In the world of finance, the automotive sector represents the financial performance and economic variables related to automobile manufacturers, dealerships, original equipment manufacturers and auto maintenance companies. The U.S. Department of Labor recognizes the manufacture, sales, servicing and production of spare parts as part of the automobile industry. This sector includes the wholesale and retail sub-sectors dealing with the sales of vehicles and spare parts.

The term "automotive sector" is used both in the automobile industry and the financial industry to refer to the companies that form the market sector and the financial products derived from their performance, such as stocks and exchange-traded funds. In the United States, the automotive sector's performance is greatly influenced by the automobile industry's big three manufacturers: General Motors, Ford and Chrysler. Consequently, the auto industry's performance also affects other major sectors such as transportation, oil, and food and beverage. In addition to manufacturers, this sector includes the manufacturers and resellers of auto parts, third-party servicing companies, manufacturers of trailers and tire stores. In the United States, each subsector of the automotive sector is recognized by the North American Industry Classification System.

Consequently, the automotive sector is not limited to the manufacture of cars and commercial vehicles. It also includes specialized industrial vehicles and other capital equipment as well as automobile design, research and development, and auto finance. The sector also provides employment to professionals from several fields including administration, human resources, engineers, sales, marketing, health care, finance, accounting, retail, wholesale and management.

The U.S. Automotive Sector

The Organization Internationale des Constructeurs d’Automobiles ranks the United States as the second-largest producer of automobiles, second only to China in the number of motor vehicles produced per year. In 2014, the country's annual production of 11.66 million passenger and commercial vehicles is greater than the combined production of Germany and South Korea, the next two countries on the list, according to OICA's annual report.

The Center for Automotive Research estimates that over 16 million units – including passenger, commercial and other vehicles – were produced that same year. In 2015, the U.S. automobile sector is estimated to be worth approximately $620 billion, contributing between 3% and 3.5% of the nation’s GDP, according to a research paper by CAR.

The U.S. automotive sector employs over 1.7 million people and pays over $500 billion in annual compensation, and it is responsible for creating jobs in multiple sectors that support the automotive industry. OEM remains one of the largest subsectors created by the automobile industry, employing over 2.4 million people in manufacturing spare parts and accessories not directly manufactured by automakers. In 2014, it also contributed $206 billion to state and federal coffers in tax revenue.

  1. What debt/equity ratio is average in the automotive sector?

    Find out more about the importance of analyzing the debt-to-equity ratio and the average debt-to-equity ratio of companies ... Read Answer >>
  2. What economic indicators are important for investing in the automotive sector?

    Discover the most important economic indicators when investing in the automotive sector: auto sales, unemployment and consumer ... Read Answer >>
  3. How much impact does government regulation have on the automotive sector?

    Learn about how government regulation affects the automotive industry in terms of design, safety features, fuel-economy and ... Read Answer >>
  4. What is the best way to get exposure to electric cars when investing in the automotive ...

    Learn more about the electric vehicle industry and what investment opportunities are available among auto manufacturers and ... Read Answer >>
  5. Which commodities are the main input materials for the automotive sector?

    Explore the materials used by automakers to create modern cars and trucks. Find out more about the materials market as it ... Read Answer >>
  6. What raw materials do auto manufacturers use?

    Learn about some of the raw materials required for auto manufacturing, including iron for steel, aluminum, rubber, and petroleum ... Read Answer >>
Related Articles
  1. Investing

    Top 5 Automobile Stocks of 2016

    Low rates, cheap gas, available credit and an improving economy should drive sales for these five industry leaders in 2012-'17.
  2. Insights

    6 Countries That Produce the Most Cars

    With over 90 million cars manufactured in 2015, the automobile industry is a massive global market led by six countries.
  3. Investing

    Key Financial Ratios to Analyze The Automotive Industry

    Learn about the most critically important financial ratios investors and market analysts utilize to evaluate companies in the automotive industry.
  4. Investing

    Ford Stock: Analyzing 5 Key Customers (F)

    Discover which companies Ford relies on as its most important customers to help the iconic company remain the top-selling auto manufacturer in the U.S.
  5. Insights

    Amazon Launches Vehicle Platform for Car Buyers

    Amazon continues its efforts to be all things to all people with the addition of Amazon Vehicles, on online fountain of information on all things auto-related.
  6. Investing

    Top 3 Auto Industry ETFs in 2017

    These three auto industry investments have been top performers in 2017.
  7. Insights

    Most Profitable Automobile Companies of 2016 (HMC, TM)

    There are only four really profitable automobile companies in 2016 as the market has not supported prices despite a projection of near record sales.
  8. Insights

    How Trump Could Kill Jobs With NAFTA Exit, Tariffs

    Trump's plan to boost U.S. jobs by withdrawing from or revising Nafta may backfire, a major report says
  9. Investing

    The Economics of Mexico's Middle Class

    Lean about Mexico’s expanding middle class society and the causes for its change from electronics to the manufacturing industry.
  10. Investing

    Do Oil Prices Affect The Auto Industry?

    Based on an understanding of complementary and substitute goods, the American auto industry is exhibiting expected effects from the recent plunge in the price of oil.
  1. Auto Sales

    Auto sales are reported monthly by the major producers of domestic ...
  2. Advanced Technology Vehicle Manufacturing Program

    A U.S. Government subsidy created under section 136 of the Energy ...
  3. Sector Fund

    A sector fund is a fund that invests solely in businesses that ...
  4. Service Sector

    The service sector is the portion of the economy that produces ...
  5. Capital Goods Sector

    The capital goods sector refers to a grouping if publicly-traded ...
  6. Industrial Goods Sector

    A category of stocks that relate to producing goods used in construction ...
Hot Definitions
  1. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  2. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  3. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  4. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  5. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  6. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
Trading Center