SUV Automobile Regulation (Ford and Toyota Focus)
Automotive Industry Regulations and how it Affects Ford and Toyota SUV Market
The regulations in the automotive industry affect the company’s manufacturing directly and assembling the SUV category vehicles as they have to meets the sets of laws and standards. The SUV vehicles design components such as safety features and performance are essential in determining the rules of the cars manufactured and assembled. More so, the make and model of the vehicles are also regulated to ensure the companies maintain their standards, brand, and intellectual property right. In this regard, the automotive firm engages in vehicle designing and enhancing creativity to increase sales. In protecting the environment, the emission regulation tends to influence the manufacturing of the cars to reduce the impact of the emission (Reynolds, 2019). This encourages designing and developing vehicles that are efficient consumption of clean energy leading to creativity and advanced technology in the automotive industry.
Therefore, regulations in the automotive industry contribute to the positive development of new brands of vehicles to comply with the changes in the automotive sector.
The automotive industry regulation affects the Ford and Toyota market as these companies must comply with the changes to remain competitive. Ford and Toyota companies must consider developing and designing new SUV makes and models that are attractive and appealing to the customers to increase the sales volume. The issue of the modern safety requirements in different aspects such as seatbelts and airbags must be incorporated in the cars. In this regard, they must be designed to fit in a specific area and hence leading to change in the size of the cars to accommodate the changes and hence the development of new vehicle models (Sneed, 2016). The automotive regulations have an impact on the production costs due to the changes that require to be achieved. The Ford and Toyota companies must embrace the changes and hence increasing the production costs. For instance, automotive regulations are put in place and designed in a manner of protecting the environment and benefiting the consumer, and hence the automotive makers faces challenges of complying with the changes, and if they fail to realize the changes, they face fines and penalties. Therefore, Ford and Toyota companies undergo the extra mile of spending more on designing and complying with the regulations hence influencing the sales and marketing.
Regulatory Barriers of Entry in the Automotive Industry
The startups’ players in the automotive industry must comply with the automotive regulations that influence their entry into the automotive sector. The barriers to entry in the automotive vary whereby the new business faces challenges to continue with their operations. The automotive industry has active regulatory measures in different areas, including on the issue of emissions, safety, and fuel efficiency, among others. The new startups in the automotive sector must ensure they comply with the regulatory measures and meets the high standards set in the industry. Another issue influencing the entry of new companies in the automotive industry is the level of competition, the innovation of latest makes and models as well as existing and established companies such as Ford and Toyota SUV category. The new companies entering into the automotive industry faces competition from established companies with massive production and market size. The established companies have advanced technology and innovation of developing new brands of vehicles that are new makes and models to advance their marketing size. As the latest entrant into the automotive industry, it is a challenge of convincing customers of an established company with new models. It makes to change the company’s product and purchase from a different company (Sneed, 2016). Therefore, the level of competition is high and hence the barrier of entry into the automotive industry.
The high cost of technology development in the automotive industry, especially in engineering, tends to influence the capability of the new entrant in the automotive sector. The companies must be equipped with resources, skills, and experience of high engineering technology to meet the standards and demands in the market. The cost of the resources and qualified personnel to ensure high-quality products in the automotive industry is high and hence reducing the chances for new entrants into the automotive sector. Another barrier to entry for a startup company in the automotive industry is the high bargaining power and access to suppliers and distribution channels. The new entrant must establish its new channel of the suppliers and distributors of the manufactured vehicles. Lack of bargaining power to convince suppliers and distributors to contribute to the business growth, the firm incurs a huge cost that later influences its performance level. Therefore, the entrant company faces different challenges that tend to become barriers for its entry into the automotive sector.
Antitrust Cases in Ford or Toyota
Antitrust Case in Ford Motor Company
The Ford Motor Company, together with other companies in the automotive industry, is being investigated by the U.S Department due to antitrust issues. The company signed with California on emissions standards deal whereby the company has been cited for violating the agreement together with others. The Ford Motor Company spokesman T.R. Reid confirmed receiving the investigation letter from Justice articulating the issue. In his response, he indicated that the company would cooperate with the investigation about toughening tailpipe emission standards (Hawkins, 2019). The deal California was the automotive companies to toughen the tailpipe, the standards that seem tougher and closely connected with the fuel economy requirements. These standards were established by former President Obama’s administration, even though President Trump’s administration is pushing to relax the standards in the pollution and millage. Therefore, the investigation of the Ford Motor Company on the violation of the emission, pollution, and fuel economy standards contributes to antitrust issues.
Antitrust Case in Toyota Company
China’s market regulator fined Toyota Motor Corporation, a Chinese local unit $12.5 million for violation of antitrust laws (NEWS, 2019). In Jiangsu Province, the Market Supervision Division announced that the Toyota Motor Corp. Chinese unit breached the law of minimum resale price of the Luxury Lexus, a Japanese car brand. The State Market Regulatory Administration has indicated minimum price that the dealers in the Jiangsu Province must comply with. The reason for setting the minimum price was a binding effect and ensuring the sellers have no right to set the prices. The authority was ensuring the consumer interests were never undermined in the Chinese automobile industry. The fine was realized on December 6, 2019 (NEWS, 2019). Therefore, the Toyota Motor Corporation Chinese unit had to pay the fine and comply with the set minimum price regulations.
Effects of Regulations in the Automotive Industry to Ford and Toyota
The effects of the regulations in the automotive industry to Ford and Toyota are depicted in a positive and negative approach. In the positive approach, the two companies are among the giants in the automobile industry. Regulations tend to hit hard to the startup and to establish a company in the industry due to a lack of enough resources and personnel capacity (Reynolds, 2019). The Ford and Toyota firms have established business in different parts of the global market and hence enjoying economies of scale. The large market size has enabled the two firms to become competitive enough to lock other developing companies in the automobile industry. More so, the companies won the customer confidence, and hence new makes and models give the customer the chance to upgrade their cars. The new make and models are made to comply with the regulations set by different markets, and hence specialized cars for those markets are designed to meet the regulations. Therefore, the regulations act as the barrier of entry for other companies and thus giving Ford and Toyota a chance to expand their business and competitive edge in the automobile industry.
The negative approach of the automotive industry regulations to Ford and Toyota is that both companies have been engaged in antitrust issues in different markets. For instance, Ford has violated the emission regulation in California, whereas Toyota has an issue of minimum price in the Chinese market. This is a clear indication that both firms incur some losses due to the hefty fines and penalties as a result of the violation of set regulations. Therefore, the impacts of regulations in the automotive industry are essential as they influence the SUV motor vehicles and determining fair marketing for all companies operating in the industry.
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