A Brief Note On The And South Korea Essay

1675 Words Oct 9th, 2016 7 Pages
Moreover, a number of lower-cost brands have recently entered the market, heightening competition further. European OEMs have announced capacity reductions of
750,000 vehicles by 2015. But with regard to how the market is likely to develop, that may not be enough. If OEMs in Europe do not revise their production footprint beyond the announced capacity adjustments, it could be five years before the industry gets back to its precrisis utilization rate and related profitability levels. Similar challenges apply to OEMs in Japan and South Korea, where capacity adjustments have already been initiated.
Closing a plant poses severe challenges on the people side, particularly given
Europe’s high and prolonged rates of unemployment. The recent history in North
America, however, shows the possibilities of restructuring and its ultimate benefits.
Though restructuring the industry was painful, sales and profits have rebounded.
Capacity is running higher than before the crisis, and almost double that of 2009
(Exhibit 9). Therefore, OEMs in Europe ought to revise their production footprint beyond the announced capacity adjustments.
2 http://www.acea.be/index.php/news/news_detail/press_release_european_automobile_manufacturers
_call_for_eu_policy_on_autom, 08.11.2012.
Consolidation
in North
America
Growing overcapacities in Europe
Consolidation in the US may be a model for addressing overcapacity in Europe
SOURCE: IHS Automotive; McKinsey
105
55
94 100 +5%
85 85
100 98
-15%
2000 05 09 2013…

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