The Automotive and Generator Industries

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Table of Contents

Introduction
Description of the Current U.S. Automotive Industry
Current Automotive Market Trends
Description of the New Industry (the generator industry)
Current Market Trends in the New Industry
Explanation from Porter’s Five Forces Analysis of the New Industry
Conclusion
References

Introduction

As the head of sales for an American company that manufactures engines for the automotive industry, I must always be vigilant and proactive. As a US-based engine building company, we have access to a wide range of attractive markets, but the generator sector stands out as an extremely fruitful avenue for expansion. Generators are prevalent in the United States for household and corporate use, constituting the industry’s lifeblood. By comparing and contrasting descriptive information, including quantitative and qualitative data, from the existing automobile manufacturing sector with that of the potential generator industry, the optimal choice for the company can be made. This data can be obtained from various sources, such as financial records, industry standards, and interviews/case studies.

Description of the Current U.S. Automotive Industry

An investigation of the present situation of the automotive industry in the United States gives useful information regarding the current state of the market as well as future estimates. The research conducted by IBISWorld offers quantitative information regarding the state of the automotive industry in the United States. This information includes the industry’s net worth of $9.5 million from April 2019 to March 2020 and annual revenue reports in aggregate (Lutz & Bodendorf, 2020). These figures list gasoline (92.9%), diesel (2.9%), hybrid (2%), electric (1.7%), and plug-in hybrid (0.5%) as the market shares for each fuel type, respectively (Czerwinski, 2021). Although most of the information was presented for the United States as a whole, qualitative data such as surveys and interviews can be used to draw conclusions about the data and better inform sales studies. The manufacturing of automobiles in the United States is a significant economic engine. The Midwest is the region that contributes the most to revenue, which results in the sector as a whole being valued at more than $200 billion (Czerwinski, 2021). The market has always been dominated by gasoline-powered autos, but electric and hybrid vehicles have recently made significant headway.

Current Automotive Market Trends

The quickening pace of growth in the automotive sector directly results from shifting preferences among automobile buyers. As a response to growing environmental concerns and more stringent regulations imposed by the government, an increasing number of people are opting to purchase electric and hybrid automobiles (Czerwinski, 2021). In addition, customers are searching for more individualized customization options, such as an expanded palette of exterior and interior hues and a greater selection of trim levels. Lastly, sales of sedans have declined while those of SUVs and trucks have increased.

Description of the New Industry (the generator industry)

The generator industry is in charge of producing and distributing electrical power generators, which are used for various purposes, including providing emergency power during blackouts, powering construction sites, and providing electricity in rural areas that are not connected to the grid. Generators are available in various sizes and types to satisfy the needs of diverse industries. Due to the need for a consistent and dependable power source in various situations, such as households, businesses, and factories, there is a rising market for generators (Jaziri et al., 2020). Increased urbanization, population growth, and infrastructure investment all contribute to the growth of the business by increasing the demand for reliable backup power sources.

The generator market is quickly increasing and has much space to grow. According to Markets & Markets, the global generator market will rise from $21.6 billion in 2020 to $27.2 billion by 2025, representing a 5.5% compound annual growth rate (Jaziri et al., 2020). The construction industry’s increasing reliance on generators to provide the expanding demand for constant electricity is fueling the growth.

Government regulations, environmental concerns, and economic conditions are just a few external factors affecting the generator industry. Generator manufacturers’ production costs have risen due to stricter pollution controls, which have compelled them to adopt cleaner technologies. Numerous factors have contributed to the success of generator industry competitors, including innovation, quality, and customer service (Jaziri et al., 2020). Businesses that prosper invest in research and development to produce better generators and provide better customer service.

The generator market is shifting toward greener, more efficient solutions. The global generator industry is anticipated to be worth $16.8 billion in 2020, making the generator sector an appealing business opportunity (Jaziri et al., 2020). Major manufacturers are presently developing cleaner and more efficient generators that run on natural gas or propane. Furthermore, transportable and portable generators are becoming increasingly popular, particularly in the construction and special event industries.

The demand for backup power sources varies across the country, with sales of generators being higher in places that experience more severe weather. A notable example is that generator sales are often higher in hurricane-prone locations like the Gulf Coast than in less vulnerable places. The commercial and industrial sectors are key generator clients. Since generators are widely used in the construction industry, the sector stands to benefit from the rise of the generator market. There is a growing need for generators in the home, particularly in areas susceptible to blackouts.

Current Market Trends in the New Industry

A closer look at the market’s volatility is made possible by a few current trends in the world of generators. As was previously noted, the industry is anticipated to acquire momentum due to the rising demand for diesel and commercial generators. While domestic usage accounted for most of the generator demand in 2017, commercial and industrial use is expected to expand at a faster rate than home use throughout the projection period of 2018–2023 (Karad & Thakur, 2019). Grand View Research, a market intelligence firm, reports that low-power generators are trending, but annual rises in all markets point to continued success and expansion (Karad & Thakur, 2019). Although portable generators were all the rage, the market started moving toward industrial, commercial, and diesel generators instead.

Explanation from Porter’s Five Forces Analysis of the New Industry

Various findings may be drawn from examining the generator industry through Porter’s Five Forces Analysis. Generac, for example, is a well-known and highly regarded name brand, making it more difficult to acquire clients than it would be for a new entrant without the advantages enjoyed by established competitors (Lutz & Bodendorf, 2020). Due to the distinctiveness of brands and the significance of generators in providing power at critical moments, suppliers have considerable leeway in adjusting prices (Lutz & Bodendorf, 2020). However, the threat of substitution is still low because there are few alternatives to the existing power sources. Finally, in terms of competitive rivalry, it should be noted that there are many competitors in this market, as previously indicated, but that the industry is expected to develop, which should have more than make up for this.

Conclusion

Since much of what defined the generator sector can apply to the automobile manufacturing industry, the original Porter’s Five Forces Analysis remains valid when comparing the two. For example, the vehicle manufacturing industry now faces more competition from several other sectors and provides additional consumer purchasing incentives. Automakers, like generator manufacturers, need help finding acceptable alternatives due to distance and their consumers’ incapacity to haggle rates. Car manufacturers can successfully regulate and replace suppliers, mainly where entry barriers are substantial due to hefty initial capital investment costs and strong brand loyalty. In summary, both sectors have challenges but are growing and getting more competitive, representing the tremendous potential for our company.

References

Czerwinski, F. (2021). Current trends in automotive lightweighting strategies and materials. Materials, 14(21), 6631. Web.

Jaziri, N., Boughamoura, A., Müller, J., Mezghani, B., Tounsi, F., & Ismail, M. (2020). A comprehensive review of thermoelectric generators: Technologies and common applications. Energy Reports, 6, 264–287. Web.

Karad, S., & Thakur, R. (2019). Recent trends of control strategies for doubly fed induction generator-based wind turbine systems: A comparative review. Archives of Computational Methods in Engineering, 28(1), 15–29. Web.

Lutz, C. J., & Bodendorf, F. (2020). Analyzing industry stakeholders using open-source competitive intelligence – A case study in the automotive supply industry. Journal of Enterprise Information Management, 33(3), 579–599. Web.

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