Globalization

Jun 29th, 2015
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University of Louisville
Course: general
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North America, Western Europe,and Japan are home to 18 of the top20 vehicle manufacturersin the world and accountfor nearly 90 percent of global production.All three of these regionsare mature automotive markets.

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Most of the challenges the automotive industry will face in the next 10 or 20 years can be identified today. They are shaped by changes in the underlying economics of the auto business, from supplier through consumer, and by definition they are sufficiently broad to be of interest to all the participants in the industry. We have distilled the five macro challenges described below from our research and client experience.I. GlobalizationNorth America, Western Europe, and Japan are home to 18 of the top 20 vehicle manufacturers in the world and account for nearly 90 percent of global production. All three of these regions are mature automotive markets, with low expected unit growth rates (negative in Japan) and capacity in excess of regional demand. Vehicle manufacturers therefore have turned their sights toward growth opportunities in emerging markets: Latin America, North and South Asia, China, India, Eastern Europe, and Russia. These markets are forecasted to grow at more than double the average industry rate over the next ten years. The headlong rush of vehicle manufacturers to set up Greenfield assembly sites in these markets suggests a profound faith in the value and durability of first-mover advantages.The economics of this globalization are troubling. Governments in the developing markets know that their prospective growth has value, and it is perfectly rational for them to auction off that growth potential to the highest bidders. As car companies vie for marke

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