Automotive industry in terms of B2C market Characterization of market operations in Automotive Industry
The automobile manufacturing industry includes all sales of cars, light trucks, the increasingly popular SUVs as well as light commercial vehicles. Once, a desirable commodity for the rich, automobiles has long been a part of the mainstream. Now, in some markets, most families own two or more vehicles.
Despite steady volume growth, recent economic conditions have seen value growth rates fall to under one percent. Volumes and values have bounced back a little in 2003, but the key drivers of the market have remained the same.
In the US, incentives continue to be a major factor in the automobile market, although they haven't stopped volumes in the region from declining year-on-year since 2001. The strengthening economy in the US will help to ease pressure on prices, but with such high levels of competition among the big players, process will by no means rocket even if the brightest of economic forecasts win the day.
Profitability remains weak in the US and across the rest of the world. A global study by KPMG showed that automotive executives believe 2003 was the worst year for profitability in the last five years, but significantly they also claim that the market has turned the corner, and that the largest percentage expected profitability to return around 2006.
Growth remains strongest in the Asia-Pacific region, even when the Japanese market is included. In volume terms, the region as a whole grew by over 20% over the last five years, compared to small net declines in Europe and the US over the same period. However, fears of overcapacity are growing, particularly in China where there is no guarantee that demand will carry on growing as fast as supply.
Globalization within the automotive industry has seen through many new technological innovation as well as marketing innovation, brining new untapped frontiers and new markets and crossing over domestic markets.
In the past few years, we may have noticed that similar to other industry like electronics apparel and consumer goods, automotive industry has also share the similar trend of growth, like FDI, global production and cross border trade have increased since the 1980's.
Higher market saturation in the domestic market and the recent emergence of third world potential markets like India, Brazil and China, and its attractive low - cost skilled labor has attracted huge FDI's, mergers, partnership, joint ventures with other local companies by the large Automotive industry in exploiting the market by setting up production facility to supply these Foreign markets as well as its own domestic market.
Over the year new automobile companies emerge as a global player from these developing markets, making a global reach and to exploring new market horizons by these companies in the developed market. As it can be clearly seen with the recent events in the year 2008, a high profile purchasing took place of a well known automobile brand Jaguar and Land rover by the Indian Automobile Giant TATA motors from Ford Motors.
It has become imperative to see that with the recent events of globalization, we can deduce that Globalization in matter of fact is taking place in both sides of the world. Moreover the With new emerging key player entering the global market by acquiring lead brands and innovating cheaper alternatives as compared to the major players shows aggressiveness in entering the established market in the developed economy.
Global the global automobile and components market saw a rapid growth by 2.5% in 2002, vehicle production so had seen more than doubled growth since 1975, from 33 to nearly 73 million in 2007. The opening of new markets in China and India has also substantially helped to drive the pace of growth. While seven countries accounted for about 80% of world production in 1975, 11 countries accounted for the same share in 2005.
World vehicle production grew at an annual average rate of around 2% in the period 1975-1990, rising to around 3% in 1990-2005. Low rates of motorization and huge populations resulted in a surge of new investment in China and India, where market growth - and, accordingly, production has been increasing very rapidly. Giving more scope and further increase ability or maintain their share of global automotive production since the entry of China and India in 1990-2005 can be seen as a real success for some countries. Canada, for example, has maintained its share of 4% in 2005.