Economics

The first potential scenario for costs in the auto industry is for them to benefit from the freedom given by steering away from oil based fuel engines. The move by GM to develop plug-in type of vehicles will be very important in determining the sensitivity of America and the rest of the world into the fluctuations of oil supply. We are all affected by the constant surges in oil prices as their demand and supply is literally the basis why the industrial world keeps on going.

Environmental politics and related concerns regarding carbon emissions have heightened sensitivity to gas mileage standards and environmental protection worldwide (Wikipedia, 2010).

This is understandable as there was a lot of pressure from both society and the political arena to shift from the petroleum based engines.

The second scenario would be the increased attractiveness of the American auto products since the dollar would be devalued. The U.S. has run a massive current account deficit, borrowing money from abroad in order to maintain adequate levels of investment at home will result in the weakening of the dollar one way or the other (Harrison, 2008). The end prices will be cheaper in the eyes of foreign buyers but it would mean tougher times for the American citizen. All auto companies would probably shift the majority of the production plants abroad as they already are with very minimal presence in their home country. Only sales and marketing would probably remain in the American territory to drastically reduce the overhead costs for employees.

There is a chance however that the dollar might depreciate terribly to the point where there is no more advantage if the auto companies are going to base their operations abroad. Even though, our countrys economic position in the world is weakening as pointed out a motley fool article by hanson, (Hanson, 2006) there is really no way to tell whether the chances of a permanently dollar will sink deep enough to the level of third world countries. The technology as well as operational efficiency should be the main concern of American based auto companies to compete well in the world market and even in their local territory.

The best thing that Big Drive dealership should do is to start phasing out the inefficient vehicle models already. They should do everything to eliminate these in their inventory and take in more fuel efficient cars in response to the rising gas prices and changing consumer tastes. The intake of new models however should be very minimal as there are a lot of technologies still in the making that will enter the market as soon as they reach full development. There are a dozen possible fuels that vehicles can have depending on the decision of their manufacturer.

The automobile industry simply can no longer rely on oil to supply 98 percent of the worlds automotive energy requirements (Blanco, 2009) shows that the auto industry will have to shift radically to something else. The Big Drive dealership should prepare for this inevitable change.

A common skill required would obviously be in dealing with batteries. Even if the type of fuel would change, another skill that would come in handy in servicing cars would be the electrical knowledge of the circuitry involved with the fuel either liquid type or hydrogen and stored fuel cells. These are the areas that the auto dealership needs to prepare and watch out for. The current situation on a macro level guarantees that there will be several and unpredictable upheavals in the auto industry. The technological paradigm shift will cause these massive changes that have not been seen since the time that automobiles were invented.