Thesis Presentation
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The document analyzes the impact of the 2007-2009 global recession on major automobile manufacturers. It discusses how the recession caused by the housing bubble and job losses reduced consumer purchasing of vehicles. Manufacturers like GM, Chrysler, and Toyota saw major sales declines, while Hyundai sales increased. Strategies included cutting costs, focusing on fuel efficiency, restructuring brands, and shifting markets. The recession highlighted lessons for manufacturers on responsibly managing growth and adapting to consumer demands.
Thesis Presentation
- 1. THE EFFECTS OF THE GLOBAL RECESSION OF 2007-2009 ON THE AUTOMOBILE INDUSTRY BY JASON DILLMAN
- 2. OUTLINE • THE RECESSION OF 2007-2009 • IMPACT ON CONSUMER BEHAVIORS • NORTH AMERICAN MANUFACTURERS • FORD MOTOR COMPANY • GENERAL MOTORS • CHRYSLER LLC • EUROPEAN MANUFACTURERS • BMW AG • DAIMLER AG • VOLKSWAGEN GROUP • ASIAN MANUFACTURERS • TOYOTA MOTOR CORPORATION • HONDA MOTOR CO., LTD. • NISSAN MOTOR CO. LTD. • HYUNDAI AUTOMOTIVE GROUP • CONCLUSIONS • QUESTIONS Objective: To analyze the impact of the global recession on the 10 major automobile manufacturers in the U.S. market and observe the strategies that were used.
- 3. GLOBAL RECESSION OF 2007-2009 • AKA “THE GREAT RECESSION” • DECEMBER 2007 – JULY 2009 • PRIMARY CAUSES • CHAOS IN THE US FINANCIAL MARKET • IRRESPONSIBLE MORTGAGE LENDING • FALSE CREDIT RATINGS • COLLAPSE OF $8 TRILLION HOUSING BUBBLE • PRIMARY EFFECTS • BANKRUPTCY OF LARGE BANKS • PANIC AND DISTRUST FROM LENDERS • INABILITY FOR BUSINESSES TO BORROW MONEY TO CONTINUE OPERATIONS • LOSS OF 8.4 MILLION JOBS IN THE US
- 4. IMPACT ON CONSUMER BEHAVIORS REGARDING AUTOMOBILES • AUTOMOBILES WERE ONE PURCHASE THAT CONSUMERS COULD HOLD OFF ON BUYING FOR SEVERAL YEARS IF NECESSARY • AS EMPLOYMENT WENT DOWN, CONSUMERS PURCHASED MUCH LESS VEHICLES AND WAITED UNTIL AFTER THE RECESSION • CONSUMERS PURCHASING VEHICLES MORE SO LOOKED FOR: • PREMIUM VEHICLES • EFFICIENT ENGINES (TYPICALLY 4-CYLINDER) • AS A RESULT, AUTOMOBILE MANUFACTURERS SUFFERED ENORMOUS DECREASES IN SALES
- 5. NORTH AMERICAN AUTO MANUFACTURERS: FORD MOTOR COMPANY • COMPANY WAS ALREADY DOING POOR BECAUSE OF FOREIGN AND DOMESTIC COMPETITION • IMPACT: • SALES DECREASED TO CAUSE NEAR BANKRUPTCY • AVOIDED BAILOUT BECAUSE OF $23 BILLION IN MORTGAGED MONEY BEFORE RECESSION • STRATEGY: • SELL ALL FOREIGN BRANDS AND DECREASE SHARES IN MAZDA • DROP MERCURY BRAND • MAKE POPULAR MODELS AVAILABLE IN EVERY MARKET • FOCUS ON MAKING MORE FUEL EFFICIENT VEHICLES TO FIT CONSUMER DEMAND
- 6. NORTH AMERICAN MANUFACTURERS: GENERAL MOTORS COMPANY • LARGEST CAR COMPANY IN THE WORLD • MOST BRANDS USED SAME TECHNOLOGY • ANNUALLY REDUCED QUALITY AND INCREASED PRICES • IMPACT: • BIGGEST LOSS OF SALES, WHICH CAUSED THE COMPANY BANKRUPTCY AND NEED FOR GOVERNMENT BAILOUT • RESTRUCTURE: • CLOSED SEVERAL PLANTS, AND LAID OFF 21,000 EMPLOYEES • CUT WAGES AND BENEFITS • REDUCED LINEUP TO ONLY CONSIST OF CHEVROLET, BUICK, CADILLAC, AND GMC
- 7. NORTH AMERICAN MANUFACTURERS: CHRYSLER LLC • LAGGED FAR BEHIND FORD AND GM IN SALES • RECENTLY FAILED PARTNERSHIP WITH DAIMLER AG AND WERE SOLD TO AN EQUITY FRIM, CERBERUS CAPITAL MANAGEMENT • IMPACT: • IMMEDIATELY WENT BANKRUPT AND REQUIRED A BAILOUT • NEW OWNERSHIP: • ITALIAN COMPANY FIAT S.P.A., PAID OFF THE GOVERNMENT DEBT AND PURCHASED THE COMPANY TO BECOME FIAT- CHRYSLER AUTOMOBILES (FCA) • FIAT S.P.A. DID NOT OFFER MONEY, ONLY NEW TECHNOLOGY • REDESIGNED CHRYSLER PRODUCTS TO OFFER SMALLER AND MORE EFFICIENT VEHICLES
- 8. EUROPEAN MANUFACTURERS: BMW AG • BMW BRAND WAS NO. 1 BEST-SELLING LUXURY VEHICLE IN THE WORLD • EACH BRAND WAS NO. 1 PREMIUM VEHICLE IN THEIR CLASS • IMPACT: • LOST SALES AS THEY DID NOT OFFER SMALLER ENGINES • STRATEGY: • MAKE ALL MODELS FULLY CUSTOMIZABLE TO FIT CONSUMER NEEDS AND KEEP INVENTORY LOW • ALLOW WORKERS TO BANK HOURS DURING BUSY TIMES AND TAKE OFF EXTENDED PERIODS OF TIME WHEN BUSINESS WAS SLOW • BARGAIN FOR GERMAN GOVERNMENT TO PAY 80% OF THEIR FIFTH WORK DAY WAGES • BEGIN TO BUILD VEHICLES WITH SMALLER ENGINES
- 9. EUROPEAN MANUFACTURERS: DAIMLER AG • MERCEDES-BENZ WAS NO. 2 BEST-SELLING LUXURY CAR IN THE WORLD • CONTINUOUSLY NEGLECTED FUEL ECONOMY IN THEIR VEHICLES • IMPACT: • MERCEDES-BENZ LOST SALES BECAUSE OF THEIR LARGE SIZE AND INEFFICIENCY • SMART LOST ALMOST AS MANY SALES AS HUMMER • STRATEGY: • FOCUS ON CHINESE MARKET, WHICH DEMANDED LARGER VEHICLES LIKE MERCEDES-BENZ • LET SMART CONTINUE TO STRUGGLE • ELIMINATE MAYBACH
- 10. EUROPEAN MANUFACTURERS: VOLKSWAGEN GROUP • ENJOYED HIGH GLOBAL SALES, BUT SUFFERED FROM LOW US SALES • HAD A GOAL TO BECOME THE LARGEST CAR COMPANY IN THE WORLD • IMPACT: • THE COMPANY AVOIDED LOSING AS MANY SALES AS MOST OTHER AUTOMOBILE MANUFACTURERS • STRATEGY: • START AGGRESSIVE ADVERTISING CAMPAIGN • ACQUIRED TWO COMMERCIAL VEHICLE COMPANIES, SCANIA AND MAN • INCREASED PRESENCE IN EMERGING MARKETS, PRIMARILY CHINA AND SOUTH AMERICA
- 11. ASIAN MANUFACTURERS: TOYOTA MOTOR CORPORATION • Second largest car company in the world • Expanded too quickly in attempts to top GM and had several recalls • Impact: • Lost almost as many sales as GM and Chrysler • Strategy: • Allow workers to bank hours during busy times and take off extended periods of time when business was slow • Provide workers reduced paid time off to do community service to improve public relations • Did not lay off a single worker
- 12. ASIAN MANUFACTURERS: HONDA MOTOR C0., LTD. • ALREADY OFFERED THE MOST RELIABLE AND FUEL EFFICIENT CARS • IMPACT: • LOST SALES REGARDLESS AS CONSUMERS BOUGHT LESS VEHICLES IN GENERAL • STRATEGY: • SAVE MONEY BY PULLING OUT OF FORMULA ONE • REDUCE EMPLOYEE WAGES • PROVIDE WORKERS REDUCED PAID TIME OFF TO DO COMMUNITY SERVICE TO IMPROVE PUBLIC RELATIONS • CLOSE FACTORIES TO REBUILD AND UPDATE TECHNOLOGY
- 13. ASIAN MANUFACTURERS: NISSAN MOTOR CO., LTD. • IN A PARTNERSHIP WITH RENAULT, WHICH HELPED THEM OBTAIN STRONG SALES IN GLOBAL MARKETS • IMPACT: • THEY LOST ALMOST AS MANY SALES AS GM, CHRYSLER, AND TOYOTA • STRATEGY: • REMOVE FOCUS ON THE SATURATED US MARKET • INCREASE PRESENCE IN BRAZIL, RUSSIA, INDIA, AND CHINA • PURCHASE 25% OF AVTOVAZ TO INCREASE RUSSIAN SALES
- 14. ASIAN MANUFACTURERS: HYUNDAI AUTOMOTIVE GROUP • WERE CRITICIZED FOR: • BEING LOW QUALITY • LACKING R&D • LOW CONSUMER RECOGNITION • FOCUSED WAS ON SELLING VEHICLES TO CONSUMERS WITH LOW INCOME • IMPACT: • ONE OF THE ONLY AUTO MANUFACTURERS TO INCREASE THEIR SALES • STRATEGY: • HYUNDAI ASSURANCE PLAN
- 15. CONCLUSIONS • NORTH AMERICAN MANUFACTURERS • DO: • FINANCIALLY PREPARE FOR RECESSIONS • REDUCE SIZE OF COMPANY TO BECOME MANAGEABLE • DO NOT: • EXPAND COMPANY PAST WHAT CAN BE REASONABLY MANAGED • SATURATE BRAND LINEUP • IGNORE CONSUMER TASTES AND PREFERENCE • REDUCE QUALITY OF VEHICLES AND INCREASE PRICE IN ATTEMPTS TO PROFIT
- 16. CONCLUSIONS • EUROPEAN MANUFACTURERS • DO: • OFFER PREMIUM VEHICLES • RESTRUCTURE COMPANY TO AVOID LOSING SKILLED WORKERS • FOCUS ON REALISTIC FUTURE INNOVATIONS, SUCH AS BETTER FUEL EFFICIENCY • SHIFT FOCUS ON MARKETS THAT DEMANDS THE COMPANY’S VEHICLES • ADVERTISE TO IMPROVE BRAND IMAGE • DO NOT: • IGNORE CONSUMER TASTES AND PREFERENCES IN ANY MARKET • DEVELOP DRASTIC INNOVATIONS LIKE SMART DURING HARD ECONOMIC TIMES
- 17. CONCLUSIONS • ASIAN MANUFACTURERS • DO: • RESTRUCTURE COMPANY TO AVOID LOSING SKILLED WORKERS • ANALYZE AND CUT UNNECESSARY COSTS TO SAVE MONEY • UNDERSTAND CONSUMER FEARS LIKE HYUNDAI DID WITH ASSURANCE PLAN • DO NOT: • EXPAND COMPANY PAST WHAT CAN BE REASONABLY MANAGED
- 18. QUESTIONS?