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. Which benchmarks / indexes track the automotive sector?

    Explore some of the major benchmark equity indexes worldwide that analysts and investors use to track the performance of ... Read Answer >>
  2. What is the average return on equity for a company in the automotive sector?

    Discover the average return on equity, or ROE, for companies in the automotive sector and the importance of ROE as an equity ... Read Answer >>
  3. 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 >>
  4. What is an original equipment manufacturer (OEM) in the automotive sector?

    Learn more about OEM, VAR, and aftermarket manufacturers – and how they compete for customers. Explore industry trends that ... Read Answer >>
  5. What is the average price-to-earnings ratio in the Internet sector?

    Learn what the average price-to-earnings ratio, or P/E ratio, is for companies in the Internet sector and how the sector ... Read Answer >>
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