Shanghai Volkswagen: Time for a Radical Shift of Gears

Several factors have affected how the American auto industry now positions itself on the world market, and big changes have been made to reflect this new direction. The introduction of new technologies in vehicles, the growing market for cars in new developing markets, the impact of the industry on the environment, legislative responses and demands, as well as the increased expectations from consumers, are some of the factors. More international cars are being designed, manufactured and bought by American consumers and exported to foreign markets today than those exclusively manufactured by American companies, redefining the American auto industry, while having a positive impact on its economy. International brands accounted for 45% of total sales in the U.S. in 2013 and have now risen to 59% of the market, and continue to grow. While the amount of American cars has decreased in the local U.S. market share to international ones, the increase of foreign car production on U.S. soil has had the effect of creating new jobs for Americans both in the auto industry as well as in related new industries. The industry has seen huge growth numbers in the last few years with more growth expected.

The streets of China used to be full of bicycles, but the more recent economy upbringing has resulted in more car buyers. The problem is not the amount of cars on the street, but the amount of bad and toxic emissions that are put in the air. China does not have regulations on the emissions standards like other countries do. Cars built by other countries that are sold to China for selling purposes, meet the regulations in accordances to the country that they were built in for the amount of emissions the car allowed to emit into the air. Putting regulations on things like emissions will result in cleaner

The last several years were also tumultuous for the U.S. auto industry. After dominating the market for decades, American automakers had grown complacent about product development. At the same time, rising gas prices and uncertainty about the economy caused consumer preferences to shift from SUVs to more fuel efficient vehicles. Foreign competitors entered the U.S. market offering more reliable, higher quality and more fuel efficient vehicles at a lower price and began to steal market share away from American automakers. In order to remain competitive, U.S. automakers need to focus on increasing production efficiencies and developing innovative product offerings. Firm Analysis

Globalization has led to an increase in China's populations, because of this increase the number of cars they own has also increased. In China the rate of cars to people is about 58 vehicles for every 1,000 people. Although this may not seem like that much, especially when compared to America, which has

General Motor owned more dealership and brands than its competitor but their vehicles only have a little difference features. It causes the consumers refuse to buy those cars because they can get the similar car from others with lower price. Therefore, they are planning to increase its manufacture capacity and stimulating a weak product offering through better R&D. Furthermore, GM hopes to enhance design, decrease costs, get out of the fruitless duplication of activities and merge several brands into one sale channel as well.

As we look at our SWOT analysis to follow, we are in a sustainable overall position, we have strengths to balance our weaknesses, and particularly our knowledge of where we are heading for and what our customers need. We also have some attractive opportunities. However, we have a weakness in competiting against price-oriented competition from both local and international brand names.

Audi has some fantastic models up its sleeves and is known to be even more premium and the choice of A grade customers.

During the first half of this century, automobile imports were negligible on American roads. For instance in 1950s, only 21,287 automobiles were imported and local manufacturers ignored their presence in the belief that the imports were small and low quality. However, foreign automobiles have since set the quality benchmark and in 1986 reached an all-time high of 4.1 million units. In 1980s the big three auto makers (Ford, General Motors, and Fiat/Chrysler) formed joint ventures with Japanese automakers in order to capitalize on consumer attitude towards foreign automobiles. In 2004, the automobile manufacturers formed the

I. Volkswagen is one of the world’s best-known car manufacturers; unfortunately it has damaged its credibility and reputation with the recent emission scandal that the company was involved in. Volkswagen failed in establishing the triple bottom line, social responsibility, and sustainability.

With the current trend of climate changes and rising oil prices it is believed that by 2020 five in every ten cars will be electric driven. The expansion of electric or hybrid vehicles could possible goes way beyond the expected just like the unexpected market rise for the Chinese bicycles. The market size for Chinese bicycles grew over 200 times the expected within a span of 10 years. The growth was something unexpected and greatly negated the earlier forecast that predicted a slow market growth. The same growth is likely expected for the new energy automobiles. For example, currently china records huge sales of new energy automobiles simply because the manufacturer sells the products at consumer friendly prices. Majority of its ultra-low priced electric vehicles trade at roughly $4000,

Skoda was positioned as less premium than VW which was positioned as more premium than even Honda and

The company initially entered into the Chinese market through licensing. Having gained sufficient local knowledge, it wanted to capture further the growing market with a new strategy which would be a direct involvement for which it could consider exporting and agencies. These would not allow it to form strong customer relationships. Cummins Inc. could also consider opening a Representative Office or a R&D Consortia but it wouldn’t give them access to the Chinese market. Another option for it is to set up a wholly foreign owned enterprise which would require very high investments and intense market study. Finally, Sino-US Joint Venture was the best option for them as it not only allowed them to enter the market fully but also to share the costs and risks with its Venture partner.

It has made its name in the global market and has given a good competition to other companies in automobile sector.

The Chinese automobile market has grown by 1/3. This means that there is a lot more room for automobile companies like Honda to expand and grow. Honda will be able to increase its production and sales as the market will be bigger.

One potential threat for Volkswagen is that Toyota may respond strategically by also cutting its prices. However, given Toyota’s quality problems over the past year, they will not be able to lower prices, as this possibly would create the perception of lower quality.. First and foremost, Toyota needs to ensure it handles its quality problems to its customers’ satisfaction. The auto maker needs to ensure the public perception is that Toyota is being upfront, honest, and responsible in dealing with recalls and the