Learning to drive isn’t easy – and learning to invest in the automobile industry isn’t much simpler. Intricate business relationships, complicated geographical dynamics, and technological change all make for a market more confusing than an eight-way junction.

Why should I care about the autos industry? Cars, trucks, tractors: the automobile industry is too big to ignore. Almost 100 million vehicles are produced each year – and in Europe alone, around 12 million people rely on the industry for their livelihood.

All those vehicles mean a lot of money – and if you know how to invest in the industry, that could translate into returns for you. As more people in emerging markets get behind the wheel, car sales are forecast to grow over the coming years. And with new products like electric and autonomous vehicles revving up to hit the road, the autos industry ten years from now could be pretty unrecognizable. All this disruption creates opportunities for some companies to profit – but will probably bring others screeching to a halt.

To make sure you’re on the right side of the road, this Pack will give you a whistle-stop tour of the industry: the big players, the opportunities and challenges, and how to get invested in this twisting and turning market. Jump in – let’s accelerate your finances.

Vehicle inspection

Which countries dominate the autos industry? The world’s top vehicle producer is China, churning out a whopping 27 million cars in 2018. That’s over twice as many as America – the second-biggest producer, closely followed by Japan. Germany and India bring up the top five’s rear. But it wasn’t always that way: China’s acceleration started in the mid-2000s at the expense of America, Japan, and Germany...

Source: OICA

Cheap labor and excellent manufacturing capabilities allowed Chinese carmakers to capture the bulk of automobile growth in the past decade – growth that Chinese consumers contributed to as they hit the roads. Since 2000, the number of cars produced globally has skyrocketed from 58 million a year to almost 100 million 📈

But the market might have just hit a pothole. In 2018, production declined for the first time in decades – a drop of two million cars compared to the year before. And April 2019 saw sales declines in both China and India, which doesn’t bode well for manufacturers.

Who are the manufacturers? The biggest car company in the world is Japanese giant Toyota – though it’s about neck-and-neck with German firm Volkswagen (owner of brands ranging from Audi to Bentley). The other big players are South Korea’s Hyundai, all-American General Motors and Ford, and Toyota’s countrymen Nissan and Honda. Hot new kid on the block Tesla might seem to be an autos giant when measured by the value of its shares – but in terms of production, it doesn’t even crack the top 20.

Source: OICA

The relationships between these companies are complicated; it’s fairly common for auto companies to own stakes in the competition. Nissan and French firm Renault own parts of each other, and Toyota owns a chunk of Subaru. And consolidation in the sector has been increasing: Volkswagen and Ford announced a global partnership in early 2019, Daimler and Chinese firm Geely have established a joint venture, and Fiat-Chrysler recently tried to merge with Renault – though that deal fell apart.

All these firms are racing on an ever-changing track: the autos market is rapidly evolving. Next, we’ll look at how the gears are shifting.