The biggest risks facing automakers in 2012

Like any other industry recently, the economic downturn has negatively affected sales and overall business growth. The auto industry has been hit especially hard by the aftermath of overseas environmental disasters in Asia, with factories out of service for weeks. In Detroit last week at the North American International Auto Show, the opening to the public had been the most action-packed and spirited in years. Much emphasis was placed on national automakers and local automakers. Demand for newer, high-performance and alternative-fuel cars is at its highest since the 2008 recession. The New Year, however, presents new challenges and hurdles for the world’s automakers. Read on to find out.

European debt abroad has had long-lasting effects on the automobile industry. On the one hand, we are not sure how the European debt crisis will specifically affect the world economy. Domino effects have not yet been foreseen in national companies. Time also determines many problems and how to solve them. For example, the launch of new cars depends on many things, patterns and stock rates. Many automakers determine where they are going to launch a specific car based on region, local demographics, and demand. Staggered releases are typical and carefully thought out. One of the biggest challenges automakers face is how to outperform their competitors in terms of marketing and advertising. This contributes to the price levels; upgrade packages, initial base prices, and memorable advertising.

There is a global push to obtain safety research and assure consumers that why they are buying will not be recalled. However, sometimes this is simply not protected all the time. Toyota had major brake problems on its Toyota Camries that caused a huge stir in its sales and customer loyalty. Automakers face the constant challenge of restyling, reinventing and introducing newer and better models for their old models.

Another pressing challenge facing American automakers is in terms of production. Costs, location, use of materials and general factors of production. It’s a huge challenge to stay competitive in the game, especially in midsize cars. Assessing the market and choosing which models to revive and which to recall entirely is a major decision car makers will face in the coming year. Often times, declining sales figures can be reversed if a new model of a car is launched, and at other times it is difficult for automakers to come back strong from a model that has performed well in previous years.

Keeping customers loyal and happy with their chosen car make is critical. With stiff competition, entering the hybrid and electric market will also be just as competitive. Just as important in the auto production and sales industry is the performance of auto insurance companies. As auto insurance rates rise, fewer cars are being sold. As you can see, there are many factors that coincide with the total recovery of the automobile industry.