Future of Car Industry Essay

Future of Car industry

 

Introduction

The car or automotive business today is profoundly influenced by globalisation and information technology. It can be noted that most car and parts manufacturers are merging, outsourcing of component design is emergent, brands are changing and the giant car or automotive industries are expanding deeper into providing financial services to their clients. Most successful car or automotive industry firms have become totally global as car dealership holding giants have been able to acquire the best dealers in major markets as well as national chains have taken over the used car business. Clients become more dependent on the convenience of the Internet for information before purchasing cars and automotives.

In addition, car or automotive manufacturers are utilising the latest in the information technology methods to manage their supply chains and replenish their inventories (Research and Markets 2004, p.1).  The onset of globalisation and IT, in turn, pose great competitive competitions for the car or automotive industry. According to KPMG International (2006) these demand a more expansive and accessible strategy while cutting costs and improving synergies through alliances with foreign partners. In addition, global market position demands the right strategic partner, assessment of the market as well as management of the cultural impact.  Deciding what part of the market give emphasis, knowing where to improve profitability and understanding the related chances are all part of the new reality for car industry today.

Future of Car industries

            There are actually macro challenges that face automotive industry in the next years, globalisation, product differentiation, product development, green marketing supply chain restructuring, and marketing and distribution (Boos Allen and Hamilton 1999). Car or automotive manufacturers as well as their will continue to be challenges by different environment aspects, tough global competition, and more demanding clients. In addition, shortages of capital as well as skilled human resources and time pressures to do more, quality, and yet faster exacerbate their challenges (Formidable Changes 2000, p.13). As car industries vie for market share as well as added manufacturing capacity to be able to establish where they hope to sell, they lose the economic returns to themselves and worsen and intensify the overcapacity problem on a larger scale. In addition,, emerging market clients increasingly demand the same levels of quality as well as technology as clients in mature markets making the local content rules and supply chain economics dictate that suppliers build and generate their own manufacturing close to assembly facilities. The context of world car  with one common design, customised at low cost to local tastes and requirements, and is elegant and appealing still challenges most car or automotive manufacturers today (Boos Allen and Hamilton 1999, p.4; Formidable Changes 2000, p.13). Secondly, the industry must offer differentiated products that suffice customers’ fickle wants and requires in a particular locale at a point in time. The challenge is to be able to understand car client’s preferences and respond accordingly thru a method and system that would address both buyers’ functional as well as expressive attributes and make them appreciate and value the product. Thirdly, product development challenge lies along two dimensions for the car industries in the future.  First is to learn how to distinguish the parts of the car where car clients are indifferent from those that are visible and important to creating and preserving brand identity. Second is to reduce the cost development so as to be able to make product differentiation more affordable (Boos Allen and Hamilton 1999). The use of derivatives from existing platforms results in shorter time periods required to develop new products and allows producers to more quickly adjust to shifts in car clients preferences (Andrews 1999, p.19). Furthermore, car or automotive players have been preoccupied with reducing their overall levels of vertical integration, both to ensure that purchased parts are world-class and to reduce their fixed costs of assets and labor as well as reducing the number of industries that supply directly to the car or automotive company and delegating some of the routine tasks of purchasing, production scheduling, and inventory management to their “Tier One” suppliers. In addition car industries should consider supplier consolidation which is a potential solution but suppliers must develop relevant new capabilities in order to transform themselves from assemblers or integrators into system solution providers. This also entails surpassing the car or automotive company customer into the ultimate customer in order to understand their wants and requires for an automotive system, such as suspension, braking, or seating and their perceptions of value. Lastly, two main method and systems in creating and capturing customer value which require radical changes have emerged in the industry. One is extensive participation in the stream of post-assembly transactions relating to a vehicle, beginning with the initial retail sale and ending at the recycle center. The other is building and exploiting more durable relationships with customers over their vehicle-buying lifetime (Boos Allen and Hamilton 1999, pp. 4-7).  To keep and maintain the value, car or automotive makers should become more capable marketers and take control of the purchase experience thru direct contact with the customers

 

Reference

Andrews, D 1999, Automobile Industry Outlook, Auto Asia, v viewed February 17, 2010, <http://www.auto-asia.com/finance/autooutlook.pdf>.

 

Automotive 2006, KPMG International, Sweden, viewed February 17, 2010 <http://www.kpmg.com/Industries/IM/AUTO/>.

Booz Allen and            Hamilton, Inc., Challenges Facing the Global Automotive Industry 1999, viewed February 17, 2010 <http://www.boozallen.com/media/file/56733.pdf>.

Formidable Challenges for Auto Industry’ 2000, USA Today, August, p. 13.

Research and Markets: The Automobile Industry Almanac 2005; Globalization is   in Evidence Throughout the Automobile Industry’, 2004, Business Wire,  viewed February 17, 2010     

 

 

 

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