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Car Manufacturing Industry and Economy


As previous research indicates, the supply, demand, and profits derived from the automotive industry have a significant influence on the available macroeconomic policies. An analysis of the historical data obtained from the said industry reveals that the mentioned trends are highly dependent on the business cycle. In the world, the giant car manufacturing companies include Toyota, originating from Japan, Ford, General Motors and Chrysler, both of American descent, and Mercedes Benz from Germany among others.

Although the number of units sold over time from the mentioned companies has increased, some of the companies have faced a lot of uncertainties, hindering efficient operations. For example, previously, ford sold some of its brands to other companies. On the other hand, Toyota has recalled some of its vehicles due to some mechanical problems. From the above scenario, it is evident that the companies have been losing their market share. Related data establish that such has been happening since 1955. The aspects of employment and GDP in the car manufacturing industry is emphasized in this article. It is as explained below.

Unemployment and Inflation in the Car Manufacturing Industry.

Unemployment is the happening observed when someone who actively seeks for a job or employment opportunity is unable to secure one. Unemployment is one of the measures that is used to determine health economy of a particular country. On the other hand, Inflation is the rate at which the prices of goods and services rise over a given period. Inflation increases the cost of living and at the same time reduces the purchasing power.

Statistics establish that peaks and valleys of the GDP are also somehow relevant in the car manufacturing industry. After the 1978 peak, the sales of vehicles have risen and fallen. As already predicted by analysts, the amounts of sales are not expected to reach the levels they were once because of the introduction of technology in the car manufacturing industry (Sturgeon & Florida, 2004). The aspect of technology leads to the production of long-lasting and durable vehicles. Besides, technology and unemployment are some of the factors that have an impact on the units of cars sold worldwide. When the manufacturing companies record positive generation of the production levels, this contributes to the employment rate. Otherwise, the contrary happens during a recession. Such has been observed primarily in the United States of America, between 1975 and 2009.During this period, a higher rate of unemployment was found from 1975 to 1982, when the recession rate was over.

According to data obtained from Japanese car manufacturers companies, employment was at its peak in 2009 since the revenues at this time were considerably high at $200 billion. 2001 onwards, the levels of unemployment significantly dropped, with a decrease in revenue. Therefore, in about six months to come, unemployment and inflation factors in this sector will rise or decrease depending on the taxes obtained.

Car Manufacturing Industry and the Real GDP

The GDP or gross domestic product refers to the fiscal measure of the market value of the goods and services produced in given countries within a given period. Economists argue that the car manufacturing industry is a perfect demonstration of how durable goods facilitates and controls the economy. For example, in the United States of America alone, the car manufacturing industry has the potential of influencing the economic change up to 40%, but its contribution to the economy is low.

South Africa is one of the perfect examples that demonstrate how the car manufacturing industry impact on the GDP. As per estimations, the country’s automobile manufacturing industry is expected to increase the GDP by more than eight percent. A few years ago, according to data, local production stood at 600,000 units. Recent statistics indicate that in 2015, the same contributed to 7.2 percent of the GDP whereas other manufacturing industries added to 4.4 percent (Ramey & Vine, 2004).

On a similar note, the United States of America is one of the leading car manufacturers across the world. Data estimates that more than 17.5 million units of cars are sold annually. Accordingly, the vehicle manufacturing industry accounts for around 3 to 3.5 percent of the country’s GDP, with more than 640, people employed in the manufacturing industries. Such is attributed to the highest number of car manufacturing companies across the United States of America.

How The Industry Is Going To Operate In The Next Six Months.

Employment, inflation, and GDP are some of the underlying factors that run the economy of a given nation. The named variables have overtime affected the cycle of a given economy. Hence is the reason that I chose to use them in this scenario.

In determining how the car manufacturing industry is going to operate for the coming six months, it is essential to make the economic consideration of the United States of America. Data indicates that the financial situation is healthy, taking into account the economic indicators. The GDP currently is expected to remain between two to three percent, an indication that it is supposed to remain stable. On the other hand, the aspect of unemployment has over time continued at a natural rate, and there isn’t much inflation and deflation.

As a result, the industry is expected to achieve positive growth. Such an economy facilitates efficient business operations which might positively impact the economy. Furthermore, such an environment promotes employment opportunities which will result in increased production of the car units.


Industrialisation is amongst the aspects that facilitate positive economic growth. With such, effects of unemployment are reduced at a significant rate. On the other hand, when a country’s GDP growth is low, the country goes into recession which leads to unemployment as observed earlier.


Ramey, V. A., & Vine, D. J. (2004). Tracking the source of the decline in GDP volatility: An analysis of the automobile industry (No. w10384). National Bureau of Economic Research.

Sturgeon, T., & Florida, R. (2000). Globalization and jobs in the automotive industry. Final report to the Alfred P. Sloan Foundation. International Motor Vehicle Program, Center for Technology, Policy, and Industrial Development, Massachusetts Institute of Technology.



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