Macroenvironmental Factors Affecting Automobile Industry - Presentation Transcript

Introduction Automobile usage has increased in America and elsewhere in the world. In a research done by Sutherland, J., et al. (2004) “The US has a contributed to 200 million passengers in cars and light truck over the past few years. Further in 1990, studies showed that US cars increased six times faster than human population. The leaders in the automotive industry must adopt some key elements to ensure success in this fast-moving environment. They must invest in knowing their markets, building brands, adapting product strategies and taking long-term view on their goals and objectives. This paper outlines some of the key factors which should be considered. Environmental factors automotive designers and engineers have always said the main threats in the American Automotive industry are the environmental factors such as fuel economy and the clean air regulations. Automotive Emission posed different problems than manufacturing discharges such as coal smoke. Increased fossil-fuel emission has resulted from the million car increase. Irritation smog, which is comprised of carbon monoxide, hydrocarbons, sulfur oxide and other various chemical mixtures are cited in major cities such as Los Angeles. These auto emissions are also said to cause headaches, visual pollutions, contribute to lung cancers and other respiratory disease. In the end, the engineers have designed cars that are better environmental performers, cost effective and fuel efficient to reduce the environmental

The barriers to enter these industries are quite high. It seems very difficult for potential competitors to implement themselves in these markets because there are already many big companies offering large range of products all over the world and these companies benefit from very strong brand image.

Ans: Tata Motors was a leading player in the segment of commercial vehicle market. In 1954 Tata Motors in collaboration with Daimler Benz started manufacturing heavy commercial vehicles like excavators and earth moving equipment’s. When Japanese firms Toyota, Mitsubishi and Nissan entered the Indian market through joint ventures for manufacturing light motor vehicles, Tata Motors took this opportunity and developed light motor vehicles (TATA 407, TATA 608, and TATA 709) that went ahead of the Japanese firms due to low cost, adaptable to Indian road conditions and good after sales service.

Recent opportunities include international growth potential in Mexico and abroad. Strong aging supply of automobiles across the United States and abroad. International expansion abroad. Auto part market offers growth potential.

Increasing globalization in the automotive industry is changing the way of traditional partnerships. Ten years ago, it was questionable to pursue business in markets such as India and China because political and business conditions were not conducive to direct foreign investment (Emerging Markets, Emerging Opportunities, 2012).As a result, many automotive

In this report I aim to analyze and compare the motives and strategic operations of US and European car manufacturers that have recently set up production plants in Emerging Markets and Asia Pacific regions.

By the turn of the century hundred of small companies were producing automobiles both in Europe and in America. By 2004, the industry was in different stages of its life cycle in different parts of the world. The US industry entered a period of rapid growth during 1910-28, and reached its peak of production in 1965. In the two decades up to 2004, car production was on a downward trend, but if trucks were included, output was broadly stable (see table 4.2). In Europe and Japan too, total production was showing a declining trend The problem of market saturation was exacerbated by the tendency for cars to last longer(see table 4.3). [Tables 4.2 and 4.3 about here] As a result, the automobile producers have looked increasingly to the newly industrializing countries for market opportunities. During the 1980s and 1990s countries such as Korea, Malaysia, Taiwan, Thailand, Turkey, Brazil, and Argentina offered the best growth prospects. As these markets became increasingly saturated, so China, India, and the former Soviet Union were seen as the ““next wave”” of attractive markets. With the opening of many of these countries to trade and direct investment, the world production of cars and trucks s continued to grow (see table 4.4 ). [Table 4.4 about here]

Ford has already initiated some great ideas in the form of Ford 2000, FPS, OTD, FRN and

Proton has been testing a Global Small Car with lots of local sightings but Proton has no key diesel technology to speak of so even if it does manage to enter India, it may not have the right product offering to gain a foothold there.

Tremendous amount of competition fighting for market share. In the United States (GM, Ford, Crysler), Japan (Toyota, Honda, Nissan), Korea (Hyundai, Kia), Germany (BMW, Volkswagen).

Through globalization, the auto industry has a significant effect on economies around the world. Automakers are constantly in a battle between one another, either with a foreign country or in the same region in the global market to produce and sell a better car to earn a profit. Manufacturers compete in various categories from vehicle performance to price and everything in between. The profit earned through the sales of various car models can be invested towards increasing employment ranging from engineers and designers to the workers assembling the vehicles. On the other hand, the boom of the auto industry through globalization has caused a negative effect on the environment. With automobile production increases to

Bankers and their efforts to layer the mortgage debt causing so much uncertainty in the markets that they themselves could not understand unsettled so many industries and caused so many domino effects on many industries. The motor industry was one of them that had been stable since Ford had built the first motor vehicle and introduced the assembly line.

This report is about Shiv Industry which is going through rough times because automotive parts industry was in the midst of extraordinary transformation. Shiv group has a good brand name and a positive halo effect from its reputed parent organization. In this report, I have discussed how Shiv industry can overcome from this situation by undergoing for mergers, acquisition or partnership. Shiv industry can also use new technology to get cost leadership and compete in low and medium market. They also need to focus on globally by looking for export options through partnership with foreign companies. In the last, an example of Amtek Auto Limited has been quoted who faced the similar issues but they adopted new technology with mergers and partnership to get competitive advantage in domestic and international market.

The partnership with MG Rover in an attempt to enter advanced European markets proved to be a failure because European consumers are more comfortable with well-established, quality guaranteed, and local based brands rather than a foreign company from a country that is not known for its performance in the motor vehicle industry. The only viable approach for Tata Motors is to build its international business incrementally. The most important part of a preferable strategy is to identify the needs of consumers and find ways to satisfy them, which Tata Motors successfully did by reducing the prices of its spare parts.

Tough the recent times has seen an inclination towards consolidation of the sector through mergers, India still has a large not of players in the segment. This gives rise to immense competition and fight for survival.