The global automotive industry is a highly diversified sector that comprises manufacturers, suppliers, dealers, retailers, original equipment manufacturers, aftermarket parts manufacturers, automotive engineers, motor mechanics, auto electricians, spray painters or body repairers, fuel producers, environmental and transport safety groups, and trade unions. Moreover, the auto sector is considered to be capital and labor intensive, highly competitive, cyclical, and low growth. Thus, an unexpected swing of industry conditions, in either direction, could lead to material changes in profit expectations.

The analysts believe that the automotive industry is witnessing tremendous and unprecedented changes of late. Demand has decreased significantly in the last few quarters, primarily due to weak economy, weakening employment, and weakening real estate market. In addition, the recent credit crunch is affecting the auto sales. Auto lending companies have begun to sharply scale back on vehicle leasing in various degrees in response to higher borrowing costs, write-downs of existing lease portfolios and continued pressure on used vehicle pricing. Thus, looking ahead, analysts believe that the reduction in leasing could put further downward pressure on industry sales and mix. This industry is slowly and gradually shifting toward Asian countries, mainly because of saturation of automobile industry in the western world. However, analysts believe that the US auto industry will rebound by FY10.

The analysts further believe that competition will only become stronger in the U.S. automotive industry in the long run, as Japanese and Korean Original Equipment Manufacturers (OEMs) increase imports into the U.S. and expand production capacity.