A Research Report on the Change in Global Auto Industry (II)

The major findings

The global auto industry will not change in its structural pattern, but some of the mainstream automakers will fall and others will rise in their strength: The U.S. auto industry will not vanish, either, but their corporate might will shrink; Japanese carmakers are internally injured and will slow down their expansion; the German and S. Korean automakers will relatively benefit, although their profits are affected.

General Motors has been forced to sell most of the acquired auto shares or assets, a case which can remind carmakers to be more careful in their choice of expansion mode. The "Renault-Nissan Alliance" mode is considered superior to the direct M&A (mergers and acquisitions) and the integration of operations.

Auto-parts suppliers are heavily hit by this round of auto industry's pattern adjustment, their integration will increase, and the M&A wave will emerge again among the suppliers.

Of the affected mainstream automakers, General Motors filed for bankruptcy protection and is certainly the most hit and most injured carmaker. But it is unclear yet whether the company will revive or deteriorate after the major surgery of bankruptcy protection. It is widely believed that challenge will be bigger than the chance.

Toyota Motor was severely hit by this crisis (suffering losses for the first time in more than 70 years) and the internal injury exposed by the company has staggered the industry. But after the trauma, Toyota will adjust its strategies and management, and its short-term losses are likely to last one or two years. Effective reform, if any, will change the Japanese carmaker for the better.

Volkswagen and Hyundai have relatively benefited from this round of financial crisis. In the coming few years, the two companies are expected to seize the opportunities and expand their territories in the global auto industry.

The crisis-triggered change in the auto industry will make a profound impact on the development of the players in the Chinese market -- including global brands' ventures in China as well as the Chinese-brand carmakers themselves. Global carmakers will pay more attention to the Chinese market, and they have very different urgent needs for enhancing the investment in China.

In addition, the strategic choices of global auto companies will mainly focus on investing more in low-end, small vehicle models in the Chinese market, penetrating further into China's tier-2 and tier-3 cities and using more local suppliers.

The financial crisis has led to the deterioration of the external environment of the international market. The opportunity is getting smaller for Chinese-brand carmakers to take part in overseas competition, and they suffer temporary setbacks at the beginning of their globalization.

Local automakers profit by adversity as the Chinese government has released a slew of stimulus policies for the auto market. This is a chance for Chinese automakers to get closer to global carmakers in the China market competition. But this may also make some Chinese companies blindly optimistic, which will cause their strategic blunders in future.

(To be continued)

A Research Report on the Change in Global Auto Industry (I)

A Research Report on the Change in Global Auto Industry (III)

A Research Report on the Change in Global Auto Industry (IV)

A Research Report on the Change in Global Auto Industry (V)

A Research Report on the Change in Global Auto Industry (VI)

A Research Report on the Change in Global Auto Industry (VII)

A Research Report on the Change in Global Auto Industry (VIII)

A Research Report on the Change in Global Auto Industry (IX)

A Research Report on the Change in Global Auto Industry (X)

A Research Report on the Change in Global Auto Industry (XI)

A Research Report on the Change in Global Auto Industry (XII)

A Research Report on the Change in Global Auto Industry (XIII)

A Research Report on the Change in Global Auto Industry (XIV)

A Research Report on the Change in Global Auto Industry (XV)

A Research Report on the Change in Global Auto Industry (XVI)

A Research Report on the Change in Global Auto Industry (XVII)