Global Automobile Village - Passenger Cars

Automobile is one of the largest and fastest growing sectors of the global economy; automakers manufacture passenger cars, trucks, commercial cars, buses, two wheelers, three wheelers and many more. In this discussion we will be limiting our self to passenger cars.

Automobile Industry Snapshot

In the mid-2000s, United States was the worldwide leader in the motor vehicle industry closely followed by Japan and Germany in third position. Above 50% of the global sales was contribution of top six companies (GM, Toyota, Ford, Daimler Chrysler, Volkswagen, and Honda).

Geographically industry can be classified into grownup markets (covering Japan, North America and Western Europe, accounting for major global motor vehicles activities in terms of production and sales), and growing or rather emerging markets (Asia-Pacific region, Latin America, Middle East, and Eastern Europe, which are expected to deliver all of the future growth to this industry).
Automobiles world wide are facing intense competition (of course, saturation of grownup markets is one of the major cause) thus forced most of the manufacturers to realign their operations, improve production capacities optimally as well as efficiently and look for less expensive resources in order to reduce costs, redesign product development and quality standards, conduct large market research to understand changing consumer preferences and look for cross border markets to take benefit by sourcing less expensive components as well as labour and reach to the remotest customer.
Markets
As mentioned earlier Global market can be divided into two categories –
1) Grownup Markets (Control over 85% of Global vehicle production)
North America , Japan & Western Europe
2) Emerging Markets
Pacific Rim (exclude Japan) , Eastern Europe & Latin America

Grown-up Markets
North America
For long time North American automobile industry was dominated by General Motors (GM), Ford Motor Company and Daimler Chrysler. This market observed intense competition between domestic manufacturers and foreign players to gain their part of market share. Market share of U.S. Automakers observed intense fall from 90% in 1970’s to almost 54% by 2000 (excluding cars manufactured by foreign manufacturers in U.S. production facilities). Light truck market share of U.S. manufacturers observed a fall from 85% to 79% in 2004 (although this figure of the Truck sales was inflated in part by the extreme popularity of sport-utility vehicles).

Japan
In 2004, Japan accounted for 30.9 percent of the global market and Japan exported more than 40 percent of total production. The Japanese automotive industry was dominated by six domestic players: Toyota, Nissan, Honda, Mitsubishi, Mazda, and Suzuki.

Western Europe
The European automobile market, largely include seven major western industrialized nations. Leading nations in this block were -
Germany was the leader third-largest automobile producer in the world.
France with Renault & PSA Peugeot – Citroen SA
and Italy with FIAT

Emerging Markets

Asia-Pacific
Most volatile emerging market in 1990s was the Asia-Pacific region, excluding Japan. China and India, two most populous nations on earth, most watched markets on the globe underwent economic reforms throughout the 1990s and expected to increase buying power and open markets to international competition thus China and India are the most promising future markets on globe hence on the wish list on the platter of all of the automobile manufacturers of globe.
Exponential growth certainly was observed in India, where in 1998 some 950 million populations own fewer than 6 million registered automobiles. India held small share of the global market, and sales passed 1300,000 passenger car units in 2006 led by Maruti Suzuki, Hyundai Motors, Tata Motors and Mahindra & Mahindra, among which Tata Motors and Mahindra & Mahindra as two of the three fastest growing automakers with Tata Motors acquiring Jaguar and Land Rover from the Ford’s list of companies.
South Korea becomes the world's seventh-largest producer of vehicles and this was due to success of Hyundai Motor Company, largest car maker in South Korea and amongst top ten in the world.
Thailand's automotive industry was also gearing up.

Eastern Europe
At the fall of communism in Eastern Europe, analysts predicted that most domestic firms, which were earlier protected from competition, would either cease to exist or be acquired by established foreign automakers. By early 1990’s, German automakers Bayerische Motoren Werke (BMW) and Volkswagen, also U.S. giant General Motors, had established transplants in Eastern Europe.

Latin America
Mexico, Argentina, Chile, Venezuela, and Brazil were undergoing economic reforms, and provided a combined market of 125 million consumers. Competitors in the Latin American market sold 2 million vehicles annually in the early 1990s. Chile imported +50,000 automobiles annually during early 2000’s largely from Japan and Korea.
GM, Ford and Daimler Chrysler and Volkswagen and some other manufacturers established production facilities in Mexico and Brazil.
The main advantage of Latin American production was inexpensive labor, North American Free Trade Agreement (NAFTA), hence reduced trade barriers between the U.S., Canada, and Mexico, and thus making these market more attractive to auto manufacturers. Mexico was the tenth-largest producer of motor vehicles in the world.

Customer Empowered

Customer power are growing and he is demanding everything from more choices to extra features and that too at lower cost , as a response to demand of customer manufacturers were forced to lower prices in spite of increasing cost of resources like steel and fuel to meet competition and ever increasing sales targets.

Environmental Awareness

Growing environmental concerns worldwide and seriousness of states towards the issue also prompted manufacturers to incur research and development costs in order develop environment friendly rather less harmful carriers, in this area Toyota was leading with "Prius" (gas/electric hybrid sedan), Honda also came up with Civic Hybrid and several other manufactures are working hard towards raising the bars. Public at large also understands the concern and thus as an initial response (registrations for hybrid electric vehicles in the United States were 81 percent higher in 2004) was phenomenal. The Toyota Prius captured 64 percent of that market while Honda Civic Hybrid took 31 percent of the market among registered hybrid cars in 2004.