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Automotive Industry in China

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peter hummer

on 1 May 2013

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Transcript of Automotive Industry in China

Alternative Scenarios The Automotive Industry in China This project looks to answer two questions: What will cars per capita and total cars owned be in 2025? How many cars will be sold in 2025? Variables GDP per Capita
Technological Innovation
China's Infrastructure Technological Innovation has led to a 35%
price decrease in automobiles, with more price decreases expected. Also a lot of opportunity for drop in the price of electric vehicles Final Forecast Our final forecast was a value
of cars per capita between
.23 and .25, a total of around
350 million cars Expected Future Prosperity Without Regulation Beijing Cushioned Downfall Consumer-Based Market
Expanded Automobile Services
Technological Innovation
Growing Infrastructure Increased Foreign Investment
Innovative Domestic Companies Disaster Without A Bailout Demand for Substitutes
Decreasing Investment Activity Uncertainties Government Interference Technological Innovation Slowing GDP Growth
Developing Middle Class
Transformation to Service Economy
Trends in Consumption Demographics Environment Population Growth
Aging Giant Economy Government Induced Growth
Importance of Exports Industry Oversight
Environmental Regulation
Industry Subsidies
Infrastructure investments Increased air pollution
Greater international pressures
Consumer demand for fuel efficiency Enhancements to car experience
Fuel efficiency/Alternative Energies
Consumer demand trends Economic Prosperity Business Implications Customers
Auto Companies
Complimentary Industries Stakeholders Before the mid-1980’s, production of passenger vehicles in China was scarce
In 1994 the government decided to develop the automobile industry and instituted a plan for expansion
Chinese automobile sales have experienced a rapid increase over the past few decades thanks to a growing middle class Background The goal of this report is to forecast both the personal vehicle ownership and per capita ownership of automobiles in the year 2025 The Automotive Industry
in China With any rapid economic growth may come potential hazardous side effects
Driving greener technology growth
Smog plaguing the majority of China’s largest cities (see below) Environment Communist government has direct influence in the vast majority of industries
Automotive classification as “pillar industry”
Testing lab for international investment Government Auto companies have a lot to gain with China’s emergence
The first thing that auto companies need to figure out is how they will gain access (Joint Venture)
Majority market share for the “Big Four” top firms totals about 60%
SAIC, FAW, Dongfeng, and Chang’an Auto Companies A means of transportation is a commodity that has value to all people in China
Automobiles hold a social status
Factors to consider when looking at Chinese consumers: income growth and spending habits Customers Gas stations
Car Insurance
Repair and maintenance shops
Infrastructure construction Complimentary Industries 4 million km of highways
Only ¼ paved
Average motor speed 45 km/h in 1990, but only 17 km/h in 2009
Traffic jams Infrastructure “Indigenous innovation”
2004 Policy on Development of the Automotive Industry
50% maximum foreign investment
Capping number of joint ventures Government Regulation Government regulation
Substitute transportation industries
Infrastructure Constraints 56 cars per capita in 2011
Largest auto market: 18.5 million sold in 2011
Premium segment growth: 12%
Overall market growth: 8% Domestic Auto Sales GDP: $7.318T
GDP per capita: $4,940
12th Guideline
Maintain 7% annual GDP growth
State owned enterprises 
Private companies Economic Growth Economic growth
Domestic auto sales Drivers Most popular form between cities is train
Largest high-speed rail system in world
Most popular in cities is public transportation Substitute Transportation Growth in upper and middle class Demographics Projected out sales data brought an
estimate of 54 million car sales per
year, a portion going to replace old
cars, and a portion going toward new
car owners Questions? Economic Performance Government Interference The Automotive
Industry in China Presented by: D.J. Boyd, Tom Dunn, Peter Hummer,
Sean McKelvey, Ben O'Neill Conclusion Final Forecast:
350M Automobiles
54M Sales in 2025 Cars per Capita = Cars per 100 People
Full transcript