CHICAGO, March 21, 2012 /PRNewswire/ -- Today, Zacks Equity Research discusses the Autos Industry, including General Motors Company (NYSE: GM), Ford Motor Co. (NYSE: F), Toyota Motors Corp. (NYSE: TM), Honda Motor Co. (NYSE: HMC) and Nissan Motor Co. (OTC: NSANY).
The auto industry is highly concentrated. The top-10 global automakers account for roughly 80% of the worldwide production and nearly 90% of total vehicles sold in the U.S.
In January-February 2012, General Motors Company (NYSE: GM) led with a 18.3% market share in the U.S., followed by Ford Motor Co. (NYSE: F) with a 15.3% market share,Toyota Motors Corp. (NYSE: TM) with a 13.8% market share, Chrysler-Fiat with a 11.4% market share, and Honda Motor Co. (NYSE: HMC) and Nissan Motor Co. (OTC: NSANY) at the last spots with 9.4% and 9.0% market shares, respectively.
Due to a massive structural change after the global economic meltdown in 2008, the global auto industry is expected to be ruled by automakers and suppliers based in the six major auto markets: China, India, Japan, Korea, Western Europe and the U.S.
The recent trend shows that automakers are concentrating on offering more optional features (which will save money on gas) even on the small and less gas-guzzler vehicles in order to attract buyers. The sale of optional features is helping them offset lower profit margins for small cars relative to large trucks.
The automakers continue to shift their production facilities from high-cost regions such as North America and Europe to lower-cost regions such as China, India and South America. According to a study by CSM Worldwide, China and South America together are projected to represent more than 50% of growth in global light vehicle production in the auto industry from 2008 to 2015.
The role of governments is highly significant. Governments in all major countries have become active auto industry players. Their energy and environmental policies will be strongly responsible in molding the auto industry in the coming years.
In late 2011, 13 major automakers, including Ford, GM, Chrysler, BMW, Honda, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo, have signed letters of commitment with the U.S. Government to upgrade the fuel economy standard of cars and light-duty trucks to 54.5 miles per gallon (mpg) by 2025.
The new standard is more than double the Corporate Average Fuel Economy (CAFE) standard of 24.1 mpg. It is expected to save 12 billion barrels of oil and curtail oil consumption by 2.2 million barrels per day, which accounts for half of the oil imported by the U.S. from OPEC countries on a daily basis.
The new standard also aimed at reducing carbon pollution to 163 grams per mile of CO2. With this, more than 6 billion metric tons of greenhouse gas will be curbed over the time span of the program, which accounts for more than the amount of carbon dioxide emitted by the U.S. in 2010.
Consequently, there will be a variety of powertrain technologies in the auto industry in this decade and "green" cars are likely to represent about 30% of total global sales in developed auto markets.
Globally, the hybrid market is ruled by Toyota (which includes the highly acclaimed Prius) and Honda (which has Civic and Insight hybrids). Meanwhile, other automakers such as Ford, General Motors and Nissan are also aggressively pursuing a plan to push hybrid sales. Some of their "green" cars have already generated a huge response in the auto industry, including the Ford Focus, GM Volt, Nissan Leaf andothers.
In late 2011, Ford and Toyota signed a memorandum of understanding on the equal product development collaboration in order to develop a gas-electric hybrid engine for pickup trucks and sports utility vehicles (SUVs). The automakers have decided to sign a definitive agreement that would lay out timelines to develop the technology. They expect to market the product by the end of this decade. The development of electric hybrid engines would help both the companies meet stringent fuel economy and pollution standards in the U.S. and elsewhere in the near future.
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