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Economics Research Paper On Auto Industry

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The Metamorphosis in the Auto Industry
Introduction
The auto industry commenced in the 1890s by French machinery makers, who laid the
foundation for what the entire automobile industry enjoys today. The industry has undergone a
significant metamorphosis thanks to the creativity and various innovative approaches deployed
since the first engine was made. Fordism came and ruled the industry with the mass production
of vehicles. This ushered in the globalized market structure where vehicle parts are made in one
location and assembled in another. At the start of 2020, the Covid-19 pandemic struck,
grounding major operations in the industry, but it bounced back, albeit minimally. These
elements depict the present industry outlook as discussed in-depth in this report.
Section 1: The History of the Automobile Industry
The History of Automobiles
The first car was made in 1890 by French machinery makers Emile Levassor and Rene
Panhard. The engine used to run the car was designed in Germany by Wilhelm Maybach and
Gottlieb Daimler. The first car was sold in 1891 by Armand Peugeot, who got a license to use the
same engine to make four lightweight cars ("Automobile Manufacturing"). Carl Benz produced a
four-wheeled car in 1892 in Germany before the American competitors, Frank Duryea and
Charles, produced their first gasoline-powered cars in 1893. The first mass producer in the world
was Ransom Olds, credited with making 425 gasoline-powered automobiles in 1901
("Automobile Manufacturing"). The Japanese joined the automobile industry in 1907 with a
gasoline-powered car created by Komanosuke Uchiyama. Later, in 1914, Mitsubishi established
mass production in Japan.
Image 1: Komanosuke Uchiyama, the Pioneer of the Japanese Automobile (Billy).

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The auto industry started with craft production between 1890 and 1908 when a dozen
small companies created standardized processes and production. The mass production phase
started from 1908 to 1973, and Henry Ford initiated it with a moving assembly line
("Automobile Manufacturing"). During that period, mass production became the most used
system in the entire industry. Mass production relied on standardized designs to create fully
automated assembly plants. Setting the standards for the entire industry gave Ford a high market
share. General Motors improved the assembly plant made by Ford in 1920 by creating flexibility
in the production system. As a result, it was easier to create different models of cars in an
assembly plant. Lean production was later introduced in 1953 by Toyota, with Taichi Ohno
leading the project ("Automobile Manufacturing"). The lean system produces the vehicles as
soon as customers demand them in the market. The system minimized the inventories used by
suppliers and dealerships.
Image 2: Henry Ford Auto Assembly Plant (Goss).
Mass production of electric vehicles was started by Tesla in 2007 with the Tesla
Roadster. The Tesla Roadster was released in 2008 before the Tesla Roadster Sports Edition was
released in 2009 (Hoffman 9). Brabus introduced an improved version of the Tesla Roadster in
2008. Electric vehicles were further developed in 2009 with the introduction of the Tesla Model
S (Vynakov et al. 9). The cars were made available to the public in June 2012, and in 2014, they
were supplied to China. Model S60 was introduced in 2014, but after further improvements,
model S70 was released in 2015. The changes in electric vehicles have made the storage batteries
stronger, and the features have been increasing over the years of change.
The Major Innovators
Ford was the major innovator after it introduced mass production in 1908 when various
vehicles were made using standardized designs. General Motors ended Ford's reign in 1920 by
creating flexibility in the production system ("Automobile Manufacturing"). Toyota took over
General Motors' market share with the lean system in 1953, which produced the vehicles as soon
as consumers demanded ("Automobile Manufacturing"). Ford, General Motors, and Toyota have
dominated the market before with a high market share because of the systems of production used
in the industries.
The Leaders in the Current Market
The major innovators in the past are still on the list of top 5 companies in the automobile
industry through high sales in 2021. Toyota Motors was the first company to finish as the top-
selling automaker, ending General Motors' production streak, which started in 1931(Vellequette).
According to the sales reports in 2021, Ford was ranked as the third best company in sales, and

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the fourth best company was Stellantis (Vellequette). Tesla was the second-best company after
BMW, with more sales in the luxury segment of cars bypassing Mercedes Benz and Lexus
(Teece 510). Therefore, the major leaders in the past are still the major leaders because they still
have high sales.
Section 2: Methods of Production of the Automobile Industry
The production cycle refers to the process of converting all the activities into finished
products or goods. The production cycle comprises different components that involve different
stages. The production cycle of automobiles involves the manufacturing of vehicles from
converting raw materials to various parts. It also includes joining different parts of the vehicle.
Three steps are involved in assembling: body making, painting, trimming, and chassis
assembling. Various automobile industry production factors, including land, capital, labor, and
entrepreneurship, are required to produce the vehicles. The manufacturing process starts with
making the sheets and ensuring that the cars are of high quality ("Automobile Manufacturing").
There are two methods of production in the automobile industry: mass production and
lean manufacturing. Different methods are used in automotive production. Different people also
contributed to the production of automobiles, which has changed the industry. The automotive
process involves stamping, which means that the raw materials are being changed into body
parts. Sheet metal is another step in manufacturing by joining different body parts to complete
the production. The significant parts of the manufacturing process are the production and the
development stage. Some of the significant activities included in the production of automobiles
include planning and designing the system (Curcio 69-73).
Steps involved in manufacturing include raw material, designing the system,
manufacturing stage, and testing and launching the automotive. The mass production industry is
the process of manufacturing high-quality products with automated technological capacity. Mass
production ensures that the product is effective (“Ford Motor Co”). Another name for mass
production is series production or serial production. Mechanization is a significant part that is
involved in mass production. Machines that are used to make better products and efficiency.
Mass production has led to the production of a high volume of automobiles, low costs of
automation, and better ways of marketing business products. Mass production has three
components: making standards, specialization, and division of labor. The types of mass
production are large-scale manufacturing which composes job production, flow production, and
batch production.
An assembly line is a process in which the goods are converted into another sequence. It
is one of the most used methods in mass production. One example of an assembly line includes
the assembling of products that are very crucial and complex. The assembly line design is
established through analysis to determine the different components (Curcio 69-73). The
assembly line has different types: classic, intermittent, automation, and lean. On the other hand,
lean manufacturing is another method of production, which is the process that focuses on
reducing waste in the manufacturing industry as well as maximizing production. It is based on
principles such as perfection, pull, flow, value, and value stream. An example of lean
manufacturing is the actions that include track manufacturing, heat, and air conditioning.
Fordism

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Surname 1 Student's Name Professor's Name Course Date The Metamorphosis in the Auto Industry Introduction The auto industry commenced in the 1890s by French machinery makers, who laid the foundation for what the entire automobile industry enjoys today. The industry has undergone a significant metamorphosis thanks to the creativity and various innovative approaches deployed since the first engine was made. Fordism came and ruled the industry with the mass production of vehicles. This ushered in the globalized market structure where vehicle parts are made in one location and assembled in another. At the start of 2020, the Covid-19 pandemic struck, grounding major operations in the industry, but it bounced back, albeit minimally. These elements depict the present industry outlook as discussed in-depth in this report. Section 1: The History of the Automobile Industry The History of Automobiles The first car was made in 1890 by French machinery makers Emile Levassor and Rene Panhard. The engine used to run the car was designed in Germany by Wilhelm Maybach and Gottlieb Daimler. The first car was sold in 1891 by Armand Peugeot, who got a license to use the same engine to make four lightweight cars ("Automobile Manufacturing"). Carl Benz produced a four-wheeled car in 1892 in Germany before the American competitors, Frank Duryea and Charles, produced their first gasoline-powered cars in 1893. The first mass producer in the world was Ransom Olds, credited with making 425 gasoline-pow ...
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