1 Industry Characteristics and trends.
is a German automaker that operates in the global automotive industry as a manufacturer and distributor. Volkswagen of America is one of its subsidiaries that based in the United States. Volkswagen's New Beetle is produced to target in the upper small car sector. The automotive industry is a consolidated industry as there are increasing number of joint ventures, takeovers and strategic alliances.
1.1.2 Market Size.
In the U.S., there were 8,272,042 unit of cars sold in 1997, which that include small cars, middle cars, large cars and luxury cars. There are three different segments (lower small, upper small, and small specialty) within the small car sector, and there were total 2,217,148 units of small cars sold in the U.S in 1997; it represents 27% of the total car market. In the small car sector, VW occupied a 5.04% market share and sold 111,686 cars in 1997. (See appendix Table 1).
1.1.3 Market growth.
The industry is in its mature stage of its life cycle as the sales and demand of those products are slowly decreasing and also experiencing increasing mergers and acquisitions. There were 3% drop in the total units car sales and the 4.5% decrease for the total small car sales between 96 and 97. (See appendix Table 1).
At this stage, new technology to break through the traditional production process or introduction of new product would be required in order to expand the industry life cycle. The introduction of New Beetle in 1998 is an example that VW tried to revive the matured market and the slumping sales of VW's franchise. Therefore, the New Beetle is in its introduction stage of its product life cycle.
1.1.4 Key trends in the industry.
Increasing running expense of cars.
Extending brands carried by dealers.
Consolidation, repositioning creative solutions by all automakers for volatile earning streams.
Worldwide mergers, acquisitions, joint ventures, strategic alliances and other financial arrangements are on the rise, making the automotive industry more global.