IRS Logo
Print - Click this link to Print this page

Motor Vehicle Industry Overview - Trends - June 2004

Affected IRM: X.XX.X

"This document is not an official pronouncement of the law or the position of the Service and cannot be used, or cited, or relied upon as such."



Globalization is key to the continued success of the industry.

  • Manufacturers will continue to partner with suppliers and increasingly require suppliers to finance and engineer new products.
  • Manufacturers will focus on innovation and increase emphasis on swift transitions from idea to completion.
    • Computer assisted design facilitates this process.
  • The growing use of the Internet will speed up the production cycle and bring new products to market faster.
  • Manufacturers and distributors will provide an Internet based system to allow customers to custom order vehicles directly from the manufacturer.
  • Manufacturers are experimenting selling cars directly to customers using the internet and ebay, the internet auction company.
  • Manufacturers are expanding operations and sales in China.


  • Mergers, consolidations, global competition, and severe price pressures from customers will continue to drive the industry. 
  • Record production and declining profitability is expected as manufacturers continue to push suppliers for price reductions.
  • Restructuring of the supplier base is expected to continue as companies seek optimum size to meet customers increasing demands. 
  • Original equipment manufacturers (OEM) will continue to shift design and warranty responsibilities to suppliers.
  • “Business to Business” (BtoB) e-commerce will change the way components and materials are bought and sold.


  • Manufacturers and distributors will continue to redefine, reduce, and relocate their dealership body.
  • Manufacturers and distributors will continue to test direct sales to consumers with delivery at a local dealership.
  • Superstores and publicly traded dealership groups will continue to be a factor in the industry.
  • Buyers will increasingly use the Internet to gather information prior to contacting a dealership.
  • Internet vehicle purchases will become a substitute to the traditional dealership purchase for some buyers.
  • The Internet will continue to influence the way parts are bought and sold at the dealership level.

Chapter 2 | Table of Contents | Chapter 4

Page Last Reviewed or Updated: 27-Nov-2013