Car Industry

In 2003 demand fell marginally in developed countries like the US, Europe and Japan due to slow economic growth. The UK car industry, however, grew by 2.6 percent. On a global basis, sales grew in 2003 due to the relatively better performance of the emerging markets where surging economies in India and China increased per capita incomes, which in turn made automobiles affordable.

With the emerging markets growing at double-digit rates and the developing regions showing signs of revival, the passenger vehicle industry is projected to grow at a rate of 2.8 percent per annum, see figure 48. Purchase full report here.

The US, a mature market, has seen consumers shifting towards high-end cars and light trucks like crossovers and Sports Utility Vehicles (SUVs) (see US auto industr). In the Europe car industry, small cars have seen sales decline by more than 10 percent while SUVs have grown by more than 13 percent in a declining market. Demand for utility vehicles with add-on features is likely to grow in the next few years as consumers await vehicles with higher quality-price ratios.

In Japan, consumers prefer mid-size cars, small cars and minis in that order, due to cramped road conditions, which cannot accommodate large luxury sedans (see Japan auto industry). In emerging markets like India and China, small cars hold sway as people graduate from two-wheels to four-wheels (see China auto industry and India auto industry). As per capita incomes rises in the next five years, consumers may switch to mid-size cars.

Regulations governing emission and safety directly vary with the development status of a country – the more developed the region, the stricter the norms.  Stringent emission standards are forcing companies to develop fuel-efficient vehicles. Hybrid vehicles, which are currently on the roads of more developed regions, are a step in this direction.

The development of fuel cell technology, which will enable reduced dependence on conventional fuels like gasoline and diesel, is still some distance away from commercialization in the car industry. This technology will change the landscape of the automotive industry in the coming decades. Leading companies in the car industry like Toyota, Honda, General Motors and Ford are continuously working to improve upon these technologies that will help them satisfy legislative norms and also help build competitiveness in an ever tightening market.

With growth in the developed regions stagnating, companies are focusing their efforts on the emerging where the number of vehicles per 1,000 population is very low. Companies are setting up plants or entering into alliances with local manufacturers based on their long-term growth strategy.

In addition, these regions are also acting as major export hubs for companies in the car industry.  Strategic alliances, where both parties maintain their individual identities, are fast becoming the order of the day as collaborating on purchasing and distribution saves significant costs. The Renault-Nissan alliance and The GM-Fiat alliance are cases in point (see automotive mergers and acquisitions).

Read the full article with a single purchase   CLICK HERE