‘The European Car Market Environment’
Written & researched:
For: Stuart Challinor
1. – Intentions of the report
2. – The European Car Market Environment
3. – The Micro-environment:
1. – Suppliers
2. - Distributors
3. – Customers
4. – Competitors
4. – Situation review of the European Car Manufacturing Industry 1. – Comparison to US and Japanese market
5.0 – Drivers of Change
6.0 - The Macro – Environment
6.1 – SWOT analysis
6.2 – Pestle analysis
7.0 – Conclusions and recommendations
• The EU automotive industry is the single largest automotive production region in the world, accounting for around 34% of global sales, and which contributes 7.5% to the manufacturing section within the Union. The EU-15 industry makes an enormous difference to its economic prosperity. This is manifest in its scale of employment, output, investment, trade and technological change. • The Microenvironment surrounding the industry allows room for manoeuvre in terms of its capacity to make decisions about its suppliers, distributors, customers, and competitors. -Suppliers – The supplier value chain has been drastically restructured and consolidated since the 1970s and 1980s, in an effort to improve quality and competitiveness, which has resulted in increased supplier responsibility, profitability, quality, integration with manufacturers and increased specialisation. -Distributors – The distributor network has been liberalised also through the introduction of the new 2002 Competition Commission report, which emphasises competition, autonomy, increased bargaining power and independence from manufacturers. -Customers – European customers enjoy differentiation, and have consumer preferences towards novelty cars that are ahead of the game in a technology sense, in fashionable, safety, performance and environmental terms. -Competitors – The European market has both internal and external competition from outside the Euro Zone (especially the US & Japan). The number of independent car manufacturers has decreased through M&A, into a smaller group of large manufacturing groups who have access to established brands and markets. • Currently, Germany & France are the two main players in production, and the market is dominated by European brands which is a competitive advantage. Increased investment in R&D (34%-38%) heralds the continuous importance attached to consolidation into supplier industries, and with a 2003 net trade balance of 33.515million Euros, the times appear stable. • Car price differentials & deviations in the EU-25 has reduced since 2003, yet prices for specific models are still drawing huge difference between the expensive member states (Germany) and the cheapest (Greece). • To compare the US & Japanese industries to the EU-15 draws particular differences: - More outsourcing in EU-15 than in either US or Japan,
- Unmatched major European segment for diesel-powered cars, - Fewer cars per household than the US, and,
- US & Japan have more percentage value added associated to their manufacturers due to different supply strategies. • The drivers of change are both variable and constant, and precautions can be taken to offset any detrimental effects of demand, economy, capacity, or environmental legislature, which can be used to drive the EU industry forward. • SWOT & PESTLE analysis display the areas of strength and weakness, and offers advice on future strategies and opportunities of production and organisation. • In essence, the EU industry is performing competitively, with new allowances for flexibility and capacity. Positions in emerging markets are promising, with hope of innovating new and radical technology & fuel alternatives taking full attention currently. However, if the industry wants to remain competitive, steps...
Bibliography: Figure 1: shows that Europe accounted for around 32% of global vehicle production in 2003 (-4% in productivity since 1998).
Figure 2: Ranking of top 20 Car manufacturers (2002).
Table 1: Market Share of car and engine types (2002)
| |Passenger trucks |Diesel-powered vehicles |Mini car (< 0.6 |
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