Automotive Market

One of the most highly competitive markets in the world is the automotive market. With the Japanese big three of Toyota, Nissan and Honda successfully challenging the traditional big three of Ford, GM and DaimlerChrysler it is encouraging other European and Asian companies to intensify efforts to increase their own share of the automotive market. The major areas for sales in the automotive market are shown below.

• US - ( 29% )
• Europe inc. UK - ( 29% )
• Japan - ( 10% )
• China - (  9% )
• India - (  3% )

With 64.78m vehicles produced in 2005 and only 58.7m sold, the mismatch between supply and demand is a major concern to manufacturers. With the Asian countries set to increase production for sales in the lucrative US and European markets this could cause an even greater mismatch over the next few years.
Passenger vehicle production accounts for 68.55% of the automotive market in 2005 and this figure has been steadily dropping since 2001. Commercial vehicle production has increased to 31.45% up from 31.05% in 2004.

Growth Drivers in the Automotive Market

There are many factors affecting growth in the automotive industry with the affect of these factors varying according to the maturity of the market. Automotive industry statistics show that there is a correlation between GDP growth and automobile sales growth, with the growth most pronounced in the emerging markets of India and China. In the more saturated mature markets of Europe, Japan and the US, growth in the automotive market has been lower than the respective low increase in GDP where as in the emerging markets of India and China the growth in sales is outstripping the increasing growth in GDP. This, and the relevant increase in disposable income, will significantly affect the percentage sales in the global automotive market over the next five years.

Improved fuel efficiency, hybrid vehicles, improved and innovative technology along with shorter order fulfilment times and easier auto finance are just some of the things currently being looked at by vehicle manufacturers to help stimulate sales and growth in the industry. With increased fuel prices and a more environmentally friendly marketplace, smaller, fuel efficient, hybrid vehicles should continue to increase their share in the automotive markets of the more developed countries. High level technology will no longer be the prerogative of the luxury vehicle but will become the norm in most vehicles. Internet ordering will become more common, Volkswagen already allow you to order online, and with financial bodies eager to gain more customers auto financing is already becoming easier.

In the emerging automotive markets there is massive scope for entry level vehicles as potential customers are persuaded to move from two wheeled vehicles to four wheeled ones.  China is also selling itself as place where manufacturers will want to set up with cheaper costs and less restriction on the types of vehicle which can be produced. In China there is also a growing “middle class” segment with access to easy financing which is a very attractive proposition to global manufacturers (see China auto industry).

Critical Success Factors in the Automotive Market

The last few years have seen the emergence of the Japan auto industry as a major global force. Operational efficiency, product differentiation and customer satisfaction were the key factors in their success

The automotive market is a mature market but the success of auto companies will depend on the strategies they adopt with the emerging markets. Localization and flexibility are the key components in this respect.
Companies will have to stay competitive to survive in the still growing and ever changing automotive market.

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