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IE Application: Essay h
1. H. What do you believe are the greatest
challenges facing the sector or industry you
would like to specialize in at IE? What role do
you hope to be able to play in this sector or
industry in the medium term?
Sebastiano Peroni
2. The global automotive industry
Overall, the global automotive industry is more
profitable than it was five years ago.
By 2020, global profits for automotive OEMs are
expected to rise by almost 50 %. This growth will be
mainly driven by the emerging markets, such as China;
a stagnant growth of profits is forecast for U.S, Europe,
Japan and South Korea.
3. How are evolving the market and the industry?
By 2020, global profits could increase by another EUR 25
billion, to EUR 79 billion.
The benefits will be not equally distributed among all
geographic areas or types of cars; indeed, some regions
will do much better than others.
4. The Europe decline
• The BRICs (Brazil, Russia, India, China) and RoW (rest
of the world) increased by 60 percent their profits.
• While China made profits for EUR 18 billions, sales
dropped significantly in Europe, North America,
Japan and South Korea.
European industry decreased: from the recorded
profits of EUR 15 billions in 2007 to a loss of EUR 1
billion in 2012.
5. In the recent past the source of profits shifted
2007 2008 2009 2010 2011 2012
BRIC and ROW 12 10 5 18 26 31
North America 9 -11 6 16 16 23
Europe 15 6 0 3 7 -1
Japan and South Korea 5 -3 -6 -4 -6 1
-20
-10
0
10
20
30
40
50
60
EURbillions
Profit development by geography
6. Which reasons for this decline in Europe?
• fewer people bought cars (four million units less),
principally due to the European Government
austerity measures after the economic crisis;
• the decline in sales increased the cost pressure on
producers, as capacity utilization dropped in many
plants;
• the fierce competition, which kept down prices; this
factor was an advantage for emerging markets.
7. What future for European automotive sector?
While premium manufacturers did not decrease in
sales thanks to their global position, high volume
producers have been dramatically hit by the drop in
demand.
8. What decision must be taken by European
producers?
•To increase competitiveness, automakers must take
measures to reduce rising costs (in the long term);
•To plan and organize flexible production systems;
•To transfer some plants to other location to improve
the cost position in the long term;
•To use the consolidation model of US to address
overcapacity.
100 94
55
105
0
50
100
150
2000 2005 2009 2013
Consolidation in North America
Rate of
utilization
70
80
90
100
110
2000 2005 2009 2013
Growing overcapacities in
Europe
9. Emission regulations
New regulations are encouraging
OEMs to invest in e-mobility
They trigger higher costs; in Europe the 2020 target should
be reached with advanced conventional technologies.
Electric vehicles may be the answer for the future;
European producers should focus on them.
10. What is needed in the European automotive
sector?
European vision
Combined with an International
overview; emerging markets are
increasing their importance.
11. I always search for the most demanding challenges.
This program will allow me to gain the skills that are
necessary to bring new ideas in this sector in order
to increase profits and support a sustainable
development.
My role in the medium term
12. IE would give me the opportunity to analyze and
understanding the global markets and practice to
be a decision maker; to be a manager means handle
perfectly different factors. An international network
like IE is the proper University to prepare a well-
trained international manager.
European automotive industry should be open
towards the global market.
This is the greatest challenge for the future of
European automotive industry.