Thursday, June 01, 2006

The ongoing Trend in auto Industry: Shifting from Big to Small

Written by: S.M. Mehdi Hassan
The automobile industries around the world are now going through a tough time. Rising fuel price has created serious problems for automobile buyers and users. However, this did not decrease the sales and production of automobiles rather the demand of automobile is increasing in many countries like India and China. However, now days, price and fuel efficiency has shifted consumers’ attention to smaller and fuel efficient cars. Famous Japanese auto analyst Takaki Nakanishi, said that the ability to lower price and lower production cost can bring success to the automakers. I am quoting from the report:
As demand for better mileage grows and governments tighten emissions standards around the world, the pressure has grown on global auto makers to pump out cash to develop fuel-efficient and cleaner powertrains.
At the same time, pricing remains tough as weaker brands such as General Motors Corp. and Ford Motor Co. push profit-eroding deals to sell their cars.
"If you look at what's happening now, gasoline prices are the factor most likely to tip the balance," said Takaki Nakanishi,
Nakanishi, Managing Director and Head of Japanese Equity Research at JP Morgan, was ranked the top analyst by Institutional Investor magazine and the Nikkei Financial Daily. In an interview with Reuters he said that better mileage and tight emissions standards has put pressure on automobile producers to produce small fuel efficient vehicles.
American top three automobile producers General Motors, Ford Motors and Daimler Chryslers are now going through a tough time because of their trend to produce big sports utility vehicles that wastes huge amount of fuel. On the contrary, Japanese automobile companies like Toyota, Honda, Nissan are taking advantage of the situation.
Nakanishi said that in the next ten years.

Related article:
Cost and pricing power key in auto sector