Political and Economic Change in the Automobile Industry

Cosentino, Claudio

Political and Economic Change in the Automobile Industry

Strategic options taking the example Maserati

von Claudio Cosentino (Autor:in)

BWL - Beschaffung, Produktion, Logistik

Zusammenfassung

Inhaltsangabe:Definition of problem
This paper deals with the future strategic orientation of manufacturers of luxury cars. The sociological, political, ecological, technological and economic environmental factors and their influence on corporate orientation will be highlighted and analysed. This fundamental problem for car niche brands is investigated through the example of Maserati, an upmarket brand which has become, like no other, both a trendsetter and a victim of the expectations of its patrons and customers and is now struggling for market shares together with its parent company. This paper will initially highlight influencing factors and also the need for efficiency in manufacture and production, as well as the new tasks and challenges arising from legislation. Macroeconomic factors, such as the shrinking purchasing power in developed countries like the U.S. due to inflation (and stagflation) worries (which result from the daily rise in raw material prices), exert just as great an influence on car sales figures as the growing number of super-rich in Third World countries. The question concerning the shift of target markets arises. Do the raw materials inhibit sales for these products? Or is the clientele immune? What innovations are demanded, and are they compatible with the attributes associated with super sports cars and luxury cars? Ferrari, Maserati, Lamborghini, and even Aston Martin are manufacturers who boast that they make cars with horrendous power ratings, fuel consumption, and emission levels. Their customers love the sound of the engines, comparable as they are with aircraft engines. They produce engines with eight, ten or even twelve cylinders, epitomising power, but at the same time are more suitable for the race track than for the road if one compares their figures with those of classic mass-market cars. The customers rate performance and sound higher than fuel consumption per litre and environmental awareness. These are geared to basic male instincts. Beauty of form, brute force and eroticism are mostly described in terms of beautiful women or sins or mythological mental attributes. The marketing is concerned with lifestyle, passion, and the child in people, the Freudian id. A man simply wants to own these mighty projectiles; forget common sense. The owner of such a car is, according to this cars marketing image, the one who has created it. He is successful, healthy, rich and good-looking. A majority of the worlds male […]

Leseprobe

Inhaltsverzeichnis

Claudio Cosentino

Political and Economic Change in the Automobile Industry

Strategic options taking the example Maserati

ISBN: 978-3-8366-3709-1

Herstellung: Diplomica® Verlag GmbH, Hamburg, 2009

Zugl. Europa Fachhochschule Fresenius - Hochschule für Wirtschaft und Medien GmbH,

Köln, Deutschland, Diplomarbeit, 2008

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Table of contents

List of Figures ... 3

Introduction ... 4

1.1

Definition of problem ... 4

1.2

Problem outline ... 5

The significance of the auto industry for the economy as such ... 6

2.1

Causal relationship... 6

2.2

Economic impacting factors ... 8

2.2.1

Impact on employment ... 8

2.2.2

Impact on production ... 9

2.3

Market structure in the auto sector ... 10

2.4

Economic significance of luxury carmakers ... 11

2.5

The relevant market for Maserati ... 12

2.5.1

Customer definition ... 12

2.5.2

USA, Nafta, Mercosur ... 12

2.5.3

Asia... 17

2.5.4

Europe ... 20

2.5.5

Main Competitors' Performance ... 23

2.6

The significance of economic change ... 32

2.6.1

Overall market ... 32

2.6.2

Niche manufacturers ... 33

Changes in the political terms of reference ... 33

3.1

The predominance of environmental politics ... 33

3.2

Traffic safety as uppermost political goal? ... 35

3.3

Trends in traffic infrastructure politics ... 35

3.4

Impact of political trends on the auto industry ... 36

3.4.1

Overall market ... 36

3.4.2

Niche manufacturers ... 36

3.4.3

Target market relocation? ... 37

The Maserati carmaker ... 37

4.1

History ... 37

4.2

Strategic focus of the Maserati brand ... 42

4.3

Internal brand demarcation strategy ... 44

Changes in the parameters affecting environmental politics ... 46

Strategic action options for the auto industry ... 54

6.1

Overall market ... 54

6.2

Niche manufacturers ... 59

6.3

Maserati/ Ferrari ... 60

Closing comment ... 66

Bibliography ... 68

Appendix ... 70

List of Figures

Figure 1: Problem outline ... 5

Figure 2: Worldwide automobile production 2007 ... 13

Figure 3: Light vehicle production in NAFTA ... 13

Figure 4: Sales of light vehicles in the USA in 2007 ... 14

Figure 5: Automobile sales in Asian markets ... 17

Figure 6: Production in the Chinese automotive industry ... 18

Figure 7: New passenger- car registrations in central and eastern European

markets ... 20

Figure 8: New passenger-car registrations in Western Europe ... 22

Figure 9: New passenger-car registrations and market shares in Western Europe .. 23

Figure 10: Passenger-car exports by region and country, 2007 ... 24

Figure 11: Proportion of diesels in new passenger-car registrations in Western

Europe in 2007 ... 25

Figure 12: Costs of mobility 2007 ... 26

Figure 13: New registrations of passenger cars by segment ... 27

Figure 14: European Automotive Industry Directives And Regulations ... 47

Figure 15: EC Proposed Premiums Per Car For Exceeding CO

Emission Limits ... 50

Figure 16: European Automakers` Operating Profit Per vehicle Sold 2000 -2007 ... 51

Figure 17: Volumes and Shares of West European Car Market by Segment ... 53

Figure 18: Emissions by gas ... 55

Figure 19: Emissions by industry segment ... 55

Figure 20: Alternative fuels derivatives ... 59

Figure 21: Wheel to wheel of fossil fuels ... 64

Figure 22: How to save CO

emissions in the future... 64

Figure 23: Products made of crude oil ... 65

1. Introduction

1. Introduction

1.1 Definition

problem

This paper deals with the future strategic orientation of manufacturers of luxury cars.

The sociological, political, ecological, technological and economic environmental

factors and their influence on corporate orientation will be highlighted and analysed.

This fundamental problem for car niche brands is investigated through the example of

Maserati, an upmarket brand which has become, like no other, both a trendsetter and a

victim of the expectations of its patrons and customers and is now struggling for market

shares together with its parent company. This paper will initially highlight influencing

factors and also the need for efficiency in manufacture and production, as well as the

new tasks and challenges arising from legislation. Macroeconomic factors, such as the

shrinking purchasing power in developed countries like the U.S. due to inflation (and

stagflation) worries (which result from the daily rise in raw material prices), exert just as

great an influence on car sales figures as the growing number of super-rich in Third

World countries. The question concerning the shift of target markets arises. Do the raw

materials inhibit sales for these products? Or is the clientele immune? What

innovations are demanded, and are they compatible with the attributes associated with

super sports cars and luxury cars? Ferrari, Maserati, Lamborghini, and even Aston

Martin are manufacturers who boast that they make cars with horrendous power

ratings, fuel consumption, and emission levels. Their customers love the sound of the

engines, comparable as they are with aircraft engines. They produce engines with

eight, ten or even twelve cylinders, epitomising power, but at the same time are more

suitable for the race track than for the road if one compares their figures with those of

classic mass-market cars. The customers rate performance and sound higher than fuel

consumption per litre and environmental awareness. These are geared to basic male

instincts. Beauty of form, brute force and eroticism are mostly described in terms of

beautiful women or sins or mythological mental attributes. The marketing is concerned

with lifestyle, passion, and the child in people, the Freudian id. A man simply wants to

own these mighty projectiles; forget common sense. The owner of such a car is,

according to this car's marketing image, the one who has created it. He is successful,

healthy, rich and good-looking. A majority of the world's male population tends to know

more about a new product in this sector than about one in a sector with which they are

directly involved. Cars are still status symbols for most people. Given that emission

legislation, fuel prices, and rising criminality are making inroads into these childhood

dreams, or that these manufacturers profit from the current trends by proving to be

trendsetters in other ways, or that the substitution markets are large enough to

guarantee continuous growth, we have to consider only that these brands are business

1. Introduction

enterprises for which financial figures and planning data apply as for any other

company.

1.2 Problem

outline

Figure 1:

Problem outline

2. The significance of the auto industry for the economy as such

2. The significance of the auto industry for the economy as

such

2.1 Causal

relationship

The very rapid growth in the European countries in the late nineteenth century was led

by the need for and development of ways of transportation in order to provide goods in

vast areas of the countries of trade, expanding the mobility of people. Furthermore,

investors and entrepreneurs needed to be increasingly flexible and the technology

helped to be mobile both in private life and in business. As states tore down trade

barriers, cars and trucks on wheels provided the first steps towards national and

international trade on land. Private mobility at first was exclusive to the elite but

became more and more open to broader segments of society; today, private mobility is

a general standard of life as most people own or have access to cars. The car industry

represents a very important power in Western countries, enabling a workforce of

millions of people and creating trillions in revenues. But these societies were also

dependent on those industries. As the globalised world became increasingly dependent

on cars, trucks, trains, and aircraft, those industries supplied development and mobility.

However, founded in a non-globalised era, these traditional industries were are also

stuck in traditions and national lobbies and have had to adapt to new rules of the

market. From another perspective, these industries are already globalised as cars are

manufactured around the world without the force of being of that country where they

are produced. The problem of investing in fuel-saving technologies has also been a

classic Western problem and feature of the car-producing countries. The car industry

as such is very tied to the oil industry but geographically is not situated in oil-producing

countries. The European countries are not particularly known to be self-providing in

terms of oil or exporting oil to the world; nor are the oil-producing countries known to be

car producers, except for the U.S., one of the few countries with both an oil and a car

industry. The dependence on foreign oil has always been an issue for national policy;

countries incentivise their industries to invest in low-consumption engines, as Italy has

by providing billions of subsidies to Fiat in developing the now worldwide, booming

commonrail diesel engines. But countries where the oil rig was next to the cars'

production plant were more known to develop high end but high consumption cars.

Other countries such as the UK, the Netherlands or Scandinavia have been very fast in

passing legislation in favour of the environment, as the car industry has never

represented the national industry. The economic nonsense of having an oil-dependent

industry as a leading industry in an non-oil producing environment is one of the special

features of this industry, which is led by its own rules, by passion, and by the

responsibility of providing mobility to large parts of the population. The development

and revolution in this industry is affected by some factors. First, consider the shift

2. The significance of the auto industry for the economy as such

towards Asian markets as leaders of economic growth who demand product

development and are in need of technology and methods of transportation in order to

keep their development sustainable. A second issue is the increasing importance of

suppliers. As bits and pieces are becoming ever more standardised, suppliers can

easily produce large numbers in a more effective way than the vehicle constructers.

This phenomenon keeps risks low and reduces costs but makes the companies more

dependent on one another and on global trade and mobility. The markets therefore

become bigger but harder in the same way. A third issue is a political one: having a

policy providing maximum attention to traffic safety--for example, establishing the need

for special shapes in cars in order to prevent injuries when accidents happen and

regulating safety features in cars so that passengers have the best chance to avoid

injuries in case of an accident. But the latest problems in policy have taken the industry

toward a redesign of thought in relation to reducing CO2 emissions and shifting

towards new alternative energies as the greenhouse problem and the melting poles are

becoming a threat to human health. The European Union and the state of California

have developed new rules in order to force the automotive constructers to reduce

emissions and consumption of gas. Both should be able to slow down the

environmental crisis and the financial crisis caused by rising oil prices that are slowing

down the economy and reducing the force of spending around the world. The car

industry itself actually does not have to be forced in the direction of creating innovation,

as it has been an innovation engine for the last century. The companies have come up

with many features that make mobility, communication, and leisure easier when

traveling, in order to reduce stress factors or create possibilities of working while

traveling, having all this done in a safe environment. The car industry was able to put

innovations into the market which can easily be accounted for by the 50.000 patents

obtained since 1980.

The speed of the cars has always been improved and the

traditional engines, gas or diesel, have been improved step by step. Furthermore, the

oil industry has collaborated with the car industry in order to maximise the benefits of

cooperation of the two elementary basics to move a car. But this collaboration between

the industries made them dependent on each other. This is one of the criticisms of

transportation that is not independent of oil, and the industry has to face that after the

`70s oil crisis, innovations appeared based on non-oil consuming engines, but they

have not been introduced into mass production. The pressure of the regulators instead

has shown success already as the industries have dramatically lowered emissions and

featured new cars and systems within months, replacing old cars and systems

established over years. The emission limit of 135g CO

per km per fleet is a landmark

See Aaker/ Joachimsthaler [2000], p.60-69

2. The significance of the auto industry for the economy as such

that has to be reached by 2012.

This plan requires huge investments by the

carmakers that have to revolutionise their fleets in order to match to the required

emissions. Premium brands, being the leaders in development, have the biggest

problems in meeting these criteria for producing bigger cars with a lot of horse power

and big engines, as the traditional developing areas were the electronic aspects and

safety aspects of mobility, mostly featured in the high end products in order to satisfy

high end clients. So the question that might come up is: how can politics collaborate

with a high end industry to keep making traditional progress and innovation, while also

forcing the industry to develop its negative aspects in order to preserve itself? This is

an industry that if the world continues warming up has to disappear; yet at the same

time, globalisation would disappear as the world would not be able to provide the

needed mobility, which would throw the world back to the Stone Age.

2.2 Economic

impacting

factors

2.2.1 Impact on employment

The automotive industry has been very important to its home economies. The total

share of the automotive industry in global industry is around 9,6% (2007) and for the

producing countries around 14%. As the production is predominately mechanical but

still needs a great deal of workforce to develop and build cars, numbers can be kept up

easily. Workforce might shift to low-cost countries, but manpower is still needed to

assemble a car. As suppliers and industries work around the car industry, rubber

components, the steel industry, the plastic industry, the leather and glass industry or

even the design, internet or marketing industry work around a car that has to be sold. A

car is a high-involvement product with many decisions made around it and criteria that

have to be followed and considered. The latest numbers have shown that in countries

of the Triad, around 1 mln employees (European members) and 4 mln employees per

country work for the industry directly, and 25% of the other industries benefit from this

industry's activities

. A huge lobby for the United States, they often have such a high

influence that subsidies and decisions about where to produce components become

political issues, and company investments benefit from state interventions' adding

millions or billions to keep labour in the countries of origin and to help innovation. As

subsidies are mostly banned from the EU countries, these interventions are often

declared as money used for destroying old cars or investments in environmental or

ecological issues.

See

Bundesministerium für Verkehr, Bau und Stadtentwicklung (2008)

See Roland Berger [2008] 10 Mega Trends oft he Global Automotive Industry after China's WTO entry

2. The significance of the auto industry for the economy as such

2.2.2 Impact

production

These figures are pretty stable as globalisation indulges the need of mobility and

transportation and the emerging markets keep demand up; in the meantime, the

traditional markets have stable figures, as they are not growing but have to innovate

their fleets as people want to enjoy more features and as they have to adapt to

legislation issues. The typical model's life cycle has become shorter from the former 15

years of a model being on the market to 2,5-3 years (Audi) in order to see a facelifting

or a complete new car.

Marketing and the inevitable need of innovation makes fleets

broader and change faster. Margins become lower as the time of earning money per

model is getting shorter and shorter. But the market is bigger, albeit segmented

according to special needs: 1) expansion in Asia and Eastern Europe with the need of

developing a whole market from low-price cars to high end cars and trucks and 2) the

classic Western countries are becoming more and more segmented due to special

interests and needs. They are asking for SUVs, small SUVs, sedans, sport sedans,

roadsters, convertibles, limousines, and coupe limousines. Needs are indulged to

promote cars in markets that are already satisfied but still have the need to keep the

engine rolling. But as margins are becoming smaller and smaller, the structure of the

car industry has changed. Producing globally, people are employed all over the world.

Machines have taken much of the work, and standardisation has become very

important. The suppliers today produce most of the parts. Specialised, they can be

more efficient, can produce at a lower price, and do not take risks of producing model

components that will not be sold; standardisation means the possibility of finding a

model for all parts is very high. Sixty-five percent of employment in the car industry and

60% of the components utilised in a car are provided by suppliers; while they are the

biggest players in the industry, they are also fully dependent on the car manufacturers

as they provide technology to an industry whose livelihood depends upon its reputation

and standing of brands. The brands themselves stand for classification technology and

all psychological matters of the industry. Another big issue in the car industry is the

economic situation globally and nationally. Inflation, oil prices, and other factors affect

car production and sales extensively. An 8% variation in the oil price normally affects

the national GDP by 0,5% and car sales by 5%. The production for the moment is

shifted towards the emerging markets and new target markets, making constructors

partially lose their national identity. New phenomena like Tata motors' buying Britain's

Jaguar, or hedge fund Cerberus' buying Detroit-based Chrysler, show the unhealthy

Porter, M. E. [2006]: What is Strategy? In: Harvard Business Review, Issue 6, p. 61- 78

2. The significance of the auto industry for the economy as such

situation of the industry. Meanwhile, niche producers are expanding in production and

labour force.

2.3 Market structure in the auto sector

Technically, the market structure of the global auto industry can most appropriately be

classified as an oligopoly, and has been like that since the inception of the industry.

However, the extent of competition faced by firms in this industry has changed over

time. There are two phenomena that can be observed: the inverse of the degree of

concentration in the industry and the ratio of marginal costs to price. Eighty-five percent

of the cars in the world are being produced by the 13 members of this oligopoly. The

industry has faced many revolutions in the past years. The suppliers have become

more important to the industry just as, in time, production and outsourcing have been

strategic styles performed in the industry. These strategies were applied in order to

reduce costs, standardise processes, and lower risk of keeping components in stock.

On the other hand, it is the industry that has seen the most mergers and acquisitions

after the banking sector and is the classic textbook industry to describe failures and

gains of these processes. The former national flagship industries have seen nine of the

biggest mergers in the last 20 years, which all have failed and now exist in different

constellations. Examples are Jaguar (Ford now being Jaguar Tata Motors), Daimler

Benz (Chrysler now separated), and Ford Rover, now separated as well. On the other

hand, national mergers have been much more successful, seeing the Fiat Group taking

over most of the Italian players and the French PSA group. The only merger between

international equals that has been successful was made between Renault and Nissan.

Structurally the market is facing 13 big players producing 85% of the cars on the

market, all of them trying to fill all niches of the markets either by producing a very

extensive, differentiated fleet or by acquiring small specialists in the niche industries.

The Fiat group model consisting of Fiat Auto, Lancia, Alfa Romeo, Ferrari, Maserati,

New Holland and Iveco can also be applied and seen in Germany's Volkswagen Group

consisting of VW, Skoda, Seat, Audi, Lamborghini, Bentley and MAN. As traditional

target clients cannot be expended without losing credibility and image, the car

industries try to cover niches by focusing on the niches by niche producers. Using the

same platforms, innovation costs can be saved and standards can be kept easily. This

system is applied globally and can also be seen on other continents, taking the

example of the big three American producers' diversifying their clients to their affiliated

constructors. Based on the worldwide unit sales, the big three Detroit-based producers

hold 25% of the global market, followed by the German constructors' 15% and the

Monti, M. [2008]: La competizione deve essere utilizzata. In SDA Bocconi review, Issue 4/08, p. 3

2. The significance of the auto industry for the economy as such

Japanese constructors on the same level; owning the markets, leader Toyota has 14%

all alone. The big U.S. mass producers are the losing group as the markets are asking

for low consumption cars, and the fleet average of GM, Ford and Chrysler is too high;

at the same time, Japanese cars are growing in demand as hybrid drive has been

standardised and introduced successfully, and cars are mostly oriented to small

pockets and a low budget. On the other hand, the European producers, having had

many issues and losses, especially Fiat and Volkswagen in the past, have made a

great effort in transition by renewing the fleet, lowering consumption, and working on

quality, as for a period of time Japanese low-budget cars seemed to be more reliable

than expensive European cars. But on average, their markets are down, as the

following market research will show. At the top there is a growing demand for luxury

cars.

This demand comes from companies requiring cars for their management and

from social classes that do not have to watch the oil price. This phenomenon can be

seen in the traditional markets and in the emerging markets. And as the social gap is

becoming bigger and bigger with a disappearing middle class in society, the gap can

also be seen in the car industry. The demand for luxury cars is at a record height, as is

the need for economic small cars, either due to financial reasons as in the traditional

markets, or as seen in the emerging markets in order to create mobility in vast areas of

the population. There, policies have brought investments in the right direction. As the

European Union is putting pressure on the markets to lower emissions, which are

directly related to fuel consumption, the fleets are getting ready for emerging markets

where huge quantities of units can be sold to people in need of mobility and having little

money, as the markets are great but require only a small budget as an individual.

2.4 Economic significance of luxury carmakers

The only market segment providing a satisfying number and expanding, as already

mentioned, is the luxury segment or superluxury segment, whose representatives are

Ferrari, Maserati, Aston Martin, Porsche, Rolls Royce or Bentley. Despite the economy

being in a depression in the producing countries, these constructors, producing in their

home economies and facing high oil prices and production costs, are realising records

revenues. Ferrari, building 6000 units per year, could easily build 15.000 units, but by

company policy the production is restricted, and consumers wait 24 months for a V8

and 12 months for a V 12 to be delivered. Ferrari just invested 2 bln in a new

production site next to the original one, providing the newest technologies, including a

wind canal to improve aerodynamics. Their intention is to have the best technology but

not to increase capacity, although they have been out of capacity for the last 10 years.

Pasini Stefano [2008]. Quando il sogno ha due posti, in Il sole 24 ore, Issue 18 Agosto, p.23

2. The significance of the auto industry for the economy as such

Other competitors also have a diversified approach, like Fiat, towards the luxury

segment, such as Toyota's Lexus taking over luxury clients and being revolutionary in

creating luxury hybrid vehicles, which resulted in their taking over the U.S. markets and

also parts of the market share owned by the German constructors in Europe. BMW and

VW/Audi themselves are performers in the luxury segment; they added to their fleets

niche producers by takeover like Lamborghini, Bentley and Rolls Royce and maximised

profits that those companies never had when independent. One big issue is using a

basic platform on which different kinds of cars can be built; the luxury features and the

personality of the car can be added in a second step. SUVs were a trendy issue in

recent years as people who could afford them benefited from the size and supervision

of off-road cars and the classical elegance of a sedan car. This niche has been placed

successfully by nearly all American and German producers and also fought by politics

as having excessively high emissions and taking too much space in cities. But the most

important goal of luxury cars is innovation. All new features are introduced in this

segment. One hundred and fifty of the last 155 innovations have been presented in

German flagships

. An easy tool for measurement is the used battery. The flagships

are currently using 18 volts instead of 12 or two 12-volt batteries, consuming more

electricity than regular cars but also providing luxury and safety features like no other

segment. The actual share of this segment has to be seen in 12-15% in production

units and 17-19% in revenues representing around 10 bln euro; the superluxury sector

makes up around 20% of this share in total, having a 35% share in revenues.

2.5 The relevant market for Maserati

2.5.1 Customer definition

The Maserati is for professionals. It's for people who understand the difference

between glitz and elegance. A Maserati owner is successful, passionate and

sophisticated. The Maserati is certainly a sports car, but the subtle understatement in

its design separates it from its competitors, which recommends it to a market of

individuals who value refined class over gaudy features.

2.5.2 USA, Nafta, Mercosur

The worldwide demand for automobiles continued to make positive progress in 2007.

While sales figures in the U.S. and Japan were down, purchases in Western Europe

were able to record a slight increase. The emerging markets in Brazil, Russia, China

and India lived up to their names as global growth regions, once again exhibiting

Steger, U., et al. [2008].; Sustainable innovations, Heidelberg, p 60-63

Intveen, C.[2008]: Strategies of International constructors) Dissertation TU Berlin,p.26

2. The significance of the auto industry for the economy as such

buoyant sales growth. In the new EU countries, also, new registrations of motor

vehicles turned out to be extremely satisfactory. Total automobile sales worldwide in

the countries under review rose by 4 percent to over 66 million vehicles

Figure 2:

Worldwide automobile production 2007

Seventy-two million vehicles were manufactured worldwide in 2007, which meant that

automobile production exceeded the previous year's total by just under 6 percent. With

over 60 million units, passenger-car production (including light trucks in America) was

also 6 percent higher than production of commercial vehicles, which easily reached a

total of 11 million units. Production was down by 3 percent in North America

. This

meant that the U.S. did not exceed a production rate of 10.8 million units and therefore

had to accept a 5 percent drop

Figure 3:

Light vehicle production in NAFTA

See VDA [2008] annual auto motive industry data 2008, p.22

See VDA [2008] annual automotive industry data 2008, p.23

See VDA [2008] annual auto motive industry data 2008,p.22

See VDA [2008] annual auto motive industry data 2008, p23

See VDA [2008] annual automotive data 2008, p25

2. The significance of the auto industry for the economy as such

The North American share of worldwide automobile production therefore fell to 21.4

percent. On the other hand, Brazil and Argentina managed to show a total output of 3.5

million vehicles, thus achieving an output that was up by 16 percent. 16.7 million

vehicles were manufactured in Western Europe. Thus the previous year's performance

was exceeded by 3 percent, and Western Europe's share of worldwide vehicle

production increased to 23.2 percent. In the new EU countries, production rose by 28

percent to 3 million vehicles. Production in Eastern Europe increased by 13 percent to

3.1 million vehicles

. Over 29 million vehicles were manufactured in Asia, representing

9 percent growth and a 40.6 percent share of worldwide automobile production.

Figure 4:

Sales of light vehicles in the USA in 2007

With a total of 16.1 million light vehicles,just under 3 percent fewer vehicleswere sold in

the U.S. in 2007 than in theprevious year. This was the worst sales performance since

1998. Losses had to be acknowledged both in the light trucks segment and also in the

demand for passenger cars. While there was a 2 percent fall to 8.5 million units in the

number of light trucks sold, passenger cars dropped back by 3 percent to 7.6 million

units

. U.S. consumers held off buying new cars because of distinctly higher fuel

prices and because of the fact that consumer confidence fell in the course of the crisis

in the real-estate and financial markets. The share of light trucks in sales of light

vehicles as a whole was 52.6 percent. At the same time, there was a marked slump in

sales in the sport utility vehicles (SUV) segment in particular, contrasting with

noticeable sales growth in the smaller cross-utility vehicles segment. As expected,

sales of medium and heavy commercial vehicles in the U.S. suffered a massive slump

last year. After huge pre-buy effects had developed in anticipation of the more stringent

See VDA [2008] annual auto motive industry data 2008,p.23

See VDA [2008] annual automotive industry data 2008, p.23

Standard and Poors [2008] Automobile survey

2. The significance of the auto industry for the economy as such

emissions regulations(EPA `07) which had come into effect at the start of 2007, there

was no avoiding the problems expected, and as a result it was only possible to sell

371,100 trucks in 2007, corresponding to a fall by just under a third. Medium-heavy

trucks (categories 4-7), where the fall was restricted to 16 percent, were less badly

affected by this fall, while heavy trucks (category 8) actually slipped by 47 percent. So it

appears that, over and above the pre-buy effect, the altogether weaker U.S. economy

also contributed to the huge decline in the commercial vehicles segment

Also in 2007, the three U.S. vehicle manufacturers GM, Ford and Chrysler again

continued to lose ground in their domestic markets. Their market share fell by 2.7

percentage points to 52.2 percent. On the other hand, German manufacturers

acquitted themselves better. They succeeded in achieving 3 percent growth with a

sales volume of 948,000 vehicles, expanding their market share from 5.6 to 5.9

percent. The Asian manufacturers increased sales by 3 percent and expanded their

market share to 41.9 percent. At the same time, Toyota caught up with Ford for the first

time and now ranks behind GM as the second largest manufacturer in the U.S. After

further growth of 3 percent, the sales volume of the Japanese brands is approaching 6

million vehicles

. The Koreans, who, like the German brands, managed to achieve an

increase of 3 percent last year, thus reaching 772,000 units, are similarly gaining

ground in what is still the biggest sales market worldwide.

Clean diesel is the mainstay of German manufacturers' sales strategy in the U.S. In

times when fuel prices are going through the roof, the potential for the clean,

economical and efficient diesel motor is growing in theU.S., and the Americans are

losing their reservations concerning diesel technology. In the meantime, high-quality

diesel fuels are increasingly on sale all over the country and are contributing

significantly towards creating interest among customers and giving them the

opportunity to convince themselves of the indisputable efficiency advantages of clean

diesel. In this context, it is considered by no means impossible for the proportion of

diesel vehicles, today still a relatively modest 3 percent in the total number of newly

registered vehicles, to leap to 15 percent by the year 2015

. In this context, the

German brands are particularly well-placed with their number one position in diesel

technology, and they are determined to push ahead with the huge opportunities the

situation offers. Back at the start of 2008, they demonstrated at the Detroit Auto Show

how this can happen by showcasing one model after another that complied with the

strict exhaust-gas limits in all 50 U.S. states.

See VDA [2008] annual auto motive industry data 2008, p. 122

See Roland Berger [2008] 10 Mega Trends oft he Global Automotive Industry after China's WTO entry

SeeVDA [2008] annual auto motive industry data 2008, p.56

2. The significance of the auto industry for the economy as such

Production of light vehicles in North America slipped in 2007 and was 2 percent down

on the previous year with 15 million units in total. This only affected passenger cars,

which missed the previous year's production volume by 6 percent, while light trucks

were able to buck this trend by showing a 2 percent increase in sales to 8.5 million

units. While Mexico and Canada managed to expand their production by 3 and 2

percent at the final count, the U.S. fell 3 percent below the previous year's

performance, reaching a production level of 10.5 million vehicles. The U.S. therefore

accounts for 70 percent of light vehicles manufactured in the NAFTA region

. In the

course of the extremely poor demand for medium and heavy trucks, production of

commercial vehicles in North America fell by 35 percent to 405,300 units

. This meant

that North America's entire vehicle production in 2007 amounted to15.4 million units,

thus lagging 3 percent behind the previous year's performance.

The healthy demand for automobiles also continued in the Mercosur states of Brazil

and Argentina in 2007. With 28 percent growth, sales of light vehicles in Brazil reached

a total of 2.3 million units. In this context, the market share of flex-fuel vehicles which

can run on any combination of gasoline or ethanol as desired comes to a respectable

90 percent.

Compared to the previous year, automobile production in Brazil managed to increase

overall by 13 percent to 2.8 million units in the light vehicle category. Automobile

production as a whole rose by 14 percent to around 3 million units, a result that gives

cause for confidence and that should have a positive effect on the location and on the

propensity of foreign companies to invest. The development of new models for this

huge market will happen; it is only a matter of time. Brazil has attracted impressive

interest in the worldwide competitive environment with the other dynamically growing

threshold countries in Asia and Eastern Europe.

The automotive industry in Argentina can show similarly convincing results for the past

year. Twenty-four percent growth in light vehicle sales to 534,700 units, a 34 percent

rise in exports to 316,400 units, and a production rate that has increased by 26 percent

to 544,600 units are indications of this market's radical recovery

. German

manufacturers played a substantial role in the market recovery in the Mercosur states

with 29 percent growth in sales to 752,700 units, thereby managing to increase their

market share slightly.

Standard and Poors (2008) Automobile survey

SeeVDA [2008] annual auto motive industry data 2008, p.57

SeeVDA [2008] annual auto motive industry data 2008, p.56

SeeVDA [2008] annual auto motive industry data 2008, p.57

Details

Seiten
Erscheinungsform: Originalausgabe
Jahr: 2008
ISBN (eBook): 9783836637091
DOI: 10.3239/9783836637091
Dateigröße: 837 KB
Sprache: Englisch
Institution / Hochschule: Hochschule Fresenius; Köln – Medienwirtschaft
Erscheinungsdatum: 2009 (Oktober)
Note: 1,0
Schlagworte: automobilindustrie maserati automobile industry

Autor

Claudio Cosentino (Autor:in)