Powerpoint slides for my thesis presentation

1. THE EFFECTS OF THE GLOBAL
RECESSION OF 2007-2009 ON
THE AUTOMOBILE INDUSTRY
BY JASON DILLMAN

2. OUTLINE
• THE RECESSION OF 2007-2009
• IMPACT ON CONSUMER BEHAVIORS
• NORTH AMERICAN MANUFACTURERS
• FORD MOTOR COMPANY
• GENERAL MOTORS
• CHRYSLER LLC
• EUROPEAN MANUFACTURERS
• BMW AG
• DAIMLER AG
• VOLKSWAGEN GROUP
• ASIAN MANUFACTURERS
• TOYOTA MOTOR CORPORATION
• HONDA MOTOR CO., LTD.
• NISSAN MOTOR CO. LTD.
• HYUNDAI AUTOMOTIVE GROUP
• CONCLUSIONS
• QUESTIONS
Objective: To analyze the
impact of the global recession
on the 10 major automobile
manufacturers in the U.S.
market and observe the
strategies that were used.

3. GLOBAL RECESSION OF 2007-2009
• AKA “THE GREAT RECESSION”
• DECEMBER 2007 – JULY 2009
• PRIMARY CAUSES
• CHAOS IN THE US FINANCIAL MARKET
• IRRESPONSIBLE MORTGAGE LENDING
• FALSE CREDIT RATINGS
• COLLAPSE OF $8 TRILLION HOUSING BUBBLE
• PRIMARY EFFECTS
• BANKRUPTCY OF LARGE BANKS
• PANIC AND DISTRUST FROM LENDERS
• INABILITY FOR BUSINESSES TO BORROW MONEY TO CONTINUE OPERATIONS
• LOSS OF 8.4 MILLION JOBS IN THE US

4. IMPACT ON CONSUMER BEHAVIORS REGARDING
AUTOMOBILES
• AUTOMOBILES WERE ONE PURCHASE THAT CONSUMERS COULD HOLD OFF ON BUYING
FOR SEVERAL YEARS IF NECESSARY
• AS EMPLOYMENT WENT DOWN, CONSUMERS PURCHASED MUCH LESS VEHICLES AND
WAITED UNTIL AFTER THE RECESSION
• CONSUMERS PURCHASING VEHICLES MORE SO LOOKED FOR:
• PREMIUM VEHICLES
• EFFICIENT ENGINES (TYPICALLY 4-CYLINDER)
• AS A RESULT, AUTOMOBILE MANUFACTURERS SUFFERED ENORMOUS DECREASES IN SALES

5. NORTH AMERICAN AUTO MANUFACTURERS:
FORD MOTOR COMPANY
• COMPANY WAS ALREADY DOING POOR BECAUSE OF FOREIGN AND
DOMESTIC COMPETITION
• IMPACT:
• SALES DECREASED TO CAUSE NEAR BANKRUPTCY
• AVOIDED BAILOUT BECAUSE OF $23 BILLION IN MORTGAGED MONEY BEFORE
RECESSION
• STRATEGY:
• SELL ALL FOREIGN BRANDS AND DECREASE SHARES IN MAZDA
• DROP MERCURY BRAND
• MAKE POPULAR MODELS AVAILABLE IN EVERY MARKET
• FOCUS ON MAKING MORE FUEL EFFICIENT VEHICLES TO FIT CONSUMER
DEMAND

6. NORTH AMERICAN MANUFACTURERS:
GENERAL MOTORS COMPANY
• LARGEST CAR COMPANY IN THE WORLD
• MOST BRANDS USED SAME TECHNOLOGY
• ANNUALLY REDUCED QUALITY AND INCREASED PRICES
• IMPACT:
• BIGGEST LOSS OF SALES, WHICH CAUSED THE COMPANY
BANKRUPTCY AND NEED FOR GOVERNMENT BAILOUT
• RESTRUCTURE:
• CLOSED SEVERAL PLANTS, AND LAID OFF 21,000 EMPLOYEES
• CUT WAGES AND BENEFITS
• REDUCED LINEUP TO ONLY CONSIST OF CHEVROLET, BUICK,
CADILLAC, AND GMC

7. NORTH AMERICAN MANUFACTURERS:
CHRYSLER LLC
• LAGGED FAR BEHIND FORD AND GM IN SALES
• RECENTLY FAILED PARTNERSHIP WITH DAIMLER AG AND WERE
SOLD TO AN EQUITY FRIM, CERBERUS CAPITAL MANAGEMENT
• IMPACT:
• IMMEDIATELY WENT BANKRUPT AND REQUIRED A BAILOUT
• NEW OWNERSHIP:
• ITALIAN COMPANY FIAT S.P.A., PAID OFF THE GOVERNMENT
DEBT AND PURCHASED THE COMPANY TO BECOME FIAT-
CHRYSLER AUTOMOBILES (FCA)
• FIAT S.P.A. DID NOT OFFER MONEY, ONLY NEW TECHNOLOGY
• REDESIGNED CHRYSLER PRODUCTS TO OFFER SMALLER AND
MORE EFFICIENT VEHICLES

8. EUROPEAN MANUFACTURERS:
BMW AG
• BMW BRAND WAS NO. 1 BEST-SELLING LUXURY VEHICLE IN THE WORLD
• EACH BRAND WAS NO. 1 PREMIUM VEHICLE IN THEIR CLASS
• IMPACT:
• LOST SALES AS THEY DID NOT OFFER SMALLER ENGINES
• STRATEGY:
• MAKE ALL MODELS FULLY CUSTOMIZABLE TO FIT CONSUMER NEEDS
AND KEEP INVENTORY LOW
• ALLOW WORKERS TO BANK HOURS DURING BUSY TIMES AND TAKE
OFF EXTENDED PERIODS OF TIME WHEN BUSINESS WAS SLOW
• BARGAIN FOR GERMAN GOVERNMENT TO PAY 80% OF THEIR FIFTH
WORK DAY WAGES
• BEGIN TO BUILD VEHICLES WITH SMALLER ENGINES

9. EUROPEAN MANUFACTURERS:
DAIMLER AG
• MERCEDES-BENZ WAS NO. 2 BEST-SELLING LUXURY CAR IN THE WORLD
• CONTINUOUSLY NEGLECTED FUEL ECONOMY IN THEIR VEHICLES
• IMPACT:
• MERCEDES-BENZ LOST SALES BECAUSE OF THEIR LARGE SIZE AND INEFFICIENCY
• SMART LOST ALMOST AS MANY SALES AS HUMMER
• STRATEGY:
• FOCUS ON CHINESE MARKET, WHICH DEMANDED LARGER VEHICLES LIKE
MERCEDES-BENZ
• LET SMART CONTINUE TO STRUGGLE
• ELIMINATE MAYBACH

10. EUROPEAN MANUFACTURERS:
VOLKSWAGEN GROUP
• ENJOYED HIGH GLOBAL SALES, BUT SUFFERED FROM LOW US SALES
• HAD A GOAL TO BECOME THE LARGEST CAR COMPANY IN THE WORLD
• IMPACT:
• THE COMPANY AVOIDED LOSING AS MANY SALES AS MOST OTHER
AUTOMOBILE MANUFACTURERS
• STRATEGY:
• START AGGRESSIVE ADVERTISING CAMPAIGN
• ACQUIRED TWO COMMERCIAL VEHICLE COMPANIES, SCANIA AND MAN
• INCREASED PRESENCE IN EMERGING MARKETS, PRIMARILY CHINA AND
SOUTH AMERICA

11. ASIAN MANUFACTURERS:
TOYOTA MOTOR CORPORATION
• Second largest car company in the world
• Expanded too quickly in attempts to top GM and had several
recalls
• Impact:
• Lost almost as many sales as GM and Chrysler
• Strategy:
• Allow workers to bank hours during busy times and take off
extended periods of time when business was slow
• Provide workers reduced paid time off to do community service to
improve public relations
• Did not lay off a single worker

12. ASIAN MANUFACTURERS:
HONDA MOTOR C0., LTD.
• ALREADY OFFERED THE MOST RELIABLE AND FUEL EFFICIENT CARS
• IMPACT:
• LOST SALES REGARDLESS AS CONSUMERS BOUGHT LESS VEHICLES IN
GENERAL
• STRATEGY:
• SAVE MONEY BY PULLING OUT OF FORMULA ONE
• REDUCE EMPLOYEE WAGES
• PROVIDE WORKERS REDUCED PAID TIME OFF TO DO COMMUNITY
SERVICE TO IMPROVE PUBLIC RELATIONS
• CLOSE FACTORIES TO REBUILD AND UPDATE TECHNOLOGY

13. ASIAN MANUFACTURERS:
NISSAN MOTOR CO., LTD.
• IN A PARTNERSHIP WITH RENAULT, WHICH HELPED THEM
OBTAIN STRONG SALES IN GLOBAL MARKETS
• IMPACT:
• THEY LOST ALMOST AS MANY SALES AS GM, CHRYSLER, AND
TOYOTA
• STRATEGY:
• REMOVE FOCUS ON THE SATURATED US MARKET
• INCREASE PRESENCE IN BRAZIL, RUSSIA, INDIA, AND CHINA
• PURCHASE 25% OF AVTOVAZ TO INCREASE RUSSIAN SALES

14. ASIAN MANUFACTURERS:
HYUNDAI AUTOMOTIVE GROUP
• WERE CRITICIZED FOR:
• BEING LOW QUALITY
• LACKING R&D
• LOW CONSUMER RECOGNITION
• FOCUSED WAS ON SELLING VEHICLES TO CONSUMERS WITH
LOW INCOME
• IMPACT:
• ONE OF THE ONLY AUTO MANUFACTURERS TO INCREASE
THEIR SALES
• STRATEGY:
• HYUNDAI ASSURANCE PLAN

15. CONCLUSIONS
• NORTH AMERICAN MANUFACTURERS
• DO:
• FINANCIALLY PREPARE FOR RECESSIONS
• REDUCE SIZE OF COMPANY TO BECOME MANAGEABLE
• DO NOT:
• EXPAND COMPANY PAST WHAT CAN BE REASONABLY MANAGED
• SATURATE BRAND LINEUP
• IGNORE CONSUMER TASTES AND PREFERENCE
• REDUCE QUALITY OF VEHICLES AND INCREASE PRICE IN ATTEMPTS TO
PROFIT

16. CONCLUSIONS
• EUROPEAN MANUFACTURERS
• DO:
• OFFER PREMIUM VEHICLES
• RESTRUCTURE COMPANY TO AVOID LOSING SKILLED WORKERS
• FOCUS ON REALISTIC FUTURE INNOVATIONS, SUCH AS BETTER FUEL EFFICIENCY
• SHIFT FOCUS ON MARKETS THAT DEMANDS THE COMPANY’S VEHICLES
• ADVERTISE TO IMPROVE BRAND IMAGE
• DO NOT:
• IGNORE CONSUMER TASTES AND PREFERENCES IN ANY MARKET
• DEVELOP DRASTIC INNOVATIONS LIKE SMART DURING HARD ECONOMIC TIMES

17. CONCLUSIONS
• ASIAN MANUFACTURERS
• DO:
• RESTRUCTURE COMPANY TO AVOID LOSING SKILLED WORKERS
• ANALYZE AND CUT UNNECESSARY COSTS TO SAVE MONEY
• UNDERSTAND CONSUMER FEARS LIKE HYUNDAI DID WITH ASSURANCE
PLAN
• DO NOT:
• EXPAND COMPANY PAST WHAT CAN BE REASONABLY MANAGED

18. QUESTIONS?