Fiat Launches Cars in China: A Global Marketing Strategy

With the recovery of economy, the world’s automobile industry has been growing steadily over the past few years. According to Bloomberg, the US automobile sales climbed from its depth 10.4 million in 2009 to over 15.6 million in 2013. Furthermore, industry analysts predict that the sales will

The United States has the largest automotive markets in the world. The United States manufactures roughly 8 million vehicles annually (“How”). Engineers worked with ford to make machines that could produce cars parts that were needed in the vehicles. Early on, Ford was able to produce 2 million Model T’s and sold them for only 260 dollars. Henry Ford was striving to make as many cars as possible with the simplest design, he wanted the cars to be affordable, he wanted to “put the world on wheels” (“Evolution”). Ford soon began to expand around the world, manufacturing, and productivity helped 130,000 hour job salaries (“Innovation”).

USA, UK and Europe. However, the demand has been rising steadily in India and China – both the world’s fastest growing economies. Thanks to Shanghai GM, a successful joint venture with the Chinese company SAIC, GM’s sales in China increased by 68 percent to 230,048 vehicles in

Ranked sixth out of the entire world, the United States is one of the leading car manufacturers (Cars). With today's assembly and productions lines, manufacturing of products and its availability to us has never been easier. Automotive production lines revolutionized the automotive industry, as well as American life. They made building cars more efficient. Because of the increase in efficiency, the cost to produce a car went down and when production costs were lowered, so was the retail price of the cars. “This price reduction meant more people could afford to buy a vehicle of their own” (How). As a matter of fact, automobiles are one of the prime examples of mass production within assembly and production lines. Automobiles are everywhere. In the year 2011 alone, 59,929,016 cars were produced around the world (Cars), and those numbers and continually rising. In 2012, for the first time in history, over 60 million cars passenger cars

Economically the automobile industry is an oligopoly. This is why the Big 3 remains the Big 3. The nature of building cars makes it difficult for small players to enter the market. The cost of entry is high. As an oligopoly, the Big 3 also tend to pay more attention to one another than to customers or competitors. If GM adds airbags, Chrysler and Ford add airbags. Being the smallest, Chrysler tends to follow rather than lead. Ideas generated outside the Big 3 tend to be ignored.

The above chronological reconstruction reveals that Fiat would offer licenses to Chrysler for using its platforms for producing of fuel efficient cars, engines, components, and transmissions in Chrysler’s plants. Moreover, both the companies will also have access sharing their joint distribution networks. On the common ground, both the companies will have opportunities to produce small cars and premium priced cars efficiently; will have improved customer services, stronger management expertises, motivational leadership like Marchionne, and will have increased efficiency. Both the firms will have lead production capacity, will achieve stronger R&D capabilities and abilities, share their expertises on fuel efficiency management, and will have efficient structure and controlling systems.

We suggest that Mattel go ahead with the plant in Guangzhou, building a medium class factory (100M capacity) to satisfy the demand in the next 4 years. The Guangzhou location was aligned with Mattel’s overall strategy for die-cast cars, it supported Mattel's diversified portfolio of operations, and it remained a cost-competitive option even after the currency shift. There are a few reasons to support this decision:

Yet, the car manufacturer was unable to strengthen its extremely weak technological capabilities. In order to do so, a joint venture between Volkswagen (VW) and SAIC, SVW, was founded in 1985 providing market access to VW and learning opportunities for SAIC. According to Thun, the Chinese manufacturer was operating with decrepit assembly plants, outdated equipment based on highly labor intensive procedures. Furthermore, it was embedded in an unfavorable environment lacking competitiveness and supplier (Thun, 2006). The government of Shanghai initiated a localization drive through tax methods, subsidized credits and monitoring (Nam, 2015). Nevertheless, it supported SVW through relaxed foreign exchange constraints and put effort into solving the problem of lacking suppliers (Nam,

an area of particular weakness for Chinese OEMs who have relied on their foreign partners to lead the development of key component technologies. The determining factor in whether a car company can compete in the international markets is whether they have the capacity to meet local consumer as well as regulatory requirements. While Chinese firms have learned very quickly how to assemble cars and develop supply chains, they are very inexperienced at the vehicle development and synthesis process. An automobile is a complex engineered system requiring advanced technology and know-how in order to test and validate the achievement of benchmark targets in the areas of performance, fuel economy, safety and quality. It is in this area that Chinese firms are weakest. Chinese vehicles, while improving rapidly, are still not up to the world-class standards required to compete in the mature markets of the world.

Some of the top selling luxury cars come from companies like Mercedes Benz, BMW and Audi. BMW very successful model X1 SAV is likely to sell around 2,500 to 3,000 units next year. Without the X1’s contribution to the company, they would have only managed a growth of about 30%. Now Audi on the other hand also had a successful model, the Q5 and the Q7. These additions to the line have helped the company give an excellent performance even in a month like November.  Mercedes Benz car sales for the month of September were 120,982 cars. There was a 2% increase in sales from last September which reported they sold 118,559 cars. Mercedes-Benz sales were up 7.6% at 919,288 cars after 853,987 vehicles in the prior-year period. The sales of luxury car will always continue to rise no matter what the economic status a country is. People who have a lot of money won’t necessarily think that they are spending a lot on a car.

The birth of the worldwide auto industry happened in the US. Cars in some form or another had already existed around the world but they were labor intensive to produce and without a supply the market considered them more of an interesting novelty than a must have product. Henry Ford revolutionized the nascent automobile industry with the development of the assembly line to mass produce the vehicles in the US to sell to the world. Since then the US has been one of the leading countries for the manufacture of automobiles until the 1970’s. Since then there has been a marked increase in global competition which has dropped the US to 3rd in annual production of vehicles for 2014 behind China and the European Union (EU).

Why Chinese Car Brands are Stuck in First Gear Local brands make up only about 30% of their home market, the lowest proportion of any major economy

Yes! The Chinese auto industry is attractive to BYD. Given the expected growth and demand in the auto industry, combined with Chinese government having stopped issuing production permits for new automotive companies, there are very few remaining opportunities to get in to this booming auto industry. Moreover, BYD is getting a good bargain as the assets of the state-owned Qinchuan Auto are being sold at a cheaper price. The state owned auto manufacturers without foreign partners accounted for 25% of auto sales in China. Many of the SOE manufacturers did not even have R&D departments. Because most of the automobile parts were imported, similar models of cars cost more in China than in USA. The existing foreign joint ventures were selling the vehicles at prices that gave them margins of 10% to 20%. Considering the current situation, there is room for low-priced entrants. Wang always dreamt of applying Li-ion battery technology to develop an electric vehicle. Using newer battery technology and assembling it cheaply, the vehicle could be competitively priced and represent a way for China to leap

Predicting a growing number of buyers in the middle to upper classes, many luxury and sport car brands are also heading to China either through joint ventures or increased imports, such as Mercedes-Benz (JV), BMW (JV), Porsche (import), and Land Rover (import).

This coursework is divided into three main parts including demand and supply sides of the Chinese SUV market respectively and Chinese central government’s role in it.