Hybrid cars

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  • This analysis examines the hybrid automobile market and industry by taking a detailed look at the market, trends, competition, and a SWOT analysis. We will examine hybrid electric vehicles which typically combine the internal combustion engine of a conventional vehicle with the battery and electric motor of an electric vehicle. For purposes of our research, further attention is given to Toyota, a leader in the hybrid industry, in order to provide a standard for the industry and a benchmark for comparison and expectation of trends.
  • The black line shows hybrid sales continuing at their current pace since hybrids were introduced in 2000. In the five-year timeframe
  • This is the place for getting a better understanding of the hybrid market: the people making, buying and driving green cars. What began as a movement of tree-huggers and technophiles has expanded to more than 1 million hybrid owners.
  • The ability for hybrid automobiles to succeed today is measured according to several key success factors. Limitations among suppliers cause poor or restricted manufacturing efficiency. The industry needs to be able to decrease supplier power thus increasing control of production quality and quantity. While the cost recovery of hybrids is a selling point, for the industry to be successful it is necessary that hybrid products appeal to consumers independently of fluctuations in the economy. The industry needs to make efficiency and reduced emissions a priority above saving money at the pump. As with any new technology consumer education must preempt adoption. The novelty of a new technology only draws a small crowd, for hybrids to be fully successful manufacturers need to ramp up efforts to educate and inform consumers about the hybrid engine and break down myths which might hurt their industry. Another key success factor involves continuing to introduce hybrid vehicle technology through already familiar products. Pre-existing models, such as the Lexus RX, simply incorporated hybrid technology into the already popular vehicle. This allows for better ease of adoption and the ability for consumers to keep purchasing their favored vehicles.
  • Hybrid cars

    1. 1. THE EARLY MARKET OF HYBRID CARS Business English – Advanced LUISS MBA 11/07/2011 Ophélie Champeaux, Jihee Shin, Nataliya Gavryuk
    2. 2. INDEX <ul><li>Market Analysis </li></ul><ul><li>Industry Concerns and Prospectives </li></ul><ul><li>Pros and Cons </li></ul><ul><li>Your Questions </li></ul>07/11/11 LUISS MBA
    3. 3. HYBRID MARKET ANALYSIS <ul><li>Market size and growth rate </li></ul><ul><li>Profitability </li></ul><ul><li>Customers </li></ul><ul><li>5 Competitive Forces </li></ul><ul><li>Competitors </li></ul><ul><li>Key Success Factors </li></ul>07/11/11 LUISS MBA
    4. 4. MARKET SIZE AND GROWTH RATE <ul><li>The largest hybrid car markets are U.S. and Japan </li></ul><ul><li>In U.S. since their inception in 1999 more than 2 million hybrid electric automobiles and SUVs have been sold until May 2011 </li></ul><ul><li>The top selling hybrid car in the U.S. is the Toyota Prius , with 1,017,281 units sold until May 2011 </li></ul><ul><li>The industry growth rate is in average 14% per year </li></ul>07/11/11 LUISS MBA
    5. 5. MARKET SIZE AND GROWTH RATE 07/11/11 LUISS MBA Top national markets for hybrid electric vehicles between 2007 and 2009 Rank Country Number of registered hybrids 2009 Percent of global hybrid registrations 2009 Number of registered hybrids 2008 Percent of global hybrid registrations 2008 Number of registered hybrids 2007 Percent of global hybrid registrations 2007 1   Japan 334,000 45% 94,259 18% 69,015 14% 2   United States 290,271 39% 312,209 61% 350,289 70% 3   Canada 16,167 (1) 2% 15,385 3% 14,828 3% 4   Netherlands 13,686 (1) - 11,814 2% n.a. (2) - 5   United Kingdom 13,661 (1) - 19,963 4% 15,968 3% Top 5 - - 453,630 89% 457,615 91% World 740,000 511,758 500,405 Notes: (1) Cumulative sales until November 2009 only. (2) For year 2007 Netherlands was not among the top 5 world markets. Germany , with 7,515 hybrids sold, was the fifth country in the rank.
    6. 6. MARKET SIZE AND GROWTH RATE 07/11/11 LUISS MBA
    7. 7. MARKET PROFITABILITY <ul><li>The Average Price: </li></ul><ul><li>Affordable </li></ul><ul><li>Vehicles are priced between $20,000 and $30,000 . </li></ul><ul><li>The 2010 Toyota Prius has a starting price of $22,000 . </li></ul><ul><li>Upscale </li></ul><ul><li>Because of its $40,000 price tag, Chevrolet Volt is classified as an &quot;Upscale Midsize Car.&quot; </li></ul><ul><li>Luxury </li></ul><ul><li>The 2010 Lexus HS 250h shares the same platform as the Toyota Prius but is 40% more powerful. </li></ul><ul><li>It offers luxury features associated with the Lexus brand and sells for about $34,000. </li></ul>07/11/11 LUISS MBA
    8. 8. WHO BUYS AND DRIVES HYBRID CARS? <ul><li>The common misconception is that hybrid buyers are young and trendy . In reality, hybrid drivers are older than the average car buyer. </li></ul>07/11/11 LUISS MBA
    9. 9. PROFILE OF HYBRID DRIVERS <ul><li>Have higher income , much higher than the average car buyer. </li></ul><ul><li>Are a few years older than the average car buyer. </li></ul><ul><li>Twice as likely to claim to go skiing, hiking, or practice yoga than non-hybrid owners. </li></ul><ul><li>Consume more organic food , yogurt, and decaffeinated coffee than the general population. </li></ul><ul><li>Have above-average tech savvy skills. </li></ul>07/11/11 LUISS MBA
    10. 10. HYBRID AUTOMOTIVE INDUSTRY’S 5 COMPETITIVE FORCES <ul><li>Threat of new entrants: </li></ul><ul><li>The hybrid industry requires high capital </li></ul><ul><li>Switching costs to the buyer are high because of: </li></ul><ul><li>search costs </li></ul><ul><li>financial risks </li></ul><ul><li>research and education </li></ul><ul><li>negotiation </li></ul><ul><li>efforts to sell pre-existing vehicles. </li></ul>07/11/11 LUISS MBA
    11. 11. HYBRID AUTOMOTIVE INDUSTRY’S 5 COMPETITIVE FORCES <ul><li>Power of suppliers and buyers: </li></ul><ul><li>Have little power in the hybrid industry </li></ul><ul><li>The volume of purchase is low - only 1.26% of automobile sales. </li></ul><ul><li>Hybrids are highly available and sold at thousands of dealerships, online, or through independent sellers. </li></ul>07/11/11 LUISS MBA
    12. 12. HYBRID AUTOMOTIVE INDUSTRY’S 5 COMPETITIVE FORCES <ul><li>Availability of substitutes: </li></ul><ul><li>Hybrid vehicles are still new products and the availability of substitutes is low . </li></ul><ul><li>Competitive rivalry: </li></ul><ul><li>Is minimal because: </li></ul><ul><li>product differentiation among hybrids is high </li></ul><ul><li>switching costs for the customers are high </li></ul><ul><li>there are only 5 competitors . </li></ul>07/11/11 LUISS MBA
    13. 13. COMPETITORS 07/11/11 LUISS MBA Hybrid sales by manufacturer and model
    14. 14. KEY SUCCESS FACTORS <ul><li>High industry growth rate </li></ul><ul><li>Little power of suppliers and buyers </li></ul><ul><li>High availability of hybrids on the market </li></ul><ul><li>Low competitive rivalry </li></ul><ul><li>Producers could introduce hybrid vehicle technology through already familiar products </li></ul>07/11/11 LUISS MBA
    15. 15. ON THE MANUFACTURERS' SIDE THE OUTPUTS <ul><li>Different grades of hybridation... </li></ul><ul><li>Micro-hybrid (Citroen stop and start models) </li></ul><ul><li>Full-hybrid (Honda Insight, Toyota Prius) </li></ul><ul><li>Full electric </li></ul><ul><li>Refillable (Chevrolet Volt) </li></ul><ul><li>… For different positioning strategies </li></ul><ul><li>Different needs: city driving, major energy savings, « green » cars </li></ul><ul><li>Different levels of technological advance : BMW mild hybrid developed in Formula 1 </li></ul>07/11/11 LUISS MBA
    16. 16. ON THE MANUFACTURERS' SIDE HOW TO BECOME A MARKET LEADER <ul><li>Toyota Prius vs Honda Civic : </li></ul><ul><ul><li>Toyota's leadership in car industry </li></ul></ul><ul><ul><li>The Prius supremacy </li></ul></ul><ul><ul><li>2 strategies : </li></ul></ul><ul><ul><ul><li>a full lineup to settle in the emerging market of the hybrid cars </li></ul></ul></ul><ul><ul><ul><li>a focus on the small cars and the existing consumers </li></ul></ul></ul><ul><li>The technological advantage : </li></ul><ul><ul><li>Toyota vs Nissan </li></ul></ul><ul><ul><li>Fiat helping Chrysler to compete on the US market </li></ul></ul>07/11/11 LUISS MBA
    17. 17. ON THE MANUFACTURERS' SIDE THE SPECIFIC COSTS OF THE HYBRID MAKING <ul><li>Technological costs often seen as a burden in an early market </li></ul><ul><ul><li>Competition </li></ul></ul><ul><ul><li>State requirements </li></ul></ul><ul><li>R&D, industrial shipments, marketing </li></ul><ul><li>JPMorgan and Chase (2008) : cut in the cost of gas-electric systems for carmakers : </li></ul><ul><ul><li>2008 : $ 5.869 a piece </li></ul></ul><ul><ul><li>2018 : $ 1.919 a piece </li></ul></ul><ul><ul><li>-> -67% </li></ul></ul><ul><li>An expected growth in the sales should definitely drive the hybrid cars business model towards economical success in the next 10 years </li></ul>07/11/11 LUISS MBA
    18. 18. ON THE MANUFACTURERS' SIDE THE SPECIFIC COSTS OF THE HYBRID MAKING <ul><li>Technological costs often seen as a burden </li></ul><ul><ul><li>Competition </li></ul></ul><ul><ul><li>State requirements </li></ul></ul><ul><li>R&D, industrial shipments, marketing </li></ul><ul><li>JPMorgan and Chase (2008) : cut in the cost of gas-electric systems for carmakers : </li></ul><ul><ul><li>2008 : $ 5.869 a piece </li></ul></ul><ul><ul><li>2018 : $ 1.919 a piece </li></ul></ul><ul><ul><li>-> -67% </li></ul></ul><ul><li>An expected growth in the sales should definitely drive the hybrid cars business model towards economical success in the next 10 years </li></ul>07/11/11 LUISS MBA
    19. 19. ON THE MANUFACTURERS' SIDE MAIN CHALLENGES ON THE ROAD TO MATURITY <ul><li>Market growth </li></ul><ul><ul><li>US : mass market and lower prices </li></ul></ul><ul><ul><li>Europe : the diesel competitor and the import taxes </li></ul></ul><ul><li>The Green concern and the public incentives </li></ul><ul><ul><li>The US C.A.F.E. Standards: a planning tool </li></ul></ul><ul><ul><li>The EU's will to grow green </li></ul></ul>07/11/11 LUISS MBA
    20. 20. WHAT MAKES HYBRID CAR STRONG <ul><li>Better fuel efficiency than other similar size cars (up to 80% of fuel consumption reduction) </li></ul><ul><li>Comfortable and quiet ride, smooth acceleration and braking without gear changes </li></ul><ul><li>Spacious interior </li></ul><ul><li>High scoring in safety tests </li></ul><ul><li>Low pollution </li></ul><ul><li>Good performance for normal use </li></ul>07/11/11 LUISS MBA
    21. 21. Crash Test Result 07/11/11 LUISS MBA Front Impact Toyota Camry Toyota Camry Hybrid Toyota Camry Toyota Camry Hybrid Passenger’s Side Driver ‘s Side Safety Rating ***** ***** ***** ***** Head Injury Criterion 522 HIC 522 HIC 505 HIC 505 HIC Chest Deceleration 41 g 41 g 41 g 41 g Left Femur Load 804 Ibs 804 Ibs 411 Ibs 411 Ibs Right Femur Load 233 Ibs 233 Ibs 547 Ibs 547 Ibs Side Impact Rear Occupant Front Occupant Thoracic Trauma Index 55 55 42 42 Pelvis Deceleration 51 51 57 57
    22. 22. HYBRID CAR DESIGN 07/11/11 LUISS MBA
    23. 23. WHAT MAKES HYBRID CAR WEAK <ul><li>Remain reliant on fossil fuel </li></ul><ul><li>More expensive than other similar size car </li></ul><ul><li>Fuel economy can be highly dependent on season, climate, driving style </li></ul><ul><li>Special attention requested for servicing, repairs, etc </li></ul><ul><li>Difficulties and inefficiencies to purchase components </li></ul><ul><li>Less exhilarating acceleration </li></ul>07/11/11 LUISS MBA
    24. 24. HYBRID SALES AND GAS PRICE: A DIRECT CONNECTION 07/11/11 LUISS MBA
    25. 25. OPPORTUNITIES OF HYBRID CAR MARKET <ul><li>Evolution into a &quot;Plug-in Hybrid&quot; with higher capacity batteries and designed to operate for extended periods in electric-only mode </li></ul><ul><li>Spread into other market sectors (as industrial power plant) </li></ul><ul><li>Increasing awareness of environmental issues likely to keep demand high. </li></ul><ul><li>Method to produce more fuel efficient, greater performance and less impact to the environment </li></ul><ul><li>Governments seeking to meet Kyoto targets etc. </li></ul><ul><li>Additional incentives for cars such as that one with lower emissions </li></ul>07/11/11 LUISS MBA
    26. 26. RISKS OF HYBRID CAR MARKET <ul><li>Various rumors continually circulated attempting to undermine its credentials, particularly from &quot;petrol-heads“  decrease credibility / consumer confidence </li></ul><ul><li>Risk to lose market share in case fuel prices fall significantly </li></ul>07/11/11 LUISS MBA
    27. 27. Would you buy a Hybrid Car? If not sure, ask now!!! 07/11/11 LUISS MBA

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