Automotive Industry Analysis - Essay Example

Automotive industry Analysis Industry information The automotive industry is broad, covering the organizations and the Companies engaged in the business of designing, developing, manufacturing, marketing and the selling of motor vehicles. The industry is one of the worlds largest and most productive; it is among the most significant economic sectors, in terms of the revenue generated (Pendrill 4). The automotive industry does not cover the companies that do the business of vehicle maintenance, after the vehicles are delivered to the final consumer. The automotive industry has been one of the major players behind the recovery of the global economy, which had been adversely affected by the recent financial crisis and its financial shocks for the past five years (Pendrill 4). Currently, the industry is worth USD 800 billion, and market analysts predict that the global market for vehicles, particularly that of cars and light vehicles will increase from the current 80 million units bought annually, to reach more than 100 million by 2020 (Pendrill 4). Market analysts are forecasting that that the larger portion of the market expansion will come from emerging economies, including India and China among others. According to the statistics provided by the World Bank, car ownership in these markets stands at 58 cars per 1000 people in China and 18 for India; these figures are not comparable to those of European countries, where the average ratio is more than 500 cars per 1000 people. The high car ownership ration shows that European markets are saturated, therefore will not be the major drivers of market growth for the industry (Pendrill 4). Major players in the automotive industry Ranking of top performers in the automotive industry (starting from No. 1- 6) (Muller 1) In the recent past, the leadership of the automotive industry has featured three dominant players, including Toyota Motors, General Motors and Volkswagen AG. As of April 2013, these three giant players competed against one another, with the target of taking the top place (Muller 1). The race remained tight between the three main players, in the areas of production output and that of sales levels. During the year 2012/13, Toyota made sales of 9.7 million cars and trucks, which gave it a better standing, as compared to General Motors. General Motors, during the same year, sold 9.29 million cars and trucks and Volkswagen sold the least number of units out of the three companies; Volkswagen sold 9.1 million vehicles. However, from a comparison of the revenue levels, the profits made and the value of assets, Volkswagen was the unchallenged winner; VW made higher figures, when compared to the two other main competitors: Toyota Motors and GM (Muller 1). In the area of market value, the company took second position after Toyota Motors. Volkswagen made a profit of USD 28.9 billion, from a revenue base of USD 254 billion during 2012. The value of the assets of Volkswagen was USD 408 billion, irrespective of the fact that the assets, only, had a market value of USD 94.4 billion; the value of the company’s assets was lower than that of Toyota Motor’s assets, which had a value of USD 162.2 billion. Daimler AG was also a close competitor to the three top companies and became number 4; it made sales of USD 150.8 billion, generating a profit of USD 8 billion and the value of its assets stood at USD 212 billion. The company’s assets attracted a market capitalization of 64.1 billion (Muller 1). At 5th position was BMW, which made revenues of USD 98.8 billion. The revenues collected returned a profit of USD 6.6 billion. The assets of BMW were valued at USD 165.5 billion, and its market capitalization stood at USD 60 billion. At sixth position was Ford Motors, which made revenues of USD 134 billion, and profits of USD 5.7 billion (Muller 1). The assets of the company were values at USD 190 billion, and its market capitalization was ranked at USD 51.8 billion. Brief history of the Automotive Industry market leaders Volkswagen AG Volkswagen AG is headquartered in Wolfsburg in Germany. The company was founded in 1937, as a manufactory facility for the Beetle. The company’s production capacity increased rapidly during the 1950 and 60s, which catalysed the acquisitions of 1965; the company acquired Auto Union, which produced the first Audi models after WWII (Volkswagen 1). The company started the production of front-wheel drive vehicles during the 1970s, and its portfolio included the Polo, Passat and Golf. In 1986, the company acquired a controlling stake in SEAT, and in 1994 it acquired Skoda; Lamborghini, Bentley and Bugatti in 1998. Later, in 2008, the VW company acquired Scania, and also Porsche, Ducati and Man in 2012. Much recently, the company launched operations in China, and its operations grew considerably, making China one of its largest markets (Volkswagen 1). Toyota Motors The Toyota Motors Corporation was founded in 1933 as an auxiliary to the parent company, Toyoda Automatic Loom works. The first vehicle brands produced by the company were the A1 and the G1 in 1935. In 1937, the Toyota Company was established as an individual company. During the 1940s and 50s, the company sold its vehicles under the name Toyopet, which was dropped after the company entered the American market; the name was used in other markets unit the 1960s (Toyota 1). During the 1960s and 70s, in reaction to the high chicken tax charged on imported vehicles, the company started operations in the US during the 1980s. During the 1990s, the company widened its vehicle portfolio, including the addition of more luxurious and larger vehicles. In 1967, the company started the production of the Prius, marking the beginning of the production of Hybrid vehicles (Toyota 1). During the 2000s, the company increased its sales levels rapidly, through strategic models, including its entry into a Formula One work teams among other joint ventures. In 2008, its sales surpassed those of GM, which made it the world’s number one automaker. During the 2010s, the company, along with other industry players operating in Japan was affected by a series of natural disasters. General Motors GM was started in 1908, as a holding company for Buick. In 1909, the company absorbed Elmore, Cadillac, and Oakland among others; in 1909, it acquired Reliance Motor Company and Rapid vehicle Company (GM 1). In 1910, Durant lost the ownership of the company to a bankers trust, and later regained control of the company; before his return, he had started Chevrolet Motor Car Company. GM led the sales of vehicles for 77 years between 1931 and 2007; during 2008 to 2010, it was the second largest. The company regained global leadership in 2011. The company has been selling some of its subsidiaries, and struggling with financial issues after 2009, when it filed for chapter 11 bankruptcies (GM 1). Daimler AG Daimler AG is a German multinational company. The company started with the strategic agreement between Benx & Cie and Daimler Moren Gesellschaft (Daimler 1). In 1926, the two companies merged and formed Daimler-Benz AG, agreeing to use the name Mercedes-Benz for their cars. In 1998, the company partnered with Chrysler Corporation, and the new company birthed was DaimlerChrysler AG (Daimler 1). In 2007, the Chrysler group was sold out, which made the name of the company to revert to Daimler AG. BMW BMW is a German company started in 1916, after the restructuring of the Rapp Motorenwerke aircraft production enterprise. In 1918, the company was forced to stop the production of aircraft engines, therefore started the production of motorcycles in 1923. The company’s first car was the DiXi (BMW Group 1). Between 1918 and the late 1950s, the company reverted to the production of jet engines, but was not successful. In 1959, the automotive division was facing financial difficulties, but decided to exploit the economy car boom. In 1966 it acquired Hans Glas. In 1992, the company acquired a major stake in Industrial design studio, and got complete ownership in 1995. In 1994, the company acquired the Rover Group of Britain, owning it for six years, until 2000 when it sold it off. In 2007, the company bought the rights to produce Husqvarna Motorcycles. In 2012, the company was reported as the most reputable by Forbes, where the metrics included the perception of the company and its products (BMW Group 1). Ford Motors The company was launched in 1903. In 1908, the company produced the first engine distinguished by its removable cylinder; the engine was used with the Model T. in 1930, the company introduced the Model A, which was the first car with the safety glass feature (Ford 1). In 1932, the company introduced a low-cost V8 engine vehicle. Starting from 1956, the company introduced the lifeguard safety system, including rear seatbelt and a deep-dish steering among others. In 1957, the company incorporated the child-proof door locks safety feature and a hardtop that was retractable (Ford 1). During the 1980s, the company introduced highly successful brands globally. During the 1990s, the company acquired Jaguar Cars and also Aston Martin. By 2005, its corporate bonds had almost become worthless, and in an effort to revive the company, the board unveiled “the way forward’ strategic plan of 2006. In 2008, the company sold its Land Rover and Jaguar lines to Tata Motors. In 2014 the company announced the planned sale of its climate control components business (Ford 1). Global sales and Market Share Table 1: Global Sales Volumes during year 2012(Figures to be multiplied by 1,000,000) Source: (Muller 1) Chart 1: Showing the market share of the major industry players Volkswagen AG From the table showing sales volumes in a comparative style, the company made USD 254 billion. From the chart shown above, the sales volumes represented about 21 percent of the global market share control by the company. Toyota Motors From the data shown on the table, the sales of the company were USD 229 billion. From the translation of the sales amount into market share level, the company had taken a 19 percent share of the global automotive market. General Motors The table is showing that the sales of the company were USD 152 billion, and that figure represented about 12 percent of the global market share of the automotive industry. Daimler AG The table shows that the sales of the company were about USD 148 billion, which translates into a 12 percent share of the automotive market. BMW The sales distribution table is showing that the company attracted a sales volume of USD 99 billion, which translated into a market share of about 8 percent. Ford Motors The sales distribution table is showing that the company made sales of USD 142 billion, which commanded a global market share of about 11 percent. Works Cited BMW Group. Milestones. BMW Group, 2014. Web. 20 April. 2014. Daimler. Company History. Daimler, 2014. Web. 20 April. 2014. Ford. Our Company: Heritage. Ford, 2014. Web. 20 April. 2014. GM. Company: History and Heritage. General Motors, 2014. Web. 20 April. 2014. Toyota. Toyota –USA Newsroom: Company History. Toyota Corporate news, 2013. Web. 20 April. 2014. Muller, Joann. VW Is Already the Worlds Leading Automaker. Forbes, 18 April. 2013. Web. 20 April. 2014. Pendrill, Jim. Global automotive Report 2013. Manchester: Clearwater Corporate Finance LLP. E-book. Volkswagen. Volkswagen: History. VolkswagenAG, 17 April. 2014. Web. 20 April. 2014. Read More