The Global Car Industry in 2004
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Case Code: ECOA126 Case Length: 12 Pages Period: 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.300 Organization : - Industry : Automobiles Countries : Global Themes: - |
Abstract Case Intro 1 Excerpts
Introduction
In early 2000s, the car industry occupied a position of strategic importance in many countries. However, with increasing maturity, the industry's average profit margins had declined from 20% or more in the 1920s to around 10% in the 1960s and less than 5% in 2004. The car industry represented just 1.6% of Europe's stockmarket capitalization and 0.6% of USA's. About 20 years back, the corresponding figures had been 3.6% and 4.0% respectively. In recent times, the automobile market in America, Europe and Japan, where over 80% of the world's cars and trucks were sold, had stagnated. Supply had increased vis-à-vis demand for several reasons.
In countries like Germany and France, rigid labour laws had inhibited the closure of redundant factories. In America, the arrival of European, Japanese and South Korean makers and their aggressive plans to expand market share had also created overcapacity. Effective capacity had increased slowly but steadily as carmakers continued to improve their productivity...
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