13-4 Mercedes-Benz All Activity Vehicle (AAV)
During the recession beginning in the early 1990s, Mercedes-Benz (MB) struggled with product development, cost efficiency, material purchasing and problems in adapting to changing markets. In 1993, these problems caused the worst sales slump in decades, and the luxury carmaker lost money for the first time in its history. Since then, MB has streamlined the core business, reduced parts and system complexity, and established simultaneous engineering programs with suppliers.
In their search for additional market share, new segments, and new niches, MB started developing a range of new products. New product introductions included the C-class in 1993, the E-class in 1995, the new sportster SLK
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For example, many automotive experts believed the superior handling of MB products resulted from manufacturing the best automobile chassis in the world. Thus, each class within the MB line met strict standards for handling, even though these standards might exceed customer expectations for some classes. MB did not use target costing to produce the lowest-price vehicle in an automotive class. The company's strategic objective was to deliver products that were slightly more expensive than competitive models. However, the additional cost would have to translate into greater perceived value on the part of the customer.
Throughout the project realization phase, the vehicle (and vehicle target cost) remained alive because of changing dynamics. For example, the market moved toward the luxury end of the spectrum while the AAV was under development. In addition, crash test results were incorporated into the evolving AAV design. For these reasons, MB found it beneficial to place the design and testing team members in close physical proximity to other functions within the project to promote fast communication and decision making. Sometimes new technical features, such as side air bags, were developed by MB. The decision to include the new feature on all MB lines was made at the corporate level because experience had shown that customers' reactions to a vehicle class can affect the entire brand.
PRODUCTION PHASE, 1997
The project was monitored by annual updates of
Chevrolet brands sometimes find it hard to maintain and enhance ways to further increase its competitive advantage and stay ahead of its competitors. Furthermore, innovative features and styles are an area in which they should focus to keep their product and brand relevant and highly regarded. Likewise, Chevrolet could further enhance its need for fuel efficient cars as many of their SUVs utilize a lot of gas. In addition, some of Chevrolet products simply lacked significant notable changes or innovative features to the design from previous designs. Therefore, the lack of modification has caused some competitors to overtake them. Unfortunately, some of the cars within the product mix lost sales to the increase in mid-size cars which provided more comfort to the buyers and also due to many lawsuit issues and concerns present in some of its other cars. Cheap interior materials and construction also served as a weakness for Chevrolet product
The financial crisis starting in 2008 and the following recession hit hard the US auto sector. Traditional car makers had to realise that substantial changes were needed in order to maintain their strong position in the
As we can see, the automobile industry of USA is affected by the economic depression in 2009, and there are more competitors trying to compete in the automobile industry.
It has been plain to see over time that as a recession sets in consumers tend to care more about the needs of sustaining life rather than luxury items. This trend has been clearly displayed in the housing market in the United States in the past decade following inflated values and over saturation of the market. Regardless of the fact that Porsche Automotive Group has found it possible to maintain a growing profit within a specialized market, during an economic downswing the entire market will experience issues, but the far more diversified companies such as Toyota Co. And General Motors will find it easier to weather the storm.
In order to meet the future consumers’ trend forecasted by the automotive industry, Ford wants to reposition itself and its business model regarding as how to better satisfy consumer needs, which is to produce smaller economic cars that the US middle-class customers value. Therefore, it seeks to take a new direction and to bring a revolution to the automobile industry, and to revive its glory years. A number of vehicle programs have been changed, delayed or even dropped throughout 2007. Ford officials believe that the shifts are aimed to get the right products to the market faster, with the emphasis on reducing costs and accelerating product development.
The car industry has constantly provided us the consumer with a wide range of choices and varieties to suit our needs, but with the vast amount of competition how do car manufacturers attract our attention. Unique designs, impressive technology, price and customer service are all the areas consumers look for in a car, to meet these demands car manufactures need to constantly come up with new ideas to stay ahead of other competitors, introducing creative ideas which are better than what was in use previously is innovation. Innovation can also be implemented internally as it can help manufacturers be more efficient and reduce costs before products are released. Depending on resources and stature, each manufacturer will manage
First I want to show you some car brands. Volkswagen,the best-selling car brand in Europe.Audi, the world’s third largest luxury car brand after Mercedes-Benz and BMW. Scania, the sweden commercial vehicle producer, Skoda, the famous automobil manufacturer based in the Czech Republic, and SEAT, the biggest Spain car maker. Then the ultra-high performance car brand Lamborghini ,Porsche and Bugatti. And last ,British ultra-luxury car brand Bentley.
New entrants to the automotive market have been a threat to General Motors. Some of these entrants include Nissan and Hyundai. Although, they have been around for a while, they are increasingly gaining a large portion of the market and have been very efficient in product development and bringing new models to the market quickly. In response to this threat General Motors has attempted to stream line their product development portion of their business. In the past, General Motors would have to go through several departments and systems to take a car from design phase to actual production. The average was typically 48 months for this process.
The merger between Daimler and Chrysler was expected to be a success in the economy especially with the current trend and demand in the automotive sector. Daimler is considered one of the most successful and profitable automotive companies across the globe. Founded in 1893 as the Daimler Motor Syndicate Ltd, its growth and expansion in the automotive sector has been facilitated by the need to meet the interests and needs of its key stakeholders (Barnard, 1998). The vehicles that are manufactured by the company are of high standard and the quality is top-notch. Most of its customers are concerned with the satisfaction level that they achieve when they purchase the motor vehicles. The implementation of the luxurious car segment meant that the trend in the economy has considerably changed and there was need for improving the brand image and the superiority of the products offered.
The automobiles industry, it is a risky business. The automobile industries move trillions of dollars in the United States every year. It is not strange for us to see one or the other automobile industries asking for a government bailout in order to get out of a hole. Every project depends on a large volume of money, for instance, a single car project may consume billions of dollars. In addition, the industry works with negative capital, the return on the investment will be recovered only with the sales of the cars, (Fiat Chrysler Automobiles - Base Prospectus, 2016, p. 18). In this research paper we will explore: 1. The risks that Fiat Chrysler Automobiles takes; 2. How FCA changed their opportunities managing the main risks; 3. Developing market strategies to increase sales; 4. Using TQM to delineate the market strategies. In the following paragraphs, we will go over each topic to explain the main risks of a new car project and how to use the Total Quality Management – TQM principles to develop strategies to overcome the risks.
BMW had an evolutionary approach on marketing and advertising. Its sales increases from 2000 that is by introducing ‘Efficient Dynamics Concept’ which means that all BMW’s Group have lower emission. One of the main success of BMW was the introduction of the concept “KOVP, or “Customer- oriented sales and production process,” which was introduced in 2000. There had always a different in the sales between America and Europe, that is out the total sales in U.S only 15% were customized and where as in Europe half of BMW car built was according to customer’s specification. Slowly SUV’s sales decreased in America. So they introduced the new marketing strategy “Dream it, Built it, Drive it.” To their new model X3 in 2010.As American’s are different from others they need
Target costing originated from Japan in 1960s though; it was not really the first approach to product costs determination. The first idea to determine product costs can be found as early as beginning of the last century at ford in the United States, and development of Volkswagen Battles in Germany in the 1930s.with a fixed product price in order to be affordable for all people (Arnaout, 2001).
The increasing numbers of sub-model cars can also affect the brand quality through increasing any risk issues once launched to the public. Furthermore, according to (Stephen, 2004) Mercedes customers have high expectations about the high quality promised by the company. In 2003, the company disappointed many customers when they sold over 2000 vehicles with an extra option for a navigation system, which were not ready to be delivered at the right time, also accompanied by other mechanical issues. On the other hand, the company made an announcement about its new high quality hydraulic breaking system, which increased its competitiveness in terms of safety and quality against other competitors in the industry.
Forced planning. Target costing ensures proper planning well ahead of actual production and marketing. It considered important in meeting all of the goals, as indicated in 2(c). The results show that the most important benefit of target costing is to assists firms in making the trade-offs between cost and quality and functionality and it helps launch products that improve on previous generations by having reduced prices or improve quality and functionality