Passenger Cars: A Global Strategic Business Report
San Jose, CA (Vocus/PRWEB) February 14, 2011
The automobile industry has been one of the worst hit industries by the recession. Demand for cars witnessed hurting declines exacerbating the already existing woes of excess production capacities. The soft business climate, which characterized the industry even before the recession, worsened even further with the recession inducing punishing falls in auto sales, dragging industry’s major giants into the red. Global overcapacity reached its peak during the 2007-2009 economic recession when demand patterns crumbled across regional markets creating a huge supply glut in the international market. Plant closures, capacity idling, lower capacity utilization rates, and scaling back of operating capacity dotted the landscape during this period. The bailout packages offered as succor to the bleeding companies Chrysler, Ford and GM, stand testimony to the deterioration of the automotive sector. Key factors citied as responsible for declining car sales include restricted access to credit, decline in purchasing power, rising levels of unemployment, reduction in household wealth, falling consumer confidence index, decline in per capita automobile travel and volatile fuel prices, which although currently jumpy are skewed more sharply for future upward corrections. All of these factors resulted in postponements of purchases, which translated into declines in new vehicle sales/registrations. Tight liquidity lengthened the replacement cycle as consumers held on to their old cars thereby resulting in reduced spends on new cars and higher spends on maintaining old cars. Passion for expensive SUVs, especially, witnessed significant cooling.
The financial hardships resulting from the recession has triggered changes in consumer purchasing patterns for durable goods. Tight liquidity and financial constraints have redefined value and have induced simplicity in lifestyles. With one of the inescapable symptom of the recession being declines in consumer spending and purchasing power, a seismic change in attitude in currently underway with consumers cutting down on spending on products which are considered as luxury. The prolonged recession has interestingly induced a long-term shift in consumer perception towards performance, price and value offered by products, which is expected to linger on even into the post recession period. Demand has therefore considerably weakened for sports cars. This scenario is especially pronounced in the developed markets like the United States where the recession has been the sharpest, shaving off personal wealth to historical levels. The lull in the sports car segment can be thrown into sharp relief by the announced plans to discontinue Mazda's RX-8, the segment’s only rotary engine based automobile, in the United States. Manufacturers of all types of sports cars have witnessed over 50% decline in sales over the period 2008 through 2010. Brands which have taken it on their chin include Mazda Motor Corp.'s MX-5 Miata, RX-8, Mitsubishi Motors Corp.'s Eclipse, Nissan Motor Co. Ltd.'s GT-R coupe, and 370Z, and General Motors Co.'s Chevrolet Corvette, and Chevrolet Camaro.
With the recession now having played out its part in full proportions and with the automotive industry having hitting rock bottom, a rebound is now seen as inevitable. Growth will be encouraged by the resurgence in fundamental macroeconomic growth drivers. While production cuts, continuous trimming of manufacturing capacities, and elimination of value added features to produce low-cost vehicles, have all been popular short-term strategies to cope with the recession, future strategies to emerge above the turbulence will essentially be skewed towards focus on green cars, and next generation automotive technologies. In the immediate short-term, the burden of overcapacity is expected to ease as demand recovers, and sales of new vehicles increases drying up the inventories in the supply chain. Stronger levels of demand recovery in the developed markets will help ease current overcapacity issues. Replenishing of depleting inventories in the supply chain in the post recession period, as a result of resurging production activities on wings of improving vehicle demand will require stronger communication chain between the consumer, dealer and the manufacturer, to ensure field inventories are carefully tracked to maintain supply and demand balance.
Post recession, the world market for Passenger Cars will receive strongest growth impetus from developing markets such as Asia-Pacific, Latin America and Eastern Europe. Asia-Pacific in particular is the fastest growing regional market for passenger cars, both in terms of sales and production. Thriving economies, rapid infrastructure development, growing employment opportunities, rising income levels, and increasing spending power in major countries are driving high demand for passenger cars in the region. Shift in automotive production to low cost destinations such as China and India, and increased instances of overseas players entering into joint ventures and alliances with domestic players will additionally boost production and sale of passenger cars in the region.
Major players in the marketplace include BMW AG, Chrysler Group LLC, Daimler AG, Fiat, Ferrari S.p.A, Ford Motor Company, General Motors Corp, Honda Motor Co Ltd, Hyundai Motor Company, Mitsubishi Motors Corp, Mazda Motor Corporation, Nissan Motor Co Ltd, Porsche Automobil Holding SE, PSA Peugeot Citroen, Renault Group, Suzuki Motor Corporation, Toyota Motor Corp, Volkswagen AG, Audi AG, Škoda Auto, Volvo Car Corporation, among others.
The research report titled “Passenger Cars: A Global Strategic Business Report” announced by Global Industry Analysts, Inc., provides a comprehensive review of market trends, issues, drivers, company profiles, mergers, acquisitions and other strategic industry activities. The single-segment report provides sales and production figures (In Thousand Units) for major geographic markets including the United States, Canada, Japan, Europe (France, Germany, Italy, Spain, The UK, Russia, and Rest of Europe), Asia-Pacific (Australia, China, India, Indonesia, Malaysia, South Korea, Taiwan, Thailand, and Rest of Asia-Pacific), Latin America (Argentina, Brazil, Mexico, and Rest of Latin America), and Rest of World.
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About Global Industry Analysts, Inc.
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