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1GlobalAutomobileIndustry:ChangingwithTimesByChithraGopalR.S.,M.Sc(Agri)ExecutiveSummaryFromahumbleoriginasa‘horselesscarriage’manufacturingindustrydatingbackto1890s,theglobalautomobileindustryof2006hascomealongwayemergingasmarketleaderinmanufacturingactivity,providingemploymenttooneinsevenpeople,eitherdirectlyorindirectly.Hailedasthe‘industryofindustries’bytheManagementSpecialist,PeterDrucker,theautomobileindustry(US)setstandardsinmanufacturingactivitybycontributingmassproductiontechniquesduringearly1910s.TheJapanesesoonfollowedbyofferingleanproductiontechniquesinthe1970s.RidinghighoneconomicalrevivalinmanydevelopingcountriesinAsiaandEurope,theindustry’sglobaloutputtouched64.6millionvehiclesin2005.Butwithadownwardslideinmarketshare,theBigThreewasfastlosingtheirdominantpositiontoToyota,Honda,andNissan,therebysettingthegroundfortheemergenceofNewSix.MeanwhileUK,servedasthesinglelargestcustomerforEuropeanauto-makers.Japaneseplayersweretheleadersinthelightvehiclemarketandhybridmarket.ChinaandIndiaattractedtheattentionofglobalauto-makers,vyingforsettingupacost-effectiveexportbaseformeetingthedemandfromAsianmarkets.Despitegovernmentcontrols,Chinesemarketboastedofsalesofmorethan2.7millioncommercialvehiclesin2004.Withreportsofhighestgrowthinmobilityintheworldat3%perannum,furthersurgeindemandwasanticipatedfromChinesemarket.AboomingeconomyandalowinterestregimehelpedIndiatomakeitsmarkintheautomobilesectorin2004,withsalesfiguresexceedingmorethan1millioninthepassengercarsegmentforthefirsttime.Thesaleofcommercialvehiclesshowedarecordgrowthof29%over2003.Foreignauto-makerssuchasMercedesBenz,VolkswagenGroup,GeneralMotors,Honda,Toyota,Ford,FiatandMitsubishiwereallmakingabee-linetosetuptheirmanufacturingunitsinIndiatotapthegrowingdemand.Intheenvironmentfront,theKyotoProtocol,whichcameintoforceinFebruary2005,ledtotheemergenceofaclosedloopstrategyencompassingproduction,vehicleoperationandrecyclingintheglobalautomobilesector.Onanalyzingtheresponseofauto-manufacturerstoclimatechange,itisnoticedthatdespitefragmentedviewsonratificationofKyotoProtocol,auto-makerswereintheforefrontofpopularizingenvironment-friendlyinitiatives.Theywereinvestingonenginemodificationsandrelatedpollution-reducingtechnologiesaimedatproducingmorefuelefficientvehicles.Hybridvehiclesandgreenvehiclesrunningonalternativefuelsareprovingtobecommerciallyviableoptionswithcustomersqueuingupfortheseproducts,whichofferedsignificantsavingsongasolineprices.Thereporton“GlobalAutomobileIndustry–ChangingwithTimes,”tracesthegenesis,andmarkettrendsinproductionandtheinitiativestospearheadlesspollutingtechnologies.TheUSautomobileindustryandFordMotorCompanyaretakenasclassicexamplestoidentifyPorter’sFiveForcesandtodoSWOTanalysis,respectively.Theresultsstandtestimonyforthefactthattheindustryisbecominghighlycompetitive.IntheFutureOutlook,thegrowingsignificanceofmade-to-ordervehicles,andthecompetitivenessoftheemergingmarketsisdealtwithindetail.2TableofContents1Introduction.............................................................................................................................32GenesisoftheAutomobileIndustry........................................................................................43MarketTrends.........................................................................................................................83.1ProductionScenario.......................................................................................................83.2IndustryStructure.........................................................................................................153.3ResponseofAuto-manufacturerstoClimateChange.................................................173.4ProductOfferings.........................................................................................................213.5Porter’sFiveForcesandSWOTAnalysis....................................................................233.6FutureOutlook..............................................................................................................254Appendices...........................................................................................................................285References............................................................................................................................31ListofFiguresandTablesFigure1.TraditionalBufferedSupplyChain...................................................................................7Figure2.TheJust-In-TimeSupplyChain........................................................................................7Figure3.WorldAutomobileProductionin2004..............................................................................9Figure4.IndividualShareofTopUKAuto-manufacturers...........................................................12Figure5.RegistrationofNewVehiclesonAsianMarkets............................................................12Figure6.TotalSalesTrendofFour-wheelersinIndia......................................