Volkswagen also taking into consideration the effect of the country’s production. The motto of the former Soviet Union — «Das Auto», is a vivid demonstration of the country of origin of the car as an important component positioning.
The company BMW is one of the main competitors of Daimler. Although the company has only three brands — BMW, Rolls-Royce and Mini, all of these brands are in the premium segment. Manufacturing companies located directly in 13 countries, one of which is in Russia.
It is worth noting about decision of the company when coming to the Russian market — the company has a factory in Russia, avoiding the negative effect of the country’s production — the company factory is located in Kaliningrad, a European enclave, and Russian consumers still have positive expectations from the company goods, at the same time BMW significantly reduces the cost of importing products due to the absense of huge import duties from Germany. The strategy of the company has one important difference from other major manufacturers — the company invests directly without mergers and acquisitions.
2.
2. The main directions of development of the automotive business.
At the moment the global automotive industry has two distinct trends — an extension of activities in emerging markets and increased development of «green» technologies.
According to KPMG, one of the largest audit agency, the companies are facing a difficult choice these days. Whether it is worth investing in the electric car development, given their inefficiency in terms of distance travelled, or should they continue to develop more effective, but also more «dirty» gasoline and diesel engines? Should they produce inexpensive fuel-efficient city cars if emerging markets continue to show demand for SUVs and premium models? So, for the efficient operation in terms of the emerging global market the company must balance the demands of the emerging markets of the BRIC countries (Brazil, Russia, India, China) and fast moving in the opposite direction the market needs of the so-called Triad (Japan, Western Europe, North America).
According to the report of KPMG the BRIC countries show rapid growth in sales of cars, and also a positive attitude for possible changes in the structure of the industry — 80% of respondents from the BRIC countries compared to 68% in the Triad expressed their predisposition to the transition from traditional to electric motors. However, it should be noted that in these countries the introduction of electric vehicles on a commercial basis is almost impossible because of the lack of specialized infrastructure.
Despite the positive expectations from the transition to electric vehicles, consumers are cautious when buying a car — there is no information on batteries, and the prices for electric cars is lower than the average market price, bringing a suspicion of customers. While the absolute electric leaders are Toyota Prius and Chevrolet Volt, but the trend has been recognized by all leading automakers and development conducted by almost all companies.
This trend is one of the most controversial to date — despite the demand for these vehicles, the use of these vehicles without special equipment all around the place creates lots of doubts.
Surprisingly, the most optimistic approach to the use of electric vehicles is in Russia. Around 20% of respondents see them as huge potential, although in contrast to China the Russian government is not supporting such technologies. The largest consumer of electric vehicles is the middle class. The buyers of premium cars are usually not interested in lower costs for fuel and purchase such cars with cleaner environment in mind.
Fuel optimization is one of the most important factors for the middle class consumers. Also we need to note an interesting fact. The importance of safety and ergonomics of a vehicle virtually the same (72 and 71 percent, respectively), leaving questions of design and environmental performance far behind. The mature markets of the Triad increased theirdemand for small cost-effective and environmentally friendly cars.
For BRIC countries, this trend applies exactly the opposite. For the middle class in these countries buy a small car is typically an intermediary to purchase a premium car, with preference given to a class of SUV.
However, despite of all the difficulties associated with investing in the BRIC countries, the world’s largest automotive corporations pay them a lot of attention keeping in mind their potential.
It is important to mention «Mobility as a Service» when we speak about trends. The idea of this service is to provide a vehicle for small trips around the city for a small fee. The main convenience of this service is that there is no need to buy your own car to move around the loaded streets. The European leader of this segment is smart. Their concept, called car2go is already successfully implemented in a number of European and North American cities.
This idea has got no support in developing countries, although it could be a good solution for such congested and crowded cities like Moscow, Beijing, Mumbai.
It is important to mention the apparent change in the structure and distribution. With expansion of Internet the structure of consumer market has changed. Before you buy a car, there is an opportunity to see a variety of models, and discuss the advantages and disadvantages of certain models in social networks. All these things leads to the fact that now the companies are forced to pay much more attention to the accuracy and completeness of the information about their products on the Internet to provide online services and even develop applications for mobile devices.
Mercedes-Benz is planning to visualize the individual configuration of cars, taking into account the choice of various colors and technical combinations. At the moment such system is installed in Milan outlet.
Advertising on the Internet is now mandatory for major car manufacturers. With technology growth it became possible to show ads targeted to a specific group. Facebook and Vkontakte pages together with the official website are mandatory for global positioning nowadays for the Russian-speaking population. The company employees are posting all the necessary information there, and all the visitors have an opportunity to ask their questions directly.
So at the end of this chapter we need to summarize how all these trends will affect the strategic decisions of companies in the automotive sector. The main consequence will be increasing exports to the BRIC countries and the expansion of their presence in the market, especially in the segment of premium cars. The closest attention will be paid to new methods of advertising and closer cooperation of the head office with the dealers in their local markets. Traditional markets will focus mainly on efficiency and compactness of cars.
CONCLUSION.
In the conclusion it would be desirable to tell that decision to buy a car today is influenced by economy fuel efficiency.
Consumers in emerging markets are interested in upper price segment, and in developed countries the key importance is compactness and simplicity of design. Despite the fact that the next important step in the development of the automotive industry sees the spread of hybrid vehicles with the ability to recharge from the mains, machines powered by batteries is not popular with consumers and producers continue to invest in the improvement of internal combustion engines (ICE).
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