Executive Summary Report
Description of Problem
Being an engine manufacturing company, the acquired revenue is directly connected with the performance in the market environment. As a result of the various challenges faced within the automotive industry, our company finds it appropriate to diversify into a broader range of business opportunities in order to maximize revenue and improve the portfolio of the company. However, before making a move to diversify, comprehensive research and analysis are necessary to learn the trends in the market for the current industry and the news industry under consideration. My recommendations lie on the qualitative and quantitative data in this research. Quantitative data highlights the numerical figures for the previous years, current time and gives a projection of the coming years. Qualitative data highlights market trends and other factors that cannot be illustrated in numerical form.
Description of the Current U.S. Automotive Industry
Currently, in the United States, the automobile manufacturing industry is facing a series of financial issues as a result of a drop in sales due to the coronavirus pandemic. In 2020, the United States automobile industry earned revenue of $69 billion which is about a 30% reduction from the 2019 earned revenue. Over the recent years, there has been a constant decrease in automotive sales; in 2019, revenue was $99 billion, in 2019, revenue was $108 billion as that of 2017 was $126.8 billion (Quince Market Insights, 2021). From these statistics, it is arguable that the automotive industry is on a steady decline. Comparing the sales in various states, California made the highest number of sales, earning revenue of $107.7 million. In the market, fuel gas vehicles are still the most preferred by clients, reflected by the percentage of sales done. However, the sales of electric and hybrid cars are steadily increasing. So far, in 2021, the Ford F series truck has made the most sales compared to other types of vehicles.
Current Automotive Market Trends
Owing to its modern features, the current market trend in the United States is electric vehicles such as the Tesla brand. Tesla is getting famous due to its modernized features such as mobile apps, auto-pilot ability, absence of gasoline, and security features. The common trends in the modern-day market are quality, friendly customer experience, and renewable energy (MarketLine, 2020). In the United States hybrid and electric car market, the hybrid type had the more overall sales baring 69% of the overall sales. The key difference between electric and hybrid vehicles is that hybrid cars have electric motors to power the car mainly to reduce fuel consumption by delaying the use of gasoline engines. On the other hand, electric cars have an electric motor that is powerful enough to work independently without an engine and gasoline tank. In addition, there have been a large number of purchases of Sport Utility Vehicles, SUVs, recent crossovers, and light trucks. Companies such as Toyota influence the trend list due to their recent models that are compact and fuel-efficient; therefore, are preferred in the market when the prices of the fuels go high.
Description of the New Industry
The main products of the motorcycle industry broaden from street bikes to off-road cycles. The All-Terrain Vehicles (ATV) industry is expected to grow within the next few years; however, the potential growth is minimal due to the regulations by state laws. In addition, since these automobiles are majorly used for enjoyment, other factors that result in the low growth of this industry include minimal time spent by the general public on sports and leisure (Market Research Future, 2021). Generally, ATVs are classified as off-road vehicles; however, entry into the industry is challenging due to each state’s regulations, including environmental and safety policies. In addition, even though entry into the industry could have been easy, well-established industries like Polaris have gained their client’s trust. As a result, there is a developed relationship between these industries and the customers who are our target market. In addition, being perceived by the general public as a leisure automobile, there is stiff competition from motorcycle industries that produce modern motorbikes for leisure. IBISWorld established that top brands in the industry are not so many; they include; Polaris, Honda Ltd, Deere and Company, Yamaha motors, and Kawasaki Corp. However, a good number of ATVs personally customize their vehicles using compatible accessories to create a new appearance or improve performance (Market Research Future, 2021). Therefore, our company can quickly obtain materials necessary for the manufacturing. In 2020, the market size of ATV and UTV companies was shown to be $3.8 bn. and it is expected to be on the rise within the coming years. The primary brand competitors in the industry include; Polaris, having a net worth of $1.145 million; Deere, and company with a net worth of $12,937 million; and Yamaha Corporation, with a net worth of $714,644 million (Market Research Future, 2021).
Current Market Trends in the News Industry
Considering the regions where the ATV industries are more established, the southeast region is the leading. In the west region, the State of California is the leading ATV industrial establishment.
The top brand from the ATVs, Polaris Inc., has its headquarters located in Minnesota, a state with a wide range of off-road terrain; therefore, it is within a high consumer region (MarketLine, 2020). Outdoor leisure products currently on the market trend list include terrain vehicles due to their application in adventure parks, military, and agriculture. Examples of products on-demand in the UTV and ATV industry include electric youth ATV and fun accessories.
Appendix A
Explanation from Porter’s Five Forces Analysis of the New Industry
There is a moderate risk in the ATV and UTV industry. Due to competition from well-established brands, there exists competition within the industry since they have created a personal relationship with their customers (Savaskan, 2020). Also, since other industries are producing automotive for the same purpose, leisure, external competition arises. For instance, the presence of sport motorcycle industries creates stiff competition with ATV industries. In the ATV and UTV industries, there are low-cost and technological expert requirements. Also, the industry is expected to grow, although it had been slowed by the pandemic. However, companies I this industry am adopting labor-saving techniques to promote cost efficiencies.
Appendix B
Summary of Findings from Porter’s Five Forces Analysis Comparing Both Industries
Both the industries have the exact attributes; for instance, competition and customers are cost-sensitive (Egan, 2020). However, the auto industry has a high threat of sustentation due to the presence of a variety of options in that sector, increased prices of gasoline, and the presence of other transportation modes such as taxis and busses. On the other hand, there are few options for the customers to substitute with UTV. Therefore, there is reduced competition in the new industry as compared to the auto industry.
References
Egan, S. (2020). Car & Automobile Manufacturing in the United States. IBISWorld. https://my-ibisworld-com.ezproxy.snhu.edu/us/en/industry/33611a/about
Market Research Future. (2021). All-Terrain Vehicle (ATV) Market Size, Share, Growth | Report, 2027. https://www.marketresearchfuture.com/reports/all-terrain-vehiclemarket-5594
MarketLine. (2020) MarketLine Industry Profile: Automotive Manufacturing in the United States. MarketLine. https://advantage-marketlinecom.ezproxy.snhu.edu/Analysis/ViewasPDF/united-states-automotive-manufacturing110088
Quince Market Insights. (2021). Global All-Terrain Vehicles Market Size to Grow with a CAGR of 3.2% By 2028. GlobeNewswire News Room. https://www.globenewswire.com/en/news-release/2021/03/24/2198309/0/en/GlobalAll-Terrain-Vehicles-Market-Size-to-Grow-with-a-CAGR-of-3-2-By-2028.html
Savaskan, D. (2020). ATV Manufacturing. IBISWorld. https://my-ibisworldcom.ezproxy.snhu.edu/us/en/industry-specialized/od5714/about
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