BMGT 110
Reply to each by name
Zariah:
The topic I will be discussing is Ford Motor Company founded by Henry Ford in 1903, now ran by his son William Clay Ford jr. who owns majority if the shares. The Ford moto company headquarters are located in Dearborn Michigan in the U.S. Henry built his first experimental car in a workshop behind his home 1896, after formation of the company the first Ford car original Model A was assembled. Five years later the highly successful Model T was introduced, which allowed demand to develop increasing more methods. As of 2023 Ford manufacturing units are spread throughout 9 countries including the U.S, China, Spain, Russia, Turkey, India, Mexico, Thailand, and South Africa. The Ford Company chose these countries due to the fact they create a greater supply and demand value, along with creating great production, and affordable products.
Ford is revamping their lineups all over the world, focusing on selling its most profitable models. In the U.S they focus on distributing pick-up trucks and sports utility vehicles. In Europe, they focus on pushing the Ranger its mid-size pick-up and offering high performance sports packages for the Fiesta subcompact, and the Focus compact. China is the largest market distributors in the world, along with being the largest automotive market in the world. Chinese automakers already offer consumers of lot of options, forcing imposters to constantly refresh their lineups. The best way to keep profit coming in and increase your supply demand is to keep your most profitable products in places where they sale the best. Creating an organized system to complement their income is the goal, being aware of what products provide a greater outcome in the area. This will increase numbers and also support the supply and demand chain.
I believe interest rate in the U.S market will influence auto loan industry drastically; we are already in such debt that increasing loans will allow the interest rate on vehicles to go up. An increase in interest rates makes servicing’s debt even more expensive. A high interest rate can bring down the value of the consumers purchasing power on a product, which will result in a decrease in demand. Auto sales can result in inflation due to the increasing of interest rates, if they go down it will increase the credit availability on the vehicle.
Brandon:
In this week’s discussion post I`ve decided to look into the Japanese car brand Toyota. Toyota was founded by Kiichiro Toyoda in 1937. Toyota is the largest vehicle manufacturer in the world and produces cars from multiple countries. Toyota produces cars from 27 countries such as the United States, Japan, Mexico, Canada, and countries in Europe. Toyota sells about 10 million vehicles a year.
To meet with the global demand for their vehicles Toyota has outsourced some of their manufacturing to other countries. In Europe they manufacture Lexus their luxury-brand vehicle as a way to compete with European luxury vehicle brands. Toyota decides to go into different global markets as an investment. They do this to remain as the top manufacturer of vehicles globally. As they go into these new markets, they learn to adjust their supply to match the demands of that country’s market.
Toyota in their global markets sell the same model cars just under a different model name. Depending on the country, well known US models such as the Rav4 is known as the Vanguard in Japan. The Lexus RX 300 is known as the Toyota Harrier in Japan. While in Australia the Camry is known as the Aurion. Toyota has done these new name changes as a way to catch new buyers into thinking they are getting the newest car.
In the United States car sales have been a fluctuating thing since the pandemic. Interest rates for cars have increased leading to less purchasing power for the buyer. If a person were asking to finance a vehicle, they would have to pay more money over the life of the loan. If interest rates are high, it impacts the auto industry significantly. High interest causes the demand for automobiles to lessen which can cause a surplus of cars on show lots. If no cars are being sold it will lead to lack of balance of supply & demand. This will result in a loss to both the industry and retailers.
McKenzie:
I have chosen to use this week’s discussion to discuss Volkswagen. Volkswagen designs produces, and distributes multi-passenger vehicles, motorcycles, engines, and turbomachinery. They provide related services such as insurance, fleet management, and leasing. Over the last few years, Volkswagen has been among the world’s largest car producers by sales. (Statista.com)
1. In what country is the company based?
Volkswagen is a German multinational automotive manufacturing company whose headquarters is based out of Wolfsburg, Germany. (Volkswagen-newsroom)
2. In what countries does the company manufacture motor vehicles, and why might the company have picked those countries for manufacturing operations?
Volkswagen is a multinational corporation that has manufacturing units in North America, Europe, Asia, Africa, and North America. They manufacture vehicles in countries like Germany, Spain, China, India, the UK, USA, Brazil, France, the Netherlands etc.
The ability to have production overseas allows for products to be created in large quantities since the delivery is less costly. Volume in production means that companies and industries are more able to fulfill consumer needs/ wants quickly. Production in multiple countries allows for the ability to mass produce helps to ensure supply and demand are met and kept up which in turn makes for a successful company. More often than not, the quality of raw materials in factories is the same as that of other parts of the world. Overseas manufacturing enables a company to hand off manufacturing obligations to the professionals running the businesses and concentrate on other aspects of their business development. Being able to focus on product creation, promotions, marketing, and brokering new deals can help large business owners like this grow their company while also having a complete team managing quality control issues elsewhere. To any stakeholders involved, multinational manufacturing is a win-win situation. The global economic environment and the global competitive environment come into play when talking about being a multinational business owner. Not only do you begin competing against each dollar earned, but you begin competing against any other business that exists in their originating country. As discussed in this week’s reading, McDonald’s had to compete against all fast food restaurants in multiple countries. Volkswagen in turn has to compete with any other vehicle manufacturers across the world. (Williams and Lumen Learning, n.d.).
3. Does the company sell the same models across countries or do they customize models for specific countries? If they customize, why do you think they do so?
After doing some light research on vehicle manufacturing from country to country, it appears that car manufacturers often change design names depending on the selling region. VW (Volkswagen), does not market the same models across all countries. For example, the Golf and the Beetle are known worldwide, but there are many other VW models that are less known are are only manufactured and available in certain countries. VW presents six vehicles ranging from a compact car to a high-end SUV. Some worldwide vehicle models that would not necessarily be known to the United States would be; the Ameo which is explicitly designed for the Indian market, the Caddy Life and the Fox in Europe, the Phideon in China, and many others (britannica). There are many different styles and tastes when looking from country to country. The manufacturing company must take into consideration the models that will cater to each demand in order to keep up with the competition.
4. Focusing on the US market, explain how the interest rate on auto loans will influence the industry. For instance, what happens to auto sales if the interest rate goes up, and what happens when it goes down?
High-interest rates appear to depreciate the value of capital, which results in a decreased buying power for consumers (Williams and Lumen Learning, n.d.). Essentially, this means that buyers must pay extra money for the same vehicle that would in reality be cheaper if interest rates were just lower. In this case, the overall car sales would more than likely decrease. It seems that vehicle sales have plummeted for many months in a row due to high interest rates in this market. People are refraining from buying vehicles. In turn, as the job market increases, the US Federal Reserve increases the Federal Funds Rate by a quarter percentage point to try and sustain conditions where companies and individuals can prosper. (Williams and Lumen Learning, n.d.)
With increasing interest rates, it is difficult for car buyers to want to take out new car loans or leases which in turn leads to the purchase of used cars. With higher interest rates come higher monthly payments. If interest rates decrease, it would boost the value of money which then gives consumers increased buying power. Low interest rates often times will influence consumer purchasing decisions. Especially when thinking about buying a big ticket item such as a new vehicle.
