Western European Auto Manufacturers

The World’s Biggest Automotive Markets in 2002 by passenger car registrations:

1. U.S. (8.1m)2. Japan (4.4m)3. Germany (3.3m)4. U.K. (2.6m)5. France (2.1m)6. Italy (2.3m)7. Spain (1.3m)8. Korea (1.2m)9. Brazil (1.2 m)10. Canada (0.9m)

http://www.mind-advertising.com/sectors/sector_cars.htm

World’s Top 15 Manufacturers 2002 by Global Vehicle Production

(inc. sub-brands)

1. GM 8.3m2. Ford 6.73. Toyota 6.64. Volkswagen 5.05. DaimlerChrysler 4.56. PSA Peugot-Citroen 3.37. Honda 3.08. Nissan 2.79. Hyundai 2.610. Renault 2.311. Fiat 2.212. Mitsubishi Motors 1.813. Suzuki 1.714. BMW 1.115. Mazda 1.0

http://www.mind-advertising.com/sectors/sector_cars.htm

"Overall production levels have followed the economic cycle with a low point in 1993 and a steadily rising trend thereafter. Two countries, Germany and France, have historically accounted for roughly 50% of vehicle production and despite its high cost base Germany increased its share during the 1990s with strong growth in particular from the Volkswagen Audi Group. The UK experienced the strongest growth in production over the period while Italy was the only major producer to see volumes fall as the Fiat Group's traditional dominance of the small car market came under threat from Asian and Japanese competition.”

European Motor Vehicle Production

http://www.autoindustry.co.uk/statistics/production/analysis#europe

Rank Manufacturer Location of Plant Vehicles built per employee

1 (1) Nissan Sunderland, UK 99 (95)

2 (4) Renault Valladolid, Spain 89 (77)

3 (-) Toyota Valenciennes, France 88 (-)

4 (2) Ford Saalois, Germany 87 (87)

5 (6) GM Antwerp, Belgium 83 (76)

6 (12) Renault Novo Mesto, Slovenia 82 (69)

7 (13) Honda Swindon, UK 82 (67)

8 (3) Toyota Burnaston, UK 81 (87)

9 (5) GM Eisenach, Germany 80 (77)

10 (7) GM Zaragoza, Spain 80 (75)

2001 figures in brackets

Top 10 most productive car plants in Europe 2002

Source: World Markets Research Center's European Automotive Productivity Index

BRUSSELS, Belgium -- West European car sales rose strongly in October, shrugging off gloomy economic forecasts in the wake of the attacks in the United States, the European Automobile Manufacturers' Association said Thursday. Passenger car registrations in western Europe climbed to 1,205,924 units, up 8.3 percent on October last year, and follow a 26.4 percent jump in U.S. auto sales in the same month. In the 15-nation European Union, registrations were up 8.7 percent. ACEA noted that October this year had one more working day than last year but said lower interest rates and consumer attitudes toward the forthcoming introduction of the euro may have been factors in the European data. "These results are good news, especially in the current economic environment and given the previous forecasts," it said. Automakers on both sides of the Atlantic have announced hefty job cuts following Sept. 11 as the sector geared up for what it believes will be a tough year ahead. Some manufacturers in France, Germany and Italy announced production cuts last month.

Friday, November 16, 2001Global Automotive ReportEuropean sales increases parallel strong U.S. totalsBy Detroit News staff reports and wire services

http://www.detnews.com/2001/autos/0111/21/b03-345065.htm

European Automobile Industry Experiences Boost in Demand

PRESS RELEASE

(Essen, 12 August 2003)

•French and Asian brands are the winners on the western European auto market in the first seven months Great anticipation for new models from German manufacturers at the IAA Export of German cars remains at previous year's level

Car production in Germany to exceed the previous year's result

French and Asian Brands Usher in Upswing in Western European Auto Industry.

Types of Autos Economy

Sports Luxury Trucks Buses

Economy (AKA Compact)

Volkswagon’s Beetle

VOLVO

Sports

Ferrari Porsche

Jaguar

Luxury

BMW-5 series

The Queen’s Bentley

Trucks

Mercedes

Buses

Mercedes

The Big Players

1. Germany2. U.K.3. France4. Italy5. Spain

Germany Today

Germany’s economic strength has been based on car production to a great extent. The automobile industry is one of the dominating sectors because many economic activities rely on and are linked to automobile production (i.e. tire industry, plastics industry, metal processing). If you include suppliers, car services, garages or retailers, a total of about 5 million employees (1 out of every 7 jobs in Germany) depend on the success of the automobile industry. http://www.wlu.ca/~wwwgeog/special/vgt/English/ger_mod4/unit6.htm

Germany's auto industry is brimming with confidence and cash -- and even greater ambition. It has leapt vigorously from the hospital bed to which it was confined after its world collapsed in 1993, following the post-reunification boom of the late 1980s and early 1990s. Then total vehicle production plunged 22% within a year.

Vehicle production in Germany last year amounted to a 4% increase over the previous year. Exports were at an all-time high. The automotive sector, accounting for one-fifth of the country's exports, ended the year with a trade surplus of $46 billion over the value of imports. http://www.findarticles.com/cf_atinds/m3012/n9_v178/21155119/p1/article.jhtml

Germany’s Success

German Cars

Audi

BMW

Volkswagen

Porsche

Focus on German Firms

1. Volkswagen (ranks 4th) is possibly Europe’s premier carmaker. Brands include VW itself, Audi, Seat, Skoda, Lamborghini and Bentley. VW was “formed in the dark days of Nazi Germany.”

2. DaimlerChrysler (5th) is the result of a merger of DaimlerBenz and Chrysler. Daimler was known for emphasizing luxury and quality over affordability, but now it can diversify with Chrysler onboard.

3. BMW (14th) is highly competitive in the luxury market; Lexus and Audi are the nearest competitors. The company has re-offered the Mini-Cooper and has Rolls-Royce to top all luxury cars.

http://www.mind-advertising.com/sectors/sector_cars.htm

Current Events : Mercedes

•When Mercedes ( a German based company) introduced the M-class sport utility vehicle into the U. S. market, executives also decided to build the vehicle there.

•Mercedes main plant in the United States in located in Tuscaloosa, Alabama.

•Many other European Car companies are following Mercedes’ lead and are beginning to build plants in the United States to save money.

Daimler-Chrysler Merge

A “merger of equals” or an acquisition?Questions that have risen lately regarding the merger are related to this claim.

"We do not look at the management board in terms of nationality," he said. "I do not think it would be fair to think of nationality when we are trying to run an international automotive company and trying to do the best job."Geocentric Staffing

Some have suggested that this “merger” was more of a take over citing the fact that the company is under German control with 8 board members from Germany and only one from America as of 2004.

Defending the position of the board Chairman Juergen Schrempp said,

http://asia.news.yahoo.com/031210/afp/031210224858eco.html

Focus on United Kingdom

The U.K. ranks 4th among the world’s biggest automotive markets in 2002.

The automotive industry contributes greatly to the economy there.

However, U.K. no longer has a British-owned firm due to the numerous mergers of the late 20th century.

http://www.mind-advertising.com/sectors/sector_cars.htm

The Mighty Mini

•German luxury carmaker BMW launched its assault on the small car market with the reintroduction of the British 1960s icon, the Mini.

•BMW plans to go head-to-head with the Ford Ka, the Fiat Punto and DaimlerChrysler's Smart city car.

The Mini has become popular in the U.S. thanks to BMW’s many promotions and because of endorsements such as being featured in The Italian JobThe Italian Job.

http://edition.cnn.com/2000/WORLD/europe/UK/10/04/mini.end/index.html

Marketing the Mini

V.S

Cars in America

Cars in Europe

Since the Mini Cooper is such a radically different car, both in style and size compared to what most U.S. consumers are used to, BMW had to come up with a powerful marketing scheme in order for their new design to succeed here in America.

Mini Mania!!!

"The MINI is clearly an international success story. Customer reaction around the world has been astounding. People have been camping outside dealers in the United States for a test-drive and showrooms in Japan had to be closed for a while to cope with the numbers of people wanting to see the car."Dr Norbert Reithofer, BMW Board Member for Production

I My Mini!

http://www.mini2.com/news/news122.html

Not so “Mini” numbers

•The MINI range will be available in 50 markets throughout the world by the end of 2002, with the United States, Europe and Japan being major markets for the car. About 75 per cent of sales are expected to be for the MINI Cooper and MINI Cooper S models.

•In the UK market, MINI sales in the first quarter of 2002 continued to rise with 10,595 units delivered to customers out of total sales of more than 25,000 MINI’s throughout Europe

•MINI USA is expected to sell 20,000 cars in its first full year through a network of approximately 70 MINI dealers, when fully established.

http://www.mini2.com/news/news122.html

Current Events: Focus on France

The French automobile industry is the world's fourth largest, playing an essential role in the national economy due to its high visibility as well as the large number of branches and jobs directly related to it. About 7.2% of the working population is totally or partially concerned with the automobile industry (more than 2.5 million persons).

http://www.aisne-developpement.com/gb/auto.html

Current Events: France

MDI MiniCat compressed air-powered car is said to go 125-170 miles on 25kWh of electric power and at freeway speeds.

MDI air car is based in France. They claim that their air can can run a four passenger car or a minivan or a pickup on nothing but compressed air.

French aircraft maker Dassault has announced that they will team up with Hydro-Quebec to produce an electric car, available as of 2006. http://slashdot.org/articles/04/03/05/2149253.shtml

France, Cont.

Paris hosts the “Mondial de l’automobile” Every 2 years Founded in 1898 “Cars exhibited by virtually every

constructor on the planet.

Source: www.france.diplomatic.fr/label_france/ENGLISH/ECONOMIC/AUTO2/auto.html

Focus on French Firms1. “PSA Peugot-Citroen is France’s biggest carmaker and

the #2 across Europe.” PSA ranks 6th worldwide. “The company’s traditional focus on its domestic market… have allowed Renault to threaten its dominance.” Now PSA is attempting to create an international market.

2. Renault (ranks 10th worldwide) has just recently joined the international arena with the acquisition of Nissan (Asia) and Volvo (Sweden). in the late 20th century.

http://www.mind-advertising.com/sectors/sector_cars.htm

Focus on the Italian Firm

Fiat (11th) is the only Italian-owned firm. The firm “plays a dominant role in the Italian economy.” Fiat has even expanded to industries such as media and insurance services. However, recently, Fiat has suffered losses and job cuts. GM acquired 20% of Fiat’s passenger car division in 2000.

http://www.mind-advertising.com/sectors/sector_cars.htm

Struggling Spain

•The Spanish automobile industry had a late start. Although the country proved capable of short production runs of high- quality vehicles during the first third of the century it never managed to build up its own industry, unlike Great Britain, France, or Italy. •In Spain, the only major car company is called SEAT which operates in Barcelona. However, SEAT is owned by Volkswagon which is headquartered in Germany.•Spain ranks 7th in terms of the biggest auto markets.

http://netec.wustl.edu/WoPEc/data/Papers/upfupfgen470.htmlhttp://www.pommert.de/virtualia/garage/

Current Events: Spain2004 (Mar.): Ten terrorists bombs exploded almost simultaneously during the morning rush hour in Madrid, Spain, killing 190 and injuring more than 1,800.Result of the terrorist attacks:

1) Socialist party representative was elected

2) Troops removed from Iraq

3) Socialist ideas introduced into Spanish government

4) Auto industry?

-controls

-regulations

-restrictions

-room from growth and development?

http://www.yaleherald.com/article.php?Article=3122

Economic Model?

Oligopoly

Why is the auto industry an oligopoly?

Strong Entrance Barriers– Economies of Scale– High Investment

Government Protects National Industry– By Tax Breaks– By Other Incentives

The competitive industry pressures automakers to develop strategies around

two objectives: Cost Control

-Seek new economies of Scale

-Increase size of industry groups

thereby spliting costs over a broader scale of production

Product differentiation-Use Innovation

-Create new products(Lexus, Infinity, Acura)

- External Growth(Ford>Jaguar & Aston Martin, GM>Saab,

VW> Rolls Royce & Lamborghini

Diesel Engines

Regulators have passed a 35mpg average requirement by 2013.

Diesel Engines offer better fuel economy and the demand is rising in Europe.

The Big 3 is struggling in the mpg aspect of the industry.

Challenges with “Moving the Metal”

The market for autos is flooded, it reached the maturity phase many years ago.

Dealers offer rebates and free insurance

Discount reach up to 30%