Automobile Industry Essay Research Paper The automobile (стр. 2 из 2)

Renault plants, with a goal of 50,000 sales annually. Mercedes-Benz will build 45,000 commercial vehicles and 25,000 A-Class cars this year, and spend an additional $40 million to produce the new C-Class at its new plant in Juiz de For a, Brazil, with

production that was calculated to begin last January. Ford is completing construction of

its new Amazon small-car plant in Bahia, Brazil, and Toyota will add the

Yaris at its factory in Indaiatuba, Brazil.

Volkswagen currently holds a 30.4% share of Brazil’s total car market, of which hatchbacks and their variants dominate. Fiat has 26.9%; GM 24.3%; and Ford 7.2%. A study of new-car buyers last year showed that Brazilians have a 48% loyalty to their car brand on the whole, with GM averaging 48%, while Volkswagen totals 52%. However, Pinheiro, expects Volkswagen s market share to fall to 23% in five years, while the new manufacturers will increase their share to 20% in the same period due to increased competition. Already Peugeot’s 206 is the top-selling hatchback in the 1.6L category, edging out the Volkswagen Gol. The segment includes the Fiat Palio, Renault Clio, GM Corsa and Ford Fiesta.

Brazil’s proliferation of automakers also is drawing top global suppliers and encouraging methods of innovative manufacturing that emphasize lean production and just-in-time delivery, plus greater financial commitment and responsibility on the part of suppliers. Volkswagen s commercial truck plant in Resende, for example, allows suppliers to attach their modules built up in the factory to vehicles on the assembly line. Automakers today are riding a wave of optimism, with vehicle sales in the first six months of 2000 up 18%, while production jumped 24%, Anfavea reports. Continued success depends on whether the country s push toward economic growth, predicted at 4% in 2000, can be sustained while stifling inflation and keeping interest rates low to allow consumers to buy on credit. If so, automakers believe the market will grow to 2 million units by 2005, enough to help take up the slack in unused capacity and entice even more industry warriors to the

battlefield.

Going into another big country in Latin America, we found out how in Argentina, automobile s sales fell by 19.2% in 2000 as a consequence of the strong reduction of the domestic demand, which was affected by a serious economic recession that the country has been going through for more than two years. Concerning the evolution of the industry last December, Adefa said that the national production embodied 25,403 vehicles in December 2000, a number 14,7% lower than in November and 22.5% inferior to the one of the same month in 1999. The exports in December 2000 registered a decrease by 0.9% with respect to November and a growth by 64% regarding the same month in 1999. Likewise, the automotive industry was hit by several conflicts held by Argentina and Brazil during last year. Although this numbers are not very good, Argentina s last year s presidential election added some stability, but like Brazil, growth is in the future. The economy is expected to pick up this year and continue improving at least through 2003, where vehicles sales should hit 500,000 by then. Argentina will also see many of the same vehicle trends as Brazil. Some foreign automakers, however, are taking a wait-and-see attitude, putting future investment in Argentina on hold. Volkswagen AG is delaying Passat production, while General Motors Corp. not only is delaying investment but also recently said it will shut down its truck plant in Cordoba, Argentina and move production to Rosario, Brazil.

Experts will continue to be concerned with Venezuela and Colombia, as well. The latter, which has only 18 people per vehicle will see gradual recovery after 2000, but the country’s macroeconomics does not support vehicle growth. Chile, where pricing is a disaster, continues to be a headache for OEMs (Original Equipment Manufacturers).

Now, taking a close look to other Mercosur members, we can see how these countries are linking with neighboring nations to create a South American Free Trade Agreement (SAFTA), which would bring positive results to all countries. Automakers must support the evolution of trade in the region. There is still a lot of opportunity in Mercosur to increase cross-border trade, says I. Martin Inglis, former president of Ford South American Operations and recently named president of Ford North America. Most importantly, Mercosur must continue and must work. Cristiano Rattazzi, president of Fiat SpA’s Argentina operations, says Mercosur will continue in some form but will see changes. Argentina does not want complete free trade with Brazil, which would like to see zero tariffs by 2003. But the lack of tariffs eventually could close all auto plants in Argentina. Also, The Uruguayan automotive industry registered in 2000 exports for an amount of US$ 180 million, a volume that placed the sector as the third general exporter of this country and with possibilities of ratifying its presence in Mercosur. That number included both the exports of cars and automobile parts, announced the Chamber of Automotive Industries from Uruguay (CIAU) and the Chamber of Manufacturers of Automobile Parts (CFAC). The exports amounts of the Uruguayan automotive sector in 2000 were only surpassed by the exports of meat and rice.

Last December, between the 14th and 16th, the 19th Mercosur Summit was celebrated in the Brazilian city of Florianopolis, where the member countries signed an automobile industry accord which will come into effect this April. The most important points in the accord were that the nations of Mercosur, as well as associate members Bolivia and Chile, cannot surpass an annual inflation rate of five percent in the 2002-2005 period. In 2006, inflation must not exceed four percent, and the limit will be three percent in the following years, according to the pact agreed by the six presidents. Meanwhile, Mercosur member nations fiscal deficit may not be more than three percent of GDP beginning in 2002, and they will make an effort to reduce the net public debt to less than 40 percent by 2010. In the automobile section, the document also defines the nationalization level of vehicles and auto parts produced, particularly in Argentina. And finally, the accord also talked about the creation of a committee to work on a permanent basis to solve problems arising in the course of the implementation of the document. Another latest news from the Mercosur aroused over associate member, Chile, deciding to negotiate a bilateral free trade agreement with the United States. This latest challenge poses a new risk to the unity of the bloc, despite the accomplishments of the Dec. 14-15 summit in Florianopolis. The rest of the members, especially Brazil, didn t like this idea, Mercosur will negotiate in bloc with the United States, Brazilian President Fernando Henrique Cardoso and his Argentine opposite number Fernando de la Rua affirmed. Cardoso was even more emphatic when he underlined that the members would also act as a bloc in the negotiations for the creation of the Free Trade Area of the Americas (FTAA). That is the political option chosen by the bloc, simply because it bolsters our capacity to win advantages. The leaders of the two biggest members of Mercosur thus attempted to lay to rest the controversy that broke out on the eve of the summit, when it was reported from Washington that the United States had begun to negotiate a bilateral trade deal with Chile, which had previously committed to discussing its admission as a full member of Mercosur during the summit. Spokespersons for the Chilean government also said the Mercosur’s staggered arrangement of tariffs, which range from zero to 35 percent, was incompatible with Chile’s single duty of nine percent, which is set to be gradually scaled down. Uruguay applauded the idea of a Chilean-U.S. trade deal, because it is tired of what it sees as constant neglect and discourtesies from its large neighbors, explained former Argentine foreign and defence minister Oscar Camilion, in a column published this month in the Buenos Aires daily La Nacin .

Camilion added that Paraguay very likely thinks the same, but its heavy dependence on Brazil means its spokespersons are more cautious.

Throughout the whole paper, we have discussed the automobile market industry to all its extend, starting with two of the biggest markets which are U.S. and Europe, and then continuing the discussion through Latin America. I wanted to describe the U.S. and Europe markets first, in order to have a global idea of the industry, and to see how big markets can handle such an industry. By doing this, I could have a broad idea of the industry in its biggest dimension, and therefore I could make a much better judgment of the Latin America market, although is not as big.

We saw how U.S and Europe are the worlds biggest market, not only for their huge population, but also for their great development. It is not a secret that U.S. is one of the biggest powers worldwide, and therefore its development goes far beyond other countries, something that helps being a really good market for everything, and mostly for cars. Europe has a great development too, mostly now when 12 of its countries have come together to create the Euro currency, which is improving more everyday compared to the dollar, and which is making Europe more united and powerful.

Knowing this, we continued our discussion over Latin America, which is not as developed as U.S. or Europe, but it is certainly in a huge development progress. Latin America didn t have a very good past couple of years, but since last year is trying to get over it, and gain some stability. We could see how the biggest market in South America is Brazil, and how this country is a constant leader for the rest. Brazil is not only the biggest in population, but also in development and technology, were the majority of the assemble factories are placed. Finally I would like to say that Latin America, specially South America has always been a really good market, and although it is not as developed as the powerful countries in the world, it will remain a good place for manufacturers and services providers to continue in business. Latin America has been through a lot of economy crisis, but not even that has turn them around and they are still in the fight, and I think that some years from now, it would be a huge market to invest in.

REFERENCES

Zoia, David. (2000, June). Bogged Down Abroad . WARD S Auto World, pp. 34-41

Elridge, Earle. (2001, January 23). Big Three Automakers Back Dealer Group .

UsaToday.com, p.1

Howes, Daniel. (2001, January 16). Automakers European Units Won t Help Recoup

Stateside Losses . Detroit News, p.1-2

Bradsher, Keith. (2001, January 13). What Sales Slump? Foreign Makers Ask . The

New York Times, p.1-5

The Associated Press. (2001, January 24). Ford to Test Driving Distractions Simulator

to Measure Effect of Using Gadgets . Times-Picayune, p.1

Miller Joe. (2001, January 19). Automakers Join to Bolster Dealer . Detroit News, p.1

Drozdiak, William. (2001, January 14). Europe Looks to Outgrow America; Old World

Confident of Immunity to U.S. Economic Downturn for a Change . The

Washington Post, p.1-3

(2000, December 28). Fall expected in December auto sales .HoustonChronicle.com, p.1

Financial Times (London)

January 17, 2001, Wednesday London Edition 1

Financial Times (London)

January 9, 2001, Tuesday USA Edition 1

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Ward’s Auto World

November 2000

SECTION: NEWS & OPINION; ISSN: 0043-0315

LENGTH: 878 words

HEADLINE: Brazil’s Automakers Wage War in a Land of Promise and Crisis

BYLINE: BARBARA McCLELLAN

Business and Industry

Interpress Service

December 15, 2000

HEADLINE: TRADE-LATAM: TOWARD A COMMON MARKET, DESPITE EXISTING PROBLEMS

BYLINE: Mario Osava

Inter Press Service

December 20, 2000, Wednesday

HEADLINE: REVIEW 2000-MERCOSUR: DEFINING A JOINT STRATEGY ON INTEGRATION

BYLINE: By Marcela Valente

XINHUA GENERAL NEWS SERVICE

December 16, 2000, Saturday

SECTION: WORLD NEWS; ECONOMIC

LENGTH: 127 words

HEADLINE: Mercosur Countries Sign Automobile Accord

DATELINE: BRASILIA, December 15

INTERNATIONAL MARKETING

RESEARCH PAPER ON FORD MOTOR Co.

PROFESSOR NAKRA

DIEGO TOVAR

FEBRUARY 1st 2001

The automobiles sales fell in Argentina by 19.2% in 2000 as a consequence of the strong reduction of the domestic demand, which was affected by a serious economic recession that the country has been going through for more than two years.

The decrease continues the slow rhythm of the sales of cars in the international market, above all, in the United States.

In 2000, 306,946 vehicles were sold to the cars agencies, informed the Automotive Manufacturers’ Association (Adefa).

In December ‘00 the sale of cars fell by 46.3% if it is compared with the same month in 1999 and 1.5% with respect to November.

But, in spite of the strong decrease of the sales, the production and the exports of vehicles grew in 2000, indicated Adefa.

With 339,632 units, the cars manufacturing grew by 11.4% if it is compared with 1999; while the exports rose by 38% reaching 135,760 automobiles.

Concerning the evolution of the industry last December, Adefa said that the national production embodied 25,403 vehicles, a number 14,7% lower than in November and 22.5% inferior to the one of the same month in 1999.

The exports registered a decrease by 0.9% with respect to November and a growth by 64% regarding the same month in 1999.

Likewise, the automotive industry was hit by several conflicts held by Argentina and Brazil during last year.

The Mercado Comun del Sur (Mercosur) (Common Market of the South) trade group of Brazil, Argentina, Paraguay and Uruguay agreed to become a customs union at the start of 1995 (Chile became an associate member in 1997 and negotiations continue with Bolivia). Despite being on the way to becoming a full member of Mercosur, President Lagos is insisting that Chile retains its trade autonomy and be allowed to make economic accords of its own outside Mercosur. This sharply contrasts with Brazil’s view that Mercosur should negotiate trade agreements as a unified block. Lagos is also critical of the lack of institutions to deal with trade conflicts, maintaining that Mercosur should follow the example of the European Union (EU). The economic downturn in Latin America during 1999 put strains on Mercosur throughout 2000, with governments turning to trade protectionism to shield their fragile economies. In July 1999 Brazil suspended talks with Argentina in protest at new restrictions on its exports, and relations between member countries remain strained as the effects of the economic slowdown in Latin America continued to be felt in 2000

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