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the impact of globalization on automotive retailers

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the impact of globalization on automotive retailers

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    1. The Impact of Globalization on Automotive Retailers Professor Timothy K. Gilbert Northwood University West Palm Beach, Florida

    3. Germanys manufacturing sector at its fastest rate for over 1 ˝ years in January, boosted by a big order intake and new hirings, suggesting domestic activity is picking up. More recently evidence is emerging that consumer demand is improving, export growth and investment are increasing. New plants include Kia, Slovakia, late 2006, Hyundai CZ mid 2008, PSA Slovakia late 2006Germanys manufacturing sector at its fastest rate for over 1 ˝ years in January, boosted by a big order intake and new hirings, suggesting domestic activity is picking up. More recently evidence is emerging that consumer demand is improving, export growth and investment are increasing. New plants include Kia, Slovakia, late 2006, Hyundai CZ mid 2008, PSA Slovakia late 2006

    4. Three Dynamics to Watch The Quality/Cost Equation The Cost of Bringing New Product to Market Versus Consolidation The Need for Dynamic Leadership

    5. Quality Has Improvedfor all Brands

    6. But Production Costs Vary Greatly

    7. Average Man Hours toProduce a Vehicle Nissan Toyota Honda General Motors Chrysler Ford Source: the Harbour Report North America 2006 28.46 hours/vehicle 29.4 hours/vehicle 32.51 hours/vehicle 33.19 hours/vehicle 33.71 hours/vehicle 35.82 hours/vehicle

    8. Plant Capacity Utilization Nissan Toyota Honda General Motors Chrysler Ford Source: the Harbour Report North America 2006 95% 106% 91% 90% 94% 79%

    9. Overall Profit Per Vehicle Nissan Toyota Honda General Motors Chrysler Ford Source: the Harbour Report North America 2006 $2,249 $1,587 $1,215 ($2,496) $223 ($590)

    10. Can Domestic Manufacturers Get Their Costs Under Control and Still Produce Comparative Quality Vehicles?

    11. Without Losing Additional Market Share?

    12. Market Share 2004 GM: 27.61% Ford: 19.39% Chrysler: 13.08% Toyota: 12.21% Honda: 8.27% Nissan: 5.07% VW: 1.98% Other: 12.38% 2005 GM: 26.30% Ford: 18.34% Chrysler: 13.60% Toyota: 13.34% Honda: 8.63% Nissan: 6.36% VW: 1.81% Other: 11.62%

    13. Change in Market Share 2004 GM: 27.61% Ford: 19.39% Chrysler: 13.08% Toyota: 12.21% Honda: 8.27% Nissan: 5.07% VW: 1.98% Other: 12.38% 2005 GM: (1.31%) Ford: (1.05%) Chrysler: .52% Toyota: 1.13% Honda: .36% Nissan: 1.29% VW: (.17%) Other: (.76%)

    14. Changes in Market Share Reflect Buyers Who Have Switched Will buyers who have switched from domestic brands to foreign brands stay with them? Can domestic manufacturers make good quality product at the same cost as foreign manufacturers?

    15. New Product Cost Versus Consolidation

    16. Manufacturers are continually pushed to introduce new product This is true for at least three reasons: 1) New technology pushes buyers 2) Consumers want fresh, new product 3) Competition gains share with new product

    17. Nissan/Renault an Example “The two companies’ alliance, in its eighth year, has been a rare success among the partnerships formed in a wave of consolidation in the auto industry over the past decade.” (Automotive News) Nissan-Renault announced a combined drop in sales for 2006 of 3.6% (Automotive News) “Sales suffered last year due to a dearth of new products at both brands.” (Automotive News)

    18. The cost to bring a new product to market is enormous; some manufacturers will not be able or willing to spend enough to stay ahead of their competition.

    19. Look at Ford and the F-150 Pickup Truck As Ford readies a new version of its flagship product, it has been faced with stiff competition from: Chevrolet and its new Silverado Truck, Honda and its new Ridgeline Pickup, Nissan and its Titan Pickup, and Toyota and its Tacoma Pickup Truck, Dodge and its Ram Pickup. Several of these products did not even exist ten years ago.

    20. All of This Will Filter Down to the Dealers Some manufacturers will consolidate Some manufacturers will eliminate certain segments Some manufacturers will go out of the market

    21. The Winners Will Be Brands that can make better quality products and are cost effective Brands that can continually introduce new, innovative products Brands that can create strong customer loyalty

    22. Leadership is the Key

    23. Working Harder is Not Enough Knowing where to go and how to get there Thinking just over the horizon not from the rearview mirror Creating loyal customers by building a brand image Applying sound business principles to the market Northwood is aptly positioning its students to meet these challenges

    24. Loss of Market Share and Consumer Confidence Increasing government involvement in our industry

    25. Dealers Have Historically Been Aggressive and Innovative Dealers Have Always Been in Touch With Their Local Communities Dealers Have Been Able to Withstand Economic Downturns Dealers Have Been the Key Link to the Market

    26. In the Future Successful Dealers Will Link Strong, Dynamic Leadership to Brands that Offer Fresh, Cost-Effective Product

    27. Thank You

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