The automotive industry is a major industry in the world today and there’s no doubt that it has impacted the economy in many ways. Auto and auto parts stores make up 20% of retail sales in the US and in 2018, the industry contributed 2.7% to U.S. gross domestic product.
The automotive industry makes up to 60 million cars and trucks a year, of which 17.4 million was sold in 2017 and the American Automotive Policy Council predicts that by 2025, an average of 16.8 million cars and trucks would be sold yearly.
The following ways explain how the auto industry has impacted the economy:
1. Oil Consumption
With millions of cars and trucks sold yearly, there is no doubt that they account for almost half the world’s consumption of oil. In the US alone, transportation fuel consumption accounts for over 70 percent of the total oil consumption, according to the American Energy Independence. This results in a constant need to produce and transport more oils to cater to everyone, thereby improving the economy.
2. Employment Rate
The automotive industry employs up to 15million high skilled workers, and the need for employees increases as the industry grows with new technological advancements. This opens up more opportunities for people to work and decreases the unemployment rate. As it improves, more people will be employed in different fields.
3. Paychecks and Tax Revenue
Auto Alliance shows that $500billion is paid annually to auto industry-connected employees in the U.S., which is the size of the combined profits of the 23 most profitable U.S. public companies. Also, over $205billion is paid in tax revenues annually, which is more than the GDP of 142 countries across the globe
4. Electric Vehicles
Electric vehicles were made for people who wanted fuel-efficient cars and they are here to stay, as new innovations keep coming up, the same way LED Headlights have conveniently replaced halogen bulbs. The global electric vehicle market has grown rapidly over the last 10 years and J.P. Morgan estimates that by 2025, the automotive industry will make about 8.4 million vehicles or a 7.7% market share.
The high cost of manufacturing electric vehicles is the biggest obstacle to making it advance as fast as other cars. However, this obstacle is gradually getting out of the way as more EV cars are being produced and sold.
5. Attracts Big and Small Businesses
The automotive industry encompasses both big and small businesses and some of the top companies in the world patronize them. This only means that the industry continues to stay relevant and will attract more highly skilled workers and also improve the economy as it progresses.
There is more to expect from the automotive industry as it makes progress alongside the evolving technology. Its impact on the global economy does not seem to be making a decline any time soon. Experts predict that in the next few years, the automobile industry might double on their current stats as new innovations are explored.