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Automotive Industry

Automotive Industry

In any developed economy, the auto industry is one of the basic industries. In the automotive segment, employ hundreds of thousands of workers, the products of this industry make up a large share of GDP. Naturally, the support issues of car industry come to the forefront in the measures taken by the Government as part of the anti-crisis package. On how effective will such measures depends largely on the future path of all the post-crisis economy.

“Germany has had the most prominent history of automotive manufacture in the world as the country is considered to be the birthplace of the automobile in late 1870s, and it is also the home to many world-famous and popular car brands, such as Mercedes-Benz, BMW, Volkswagen, Porsche and so on” (Businessvibes, n.d.). Automotive is one of the most developed industries of Germany, taking the first place (14%) in the total turnover of industries in the country, and one fifth of the volume of turnover abroad as of 2009 in the structure of the total turnover of the industry the major share (70 %) are enterprises engaged in the production of vehicles and engines, and 26% – the company producing spare parts, tools and accessories for cars, the remaining 4% are manufacturers of trailers, tuning and other similar equipment. According to the number of cars produced in the country is stable Germany holds the third place in the world after the U.S. and Japan, and the number of exported cars is second only to Japan.

In the automotive industry in Germany are concentrated the largest in Europe and one of the world’s largest corporations. These corporations include such as Daimler Chrysler, BMW, Volkswagen, and others. Therefore, “today, Germany is world’s fourth biggest automobile producer, right behind China, Japan, and US. In Europe, Germany has the largest share of passenger car production with more than 32%” (Businessvibes, n.d.).

Daimler-Chrysler AG – The company’s activities are the production and distribution of passenger cars and trucks. The company offers a wide range of car brands: Mercedes-Benz, Chrysler, Smart, Dodge, Freightliner, Setra and Jeep. On top of that, the company manufactures diesel engines, aircraft, helicopters, space systems, and offers a wide range of services. Annual production capacity is 1.1 million, and the foreign companies – 485 thousand cars.

Volkswagen AG (VW). “Volkswagen is dominant in the popular market; it purchased Audi in 1964. VW’s most famous car was the small, beetle-shaped economical “people’s car” with a rear-mounted, air-cooled engine. It was designed in the 1930s by Ferdinand Porsche upon orders from Adolf Hitler, who was himself a car enthusiast” (Car Companies in Germany, n.d.). The main areas of activity are production, design and distribution of automobiles. Volkswagen Group makes the following car brands: Volkswagen, Audi, Seat, Skoda, Lamborghini, Bugatti, Rolls Royce and Bentley. The company is also engaged in leasing.

Among all vehicle sales revenue is about 80%, leasing – 10%, parts – 6%, etc. During the year, the company produces 2.1 million, and the foreign companies – 2.8 million vehicles.

Bayerische Motoren Werke Aktiengesellschaft (BMW).  The company manufactures a wide range of cars and motorcycles. It has a number of factories in Germany, Austria, UK, USA, Mexico, Brazil, South Africa, Egypt, Thailand, Malaysia, Indonesia, the Philippines. Among all cmpany’s revenue, vehicle sales is 78% of revenues, leasing – 18%, bikes – 18%, etc. The annual production of the company is 648 thousand cars, and the foreign companies – 468 thousand cars.

In 2009, the global financial crisis was very noticeable for the German economy. According to the Ministry of Economy, the decline in production in 2009 amounted to a record in the history of Germany 2.25%.

One of the most important sectors of the German economy is experiencing a crisis today, which is reflected in the decline in sales of cars and lower exports. The German automotive industry association predicts that in 2010 the number of new registrations of vehicles will be about 2.9 million people, which is much smaller in comparison with 2009, when there were about 3.1 million forecasted registrations. Therefore, the global economic crisis has had a negative impact on the German car manufacturers and suppliers.

A number of internationally renowned automotive companies in Germany, such as BMW, Volkswagen, Porshe and Daimler AG in connection with the total decline in demand for its cars, were forced to reduce their output.

According to reports, the employment situation in the automotive industry in Germany is quite critical in the recent past. In September 2009, was released in 1850, the staff person.

A number of car manufacturers in Germany, try not to lay off employees, but also to take certain measures. This helps them to achieve a situation in which the productivity of their workers will not be affected. They cancel overtime-working hours, along with a reduction of the working day.

The leadership of BMW as one of the measures, it was decided to extend the Christmas holidays to their workers from 2 to 4 weeks. Those measures have been adopted in other major automobile corporations such as – Daimler and Volkswagen.

After exiting from the Christmas holidays, another decision was taken to introduce a shorter working week. The first to take this step went concern Daimler, then had to resort to this BMW, the longest resisted concern Volkswagen, but he recently announced that for the week suspends in order to produce the extra cars that are currently in the global crisis is not found a buyer.

Ferdinand Dudenhoffer, principal analyst with the automotive industry in Germany, said that there is a possibility that in 2010, with an expected second wave of the global economic crisis, about 100 000 people could lose their jobs in the automobile industry.

According to experts, the economic crisis in Germany will be even more acute than in many other countries. Economics Minister Michael Glos (Michael Glos) explains this fact of export orientation of the German economy.

Germany, he said, remains the leading exporter. However, according to the forecasts of the Ministry of Economics, the supply of machinery, equipment, vehicles, industrial complexes and other exports in the world market decreased this year by 9 percent.

A significant part of German exports is supplied to Russia. According to the Ministry of Economy of Germany, bilateral trade increased annually by 20 percent in the last two years, outpacing the expansion of German trade with China.

However, the prospects for this year – not as rosy, said in an interview with Deutsche Welle expert association of German companies and foreign wholesale Jens Nagel (Jens Nagel). He called for two reasons: first, the impact of the financial crisis, and secondly – the decline in oil prices. However, the reduction of German supplies to the Russian market is not as strong as in other countries.

The German government is well aware of the role played in the economy car industry. Every seven jobs in the country are directly or indirectly associated with this industry.

That is why, German Chancellor Angela Merkel at the opening of the International Motor Show in Frankfurt called the auto industry as the engine for growth and employment in Germany. However, due to the unstable situation related to the global financial crisis, the automotive industry in Germany in the years to wait for a strong shock.

Research conducted by the newspaper Handelsblatt Company and AT Kearney argue that the new competitors from developing countries and the mortgage crisis in the U.S. will inevitably lead to a redistribution of power relations. After a long lull, the stage is started, a message as potential mergers and sales companies. According to Nikolaus Zellner, partner AT Kearney, the automotive industry is now concentrated in a new way. New market leader, Toyota is visibly growing, Porsche expects absorption Volkswagen, Daimler and rebuilt after the separation of Chrysler. In addition, competitors are not asleep. Indian group Tata says about the most significant increase in sales and cost. In China, due to the cooperation between SAIC and Nanjing grows a new car giant. It is possible that for sale of luxury brands Jaguar and Land Rover will come within the Chinese or Indian manufacturers.

Globally, the trend of automobile production in Germany in recent years can be called mediocre. None of the German automakers failed in the 2006-2009 period. Achieve both a high growth in sales, and a significant increase in cost. Except, perhaps, Porsche, which was able to significantly increase due to VW shareholder value. The German manufacturers, for example, Volkswagen, Mercedes and German subsidiaries of American corporations, growing in stable markets in Europe and North America slower than the Japanese and Korean companies. German automaker ceased to dominate the global auto industry. Leading positions Toyota, General Motors, Ford, Renault-Nissan, and only after they are Volkswagen, although concern from Wolfsburg makes every effort to ensure that, by 2020 to become one of the three leaders of the industry and to sell about 15 million units.

One of the key growth segments in the industry in the coming years will be the production of cars costing up to $ 6000 this segment will grow significantly because most developing countries. Nearly all the major automakers intend to promote in the coming years, new minicar. Volkswagen has already presented at the International Motor Show a new concept called Up. Renault with Dacia brand and the Italian FIAT, collaborating with the Indian Tata, moved even further. They are already selling or planning to sell cars in its class. According to the Boston Consulting Group, in 2005 the share of minicars one-quarter of the 51 million cars sold worldwide, and in 2015 they will be the third.

Customer behavior will result in the near future to ensure that the industry will become more polar. Customers will be more interested on the one hand, the “premium” brands, and on the other – a cheap car.

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