The auto quagmire and gasps for breath...

B&E’s Karan Mehrishi dives deep into the auto quagmire and gasps for breath...

But it’s not as if GM’s alone in the bloodbath. Ford is not too far behind when it comes to sharing in the scathing hits. When William Clay Ford Junior gave an interview to Planman Media a couple of years back, he had just entered India and was typically gung-ho about cutting it clean very soon. In the first week of August 2008, Ford reported the biggest and worst one quarter loss (April to June 2008) in the history of the corporation! $8.7 billion! Year 2007 loss: $2.7 billion! Year 2006 loss: $12.6 billion!

Not surprisingly, while annual sales have regularly fallen or remained stagnant at GM (2006: $205 billion sales; 2007: $181 billion; 2008 six months: $80.6 billion) and Ford (2006: $160 billion; 2007: $172 billion; 2008 six months: $85 billion), the sales at Toyota (2006: $179 billion; 2007: $202 billion; 2008 six months: $118 billion) and Honda (2006: $84 billion; 2007: $94 billion; 2008 six months: $54 billion) have been constantly rising. But more importantly, companies like Toyota and Honda have raked up humungous profits year after year! Toyota had profits of $11.6 billion, $14 billion and $6.18 billion in 2006, 2007 and the first six months of 2008. While Honda, during the same periods, had profits of $5 billion, $5 billion and close to $2 billion!

Compared to the accumulated profits of $44 billion in the last three years of the fuel-efficient focused Japanese Big 2, the Detroit Big 2 had accumulated losses of a mind numbing $82 billion in the same period!!! What gives?!?! That’s when I came across four extremely critical issues that could surely define the reasons why the global auto industry dies sooner than later...

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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India hasn’t really arrived as an automotive hub

India hasn’t really arrived as an automotive hub as recent data seems to suggest; but it cannot be denied that the country is staring at quite a few phenomenal opportunities, analyses virat bahri of B&E

If you see actual export figures of different players, it’s evident how the rest have hardly managed to even start leveraging India’s so-called prowess as a manufacturing base. And a lot has got to do with the cash for clunkers programme in Europe. Governments in Europe began to offer significant scrappage incentives to car buyers interested in exchanging their old cars for new ones. Small car makers have particularly benefited. In an exclusive to B&E, H. S. Lheem, MD, Hyundai India admitted, “Scrappage program announced by the Governments of various countries like Germany & Japan helped a lot and I believe that this year, we will export over 2.7 lakh vehicles.”

Ashvin feels that “perception is more to do with the brand than country of production.” So true carriers of the ‘made in India’ brand are companies like Tata Motors and Mahindra & Mahindra; and they still fare quite badly on the export front. The reasons are not hard to realise. No true blue ‘made in India’ car has ever generated as much hype as the Nano. When the car was launched, many global analysts admitted that Nano is an excellent innovation… but largely for the third world; and that reflects the perception a ‘made in India’ brand still carries there.

But a world struck by recession and exorbitant fuel prices is indeed seeking frugal solutions; and therefore, this perception can work to India’s advantage. Auto expert Tutu Dhawan comments, “The number of i10s and Suzuki cars that you see today on European roads is amazing. Worldwide, people (now) realise that you need small, more fuel efficient cars.” And that’s India’s strength; a fact that’s not entirely lost on automotive manufacturers. That is precisely why GM, Toyota, Ford, Nissan et al are all ramping up their small car initiatives in the country; as the success of such efforts will open more vistas for them.

It doesn’t make much sense to be China-focussed; Chinese car makers are too focussed on their domestic market (and on other emerging markets), which is at least five times the size of India’s.

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Source : IIPM Editorial, 2012. An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
 
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links  
IIPM : The B-School with a Human Face