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Strategic Management: Auto Industry

In: Business and Management

Submitted By pedronotejo
Words 1280
Pages 6
WORLD AUTOMOTIVE MARKET
The global Automotive industry generated revenues of $1,469.3 billion in 2009 (Datamonitor, 2011), corresponding to the manufacturing of 57.6 million light vehicles1 (PwC, 2011). In 2011, this market rose sharply to 74.6 million vehicles and is expected to grow to 106 million vehicles in 2018 at a 5.2% CAGR in the period (PwC, 2012). The major contribution to this growth will come from emerging markets, with
84%, with the BRIC2 countries alone representing 64%.
The Automotive industry is still a very concentrated market, where the top 12 manufacturers represent
83% of the units assembled in 2011 (PwC, 2012). Despite this market structure, there have been a few new entrants, such as Tesla Motors and BYD, both electric car manufacturers.
In Table 1, an analysis of the Automotive market environment is presented.
FACTORS
Political

COMMENT

IMPACT ON
DEMAND/SUPPLY

Governments and municipalities interest in green vehicles Positive for green product lines

Disposable income

Growing wages in developing countries, growing middle class with purchasing power

Positive

Low interest rates in developed economies

Positive

Currency fluctuation

Loss of competitiveness due to strong currencies
(Dawson & White, 2012)

Negative for
Japanese /Brazilian

Lifestyle changes

Approach to Western lifestyle in developing countries, demand for low-end cars (Ayres, 2012)

Positive

Green issues

Global awareness regarding pollution

Positive

R&D expenditures

Available market space for innovation, both incremental and breakthrough

Positive

New technology adoption

Technological

Negative for global companies Interest rates

Socio-cultural

Governments impose strong import taxes to foster local production

Green vehicles
Economic

Import taxes

Fast technology adoption due to fast…...

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