Daimler-Chrysler and the World Automobile Industry

The world automobile industry had experienced near constant growth through to the mid-1980’s. The transition from horse carriages to automobiles brought about uncertainty over the development of the product during the industry’s infant years. As the automobile evolved, demand for automobiles soared at different points in time throughout the world. However, depressed demand eventuated two decades ago after the saturated markets of North America, Europe and Japan. This consequently left industry profitability at a recession. The reasons to why such an occurrence was brought about are explained below.


Porter’s Five Forces

Threat of Substitutes
The competition of substitutes has remained calm within the industry (Grant, 1998). In the absence of close substitutes for a product, consumers usually will not react to price increases and switch to substitutes (Grant, 2002). Consumers’ reasons for demand for an automobile can differ. Fundamentally, motor vehicles serve the...