Question

When writing a financial-based research paper on the company General Motors, we will discuss the industry in terms of its industrial life cycle. Discuss industry problems and opportunities for this year and specifically discuss the relationship between the industry and the whole economy, such as business-cycle sensitivity.

Answer 1

General Motors is a company which is in the business of manufacturing automobiles and marketing them. The industry is getting disrupted by the advent of the electric vehicles and autonomous cars and so these form major challenges as well as opportunities for the incumbent players in the industry. The biggest threat that the internal combustion engine fuelled automobile sector is facing is that due to climate change and global awareness regarding warming, the entire industry is facing prospects of downward pressure on sales. In the face of this, the biggest opportunity for these companies are that they could venture into electric vehicle space and combine that with offerings based on autonomous technology.

The auto sector is deeply coupled with the overall economy and the contribution of the auto sector to manufacturing GDP is significant. Due to the significant coupling between auto sector and the overall economy, the performance of the auto sector is closely dependent on the performance of the overall economy. A upward economic performance usually results in high car sales and vice versa.