Text 5: The automotive Industry

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The automotive industry designs, develops, manufactures, markets, and sells the world's motor vehicles.

About 250 million vehicles are in use in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007; they burn over 260 billion gallons of gasoline and diesel fuel yearly. The numbers are increasing rapidly, especially in China and India. In the opinion of some, urban transport systems based around the car have proved unsustainable, consuming excessive energy, affecting the health of populations, and delivering a declining level of service despite increasing investments. Many of these negative impacts fall disproportionately on those social groups who are also least likely to own and drive cars. The sustainable transport movement focuses on solutions to these problems.

With rapidly rising oil prices, industries such as the automotive industry, are experiencing a combination of pricing pressures from raw material costs and changes in consumer buying habits. The industry is also facing increasing external competition from the public transport sector, as consumers re-evaluate their private vehicle usage.

The automotive market is formed by the demand and the industry. The European automotive market has always boasted a higher number of smaller cars than the United States. With the high fuel prices and the world petroleum crisis, the United States may see its automotive market become more like the European market with fewer large vehicles on the road and more small cars. For luxurious cars, with the current volatility in oil prices, going for smaller cars is not only smart, but also trendy. And because fashion is of high importance with the upper classes, the little green cars with luxury trimmings become quite plausible.