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The Automobile Industry

The Automobile IndustryAntonio Pasqualucci12/05/2015Industry Analysis1


Table of ContentsIntroduction, 3Porters Five Forces, 8Critical Succes Factors, 9Todays Global Automobile Market, 10Key Drivers of Change, 14Strategic Implications for Industry Players, 20Financial Industry Data, 22


IntroductionThe Auto Industry is a Critical component of the economic system[3.5 percent to the overall GDP of the U.S.] and has encouraged the development of many ancillary industries and became one of the largest buyer of industrial products .

Market Capitalisation: $2,ooo billion (2015)Higly Labor intensive

Major Actors are: Auto-makers and Original Equipement Manufactures ( OEM) SuppliersDistributors


Industry Value Chain

4Source: Noealt Corporate Services


Market Structure: impure oligopoly with characterised by few big producers, a differentiated product, large number of potential buyers and high barriers to entry.,high profitability.

Mature stage of development but the decline phase is still far and there is an huge potential deriving from innovation opportunities and emerging markets.


Source: www.edmunds.com6

Top Manufacturers by units sold



Critical Success Factors9

Todays Global Automotive MarketPhase of strong growth and profitability. Despite that there is still uncertainity about the future.

Main challenge: Uneveness of global markets.

International expansion and globalisation provide the most potential growth opportunity in unsaturated markets as Brazil, Indonesia, India and China


Todays Global Automotive Market(Sales Growth 1990-2015)The Global economic dowturn and the credic crisis in 2008 resulted in large losses for many actors of the industry.


Automobile Core Markets, 2015


Source: Adapted from PWC, 2015 Auto Industry trends13

Key Drivers of ChangeInnovation is more critical in the automotive industry today than ever before and it is changing the balance between automakers and their suppliers (Corwin, 2013)

Technology drives the change: Eco-efficiency, hybrid, autpiloted cars.

Changing role of OEMs and Suppliers: Shift toward a more decentralized model of innovation approach where OEMs serve as integrators, while large suppliers play an expanded role



Key Drivers of ChangesInternational Expansion is one of drivers of change:

Conglomeration In mature markets: From the 1990 occurred a spate of mergers between American, Eurpean and Japanese companies.

Distribuited Competition in emerging markets: In emerging markets the industry is formed by numerous smaller company.(i.e China has more than 120 auto-makers companies.15

Key Drivers of ChangeThree powerfull forces are driving the change of the auto industry:

Shift in consumers demand: Affecting how much people are willing to pay for a car

Expandend regulatory requirements

Increasing availability of data and information


Key Drivers of ChangeThese trends offer huge risk as well as huge opportunities, it is crucial to analyze how these trends are already affecting the industry in order to adress changes and translate them in competitive advantage:

Increasing of electronic contentProduct-mix changes made to meet regulatory requirementsThe changing face of retailPlatform modularization.


Key drivers of Change18

Key Drivers of Change19

Strategic Implications for Industry Players

Reacting strategically to demand shift is a priorityOEMs must collaborate with suppliers and focus R&D investments on their core competencies and technologies while outsourcing to suppliers other technological developments

OEMs must improve data anlysis in order to understand consumers need and improve brands loyalty



Strategic Implications for Industry PlayersSuppliers should collaborate with non-traditional automotive electronic suppliers and rationalize their portfolio to achieve competitive advantage . OEMs will seek for top suppliers to co-invest in new platforms and innovations

Distributors: to address changes in customers decision process they should invest in technologies that make the transaction ickerqu, more efficient and pleasing. Improve on-line capabilities and develop continuous connection with costumers.


Financial RatiosRatiosIndustry Average5 Years sales growth5,11%P/E12,70Dividend Yeld2%Current Ratio1,30Quick Ratio1,10Total debt to Equity1,46Gross Profit Margin22,60%EBITD Margin10,30%Net Profit Margin4,86%ROE12,7%ROI6,80%ROA3,50%


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