1. Executive Summary
3. Facts Bearing on the Problem
1. Executive Summary:
The German automotive industry with about 720,000 jobs is one of the biggest industries and dominant employers in Germany and one of the biggest automotive industries in the world (Herbst, 2009). With brands like Mercedes Benz, Volkswagen, Opel, BMW, Audi and Porsche this industry is major in car manufacturing and technology. According to Taylor (2010) Volkswagen “is the No. 1 automaker in Europe, the No. 1 foreign automaker in China, and currently ranks second in Brazil”. In most cases German cars are more expensive than foreign, especially Asian, imports. Therefore the client base in that industry has an attractive, above average income. With the price advantage the Asian car industry is also a big competitor. Growth rates are continuing to rise after a massive decline during the worldwide financial crisis. Future development potentialities are renewable energies, electronic cars, and hybrid or hydrogen powered engines. Potential threats are government regulations on CO2 emissions and a possible general speed limit on the “Autobahn”, the German highway system which would decrease sales for the big German manufacturers and increase sales for cheaper imports. This industry has a lot of growth potential and a lot of development possibilities. Based on the facts the best decision would be to take a client from the German automotive industry. 2. Purpose:
The purpose of this report is to analyze the German automotive industry and conclude whether or not it could be a profitable industry to take on a client in. This conclusion will be drawn up from key facts that will also be provided in the report in order to accurately ensure a quality recommendation.
3. Facts bearing on the Problem:
Aforementioned Trade Association
Association of Automotive Industry
Phone: +49 30 897842-410
The German automotive industry is represented by the Association of Automotive Industry (Verband der Automobilindustrie, VDA) located on 35 Behrenstrasse, Berlin 10117, Germany. They can also be contacted at +49 30 897842-410. This organization has been founded in 1901. They provide information and publications just like annual statistics and research (http://www.vda.de/de/publikationen/index.html) and work closely together with manufacturers and suppliers. According to NAIC the automotive industry has a code of 336111. http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=336111&search=2007%20NAICS%20Search
The German automotive industry could be affected by several trends. Demand for imported cars ascends, as the German middle class shrinks and the gap between rich and poor gets bigger and bigger. People are looking for cars that are affordable to buy but also affordable to own, since gas prices (about $ 7.40 per gallon in Germany) and insurance are quite expensive these days. German brands increased new registrations in 2009 by 12,9 % whereas Hyundai increased by 76.7 %, Fiat by 80.7 % and Dacia even increased the new registrations in 2009 by 23.9 %. The leading German brand was Opel with 31.9 %. Mercedes even had a decrease by – 13.9%. (Association of Automotive Industry, 2010) These numbers support the fact that small cars are demanded and the big German cars and engines become hardly affordable with an average income. The big German manufacturers followed that trend by introducing smaller cars to their product mix. Mercedes came up with the “Smart”, BMW with the “Mini”, Opel with the “Opel Corsa” and Volkswagen has the “Polo” and other small models. Ferdinand Dudenhoeffer, a major automobile expert said “For the first time ever, German manufacturers sell more cars in China than in Germany this year. This is a sign that China becomes the center of the automotive industry...
References: BBC news online. (2007). Merkel resists speed limit push.
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