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
Excerpts
Background Note
The car industry was born in Germany more than 100 years ago. Early development of the industry began in France in the 1900s. It was in America that the industry came of age thanks to Henry Ford, who introduced the assembly line production system. The car industry pioneered many innovative business practices. For example, the industry introduced the concept of "planned obsolescence," i.e. frequent changes in design to induce customers to switch to a new model every other year...
The US
In the 1980s, America's car markers had been in deep trouble. While the Ford family (which had a controlling stake in the Ford company) had bailed out Ford Motor, the federal government had given a loan guarantee that enabled Lee Iacocca to rescue Chrysler...
Europe
Through the 1990s, the European car industry had struggled. Volkswagen (VW) had been dragged down by the acquisition of the Spanish firm SEAT, and by its high production costs (especially high wages) in Germany..
Japan
The Japanese car industry had achieved major success in the past four decades. Toyota was generally considered to be the strongest car maker in the world. The company continued to unleash various product and process innovations...
China
China had emerged as an important car market. Car sales in China had been growing by leaps and bounds for a decade, with growth figures touching as much as 50% in some years. In 2004, the Chinese market overtook the German market as sales surged towards 5 million. In three years, the Chinese car market was expected to be bigger than Japan's...
Emerging Trends
As 2004 drew to a close, product development was the top agenda for all the leading car makers. Each company was trying to compete with various niche models targeted at specific consumer segments. They were renewing these models frequently to retain customer interest. This was causing the market to fragment...
The Road Ahead
A recent analysis of the financial performance of all the leading car companies revealed that of the top 17 car companies in the world, only half were earning more than the cost of their capital. The value creators in Europe were Porsche, Mercedes, BMW and Peugeot. In Asia, Toyota, Nissan, Honda, Hyundai and Kia qualified. America's Big Three - GM, Ford and Chrysler, along with Renault, Fiat, Mazda, Mitsubishi and VW seemed to have destroyed value...
Exhibits
Exhibit I: World's Top Ten Car Manufacturers, 2003
Exhibit II: Comparative Figures of World's Top Ten Car Manufacturers
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