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 types of companies are in the automotive sector besides auto manufacturers?

    Explore the relationships between automobile manufacturers and the numerous other types of companies that work in the automotive ... Read Answer >>
  3. How important are seasonal trends in the automotive sector?

    The automotive industry has some definite seasonal trends, with peak demand occurring in the spring and fall, and lowest ... Read Answer >>
  4. 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 >>
  5. Who are Tesla's (TSLA) main competitors?

    Learn about Tesla Motors' competitors, some of which are over a century old and others that are much younger. Find out about ... Read Answer >>
  6. 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 >>
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