American, German and Japanese carmakers take China to Task?

Toyota is the giant of the automotive industry in the world now. For the first time in August 2003, Toyota overtaking General Motors more cars in America than Chrysler becoming the biggest car company in the world, and probably having more than 15% of the world market, its stated aim.

It is the most critical issue for the world automotive industry but many in the American car industry, especially the big three firms General Motors, Ford and Chrysler, have been slow to address and appreciate how serious and the implication the problem really is toward the economy.

Will Toyota prevail? What is the future of Detroit? Can anything be done by American to overcome manufacturer’s competitive disadvantages in model mix, product diversity and the continuous rise in price of new cars? The choice clearly is between shrinking and sinking.

Ironically, the success of Toyota can be seemed from the areas of competitiveness in cost, quality, and products offerings. No company can survive in the global market if they overlook or neglect any of these areas.

No doubt the American automobile manufacturing industry has gone through wrenching times and still the home to the two largest vehicle manufactures in the world, General Motors and Ford which has been responsible for 20 to 25 % of world vehicle production since 1980, but it is declining especially beginning August 2003.

Detroit is steadily and continually losing ground to Japanese. Chrysler realized the scenario and concluded that it could not survive as an independent company under the Japanese attacked, sold out to Daimler-Benz, the giant German car makers of Mercedes.

The ability of American to maintain sustained economic growth and long-term prosperity is clearly seen by adversely affected declining industry. It can be overcome by taking skyrocketing demand China market to task

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At present and in the foreseeable future, automotive demands in developing world are skyrocketing especially heavy populated countries China and India. Demand is expected to be flat or grow slowly in American, Japan and Western Europe.

As the result, the world’s autos companies are looking to the east in gaining sustain economic growth. They are pouring significant investment into China, India and South East Asia. The companies having early status in China are GM, Chrysler, Citroen, Isuzu and Volkswagen.

General Motors invested heavily in China valued in hundred of millions of dollars in China and US $ 1 billion assembly plant in Thailand, whereas Ford spending not less than US $ 1 billion in China and South East Asian. By not left behind, Volkswagen is currently negotiating to joint venture with losing Malaysian Automobile company Proton to capture Malaysian and ASEAN market.

Traditionally, Japanese have huge lead and in the South East Asia market, however significant changes should be expected with the emerging Korean automobile industry especially the fast moving forward Hyundai car maker.

As the differentiation of taste, American consumers are showing a taste for the practical and medium price range vehicles, as embodied in the both top sellers in the medium price range of Toyota Camry and the Ford Taurus. Japanese car makers, however, increase tremendously market share through new strategy by creating luxury nameplates such as Lexus, Acura and Infiniti, besides improving the size and luxurious of Toyota Camry and Honda Accord.

In Korea, India, Thailand, Brazil, Eastern Europe and many other developing countries, the growth rate of sales is by far out paces the traditional consuming markets of Western industrialized Europe, Japan and North America.

Due to skyrocketing oil price and upward trend of fuel, consumers in the developing world are showing a taste for the practical, significantly lower fuel economy, more realistic gas mileage and lower affordable price range vehicles; besides fulfill the domestic demand by “local make” automobile. In additional, by replacing traditional fuel with alternative energies might be is the taste of the large segment of consumers to overcome skyrocketing oil price constraint.

With the emerging of China shown by the foreign exchange reserve reached US $ 1.43 trillion by end of September 2007, all the major players seem to be seeking to strategize global strategies aimed at the developing countries especially China, and this markets will be a critical battlegrounds in the foreseeable future.