Current State of the Industries
The automotive industry provides a primary market for motor engines, but the company needs a diversified customer base. The U.S. is the second-largest vehicle market globally, and current trends are shifting towards a greater preference for electric and hybrid vehicles. The marine industry presents a promising market opportunity as demand for recreational boat services increases. People increasingly have more leisure time than the marine economy provides. This means there will be an increase in the demand for boats, creating a market for motor engines.
Description of Problem
The company seeks to expand into additional markets to grow its business in supplying engines, a sector that the automotive manufacturing industry has traditionally relied on. The task entails exploring other sectors that offer a ready market for motor engines to bolster the company’s portfolio and increase revenue. Data for the investigation will be collected through market research using interviews. Quantitative data will be analyzed based on market statistics, including market size, growth rate, customer base, and sales. This will result in the recommendation of a new industry for diversification through a new sales division, which will be presented to internal and external company stakeholders, including investors, customers, and suppliers.
Description of the Current U.S. Automotive Industry
The automotive industry in the United States is one of the largest global markets for motor engines. The country offers a substantial market for vehicle sales and production, ranking second after China. According to Ariella (2023), the total U.S. car and automobile manufacturing market value in 2023 was $104.1 billion, and the country produced 9.2 million vehicles that year.
According to Ariella (2023), California accounted for the majority of car sales in the year, followed by Texas, Florida, New York, and Pennsylvania. The market for electric, hybrid, and plug-in hybrid vehicles accounted for about 11 percent of light-duty vehicle sales in the U.S. (Ariella, 2023). Car sales continue to grow amid declining demand for gasoline or diesel-powered vehicles.
Current Automotive Market Trends
Consumers in the U.S. are shifting their preference from sedan sales to mid-size vehicles. The consumer appetite for sport utility vehicles (SUVs) drives the increase in demand for compact vehicles. Ariella (2023) states that mid-size utility vehicles accounted for about 60 percent of mid-size vehicles registered in January 2021, an increase from 56 percent recorded in January 2020. At the same time, consumers are increasing their demand for electric vehicles (EVs), as well as hybrid and plug-in hybrid cars. Americans also prefer grey, black, silver, and white-colored cars, with low demand observed for pink, red, and green cars.
Description of the New Industry
The marine industry offers a promising new sector, involving the manufacture of essential vessels that require motor engines for propulsion. Some main vessels, including yachts, recreational boats, and commercial boats, require motor engines. The market is growing due to a steady increase in consumer demand for recreational boats and yachts, driven by the economy’s growth and rising disposable incomes.
The marine industry shows significant potential for growth, as the country is endowed with a vast coastline and numerous inland waterways, providing ample opportunities for boating and marine activities. The growth can further be activated through marketing to reach new demographics and attract more participants to boating. Technology is also essential as it facilitates the development of more fuel-efficient engines.
The marine industry has thrived due to a growing interest in outdoor activities and experiences, and boating has become increasingly popular. The marine economy contributes significantly to the US GDP, with a value of approximately $432 billion, according to 2021 data, which accounts for nearly 2 percent of the GDP (National et al. Administration, n.d.). Sales vary by region, depending on the activity, and coastal tourism and recreation contribute the largest share to the marine economy. With the increase in global trade and interconnectedness, marine shipping is expected to experience incredible growth as people need to transport their goods through commercial vessels.
Current Market Trends in the New Industry
The marine industry is characterized by increasing consumer demand as more individuals and families are interested in boating and water-based recreational activities. According to the National Oceanic and Atmospheric Administration (n.d.), there is greater demand for yachts as the economy recovers and grows, thereby providing higher incomes for the population. Customers are increasingly demanding greater marine exploration to learn. The need for customization and personalization of boats expands the market. Customers also seek better safety, considering marine exploration in deep waters can be risky.
Porter’s Five Forces Analysis of the New Industry
Porter’s Five Forces model helps describe an industry’s competitiveness based on five key factors. The information in Appendix A shows that the threat of new entrants in the industry is low due to the capital requirements. Limited suppliers have significant bargaining power, and buyers possess a moderate level of power due to the limited number of manufacturers. There is a low threat from substitute products, as the industry requires a wide range of vessels for various purposes. The competitive rivalry is high as players strive to capture a larger market share.
Comparison of Porter’s Five Forces Analysis
The marine and automotive industries share the attributes Porter’s five-forces model defines. The information in Appendix B shows that the threat of new entrants is low, and fewer suppliers have strong bargaining power. The bargaining power of buyers is moderate, as both industries have a limited number of manufacturers. The marine industry faces a low threat of substitute products, whereas the automotive industry faces a relatively high threat of substitutes. The competitive rivalry between the two industries is intense, as players seek to capture a larger market share.
References
Ariella, S. (2023). 36 Important US Automotive Industry Statistics [2022]: Facts, Trends, and Projections. 36 Automotive Industry Statistics [2023]: Average Employment, Sales, And More – Zippia
National Oceanic and Atmospheric Administration. (n.d.). Marine economy continues to power American prosperity, despite 2020 downturn. Web.
Appendices
Appendix A
Table 1 – Porter’s Analysis of the New Industry
Appendix B
Table 2 – Porter’s Analysis of the Both Industries