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What are the Top 10 Challenges Facing the Car Industry?

15th December 2013 | Anders Parment

Dr. Anders Parment on the issues facing the automotive industry that inspired him to write

I’ve been dealing with the automotive industry on a professional basis since I started writing my doctoral dissertation in 1999 (‘Car distribution organization’, Linköping University, 2005).

Since 2002 I’ve been working more intensively as a consultant for automobile companies and related businesses. As an author, speaker and columnist I’ve also had the opportunity to hear from others in the industry. And there are many opinions out there!

My experience is that the car industry, like many other industries, is hardworking and multi-faceted with some inherent difficulties when it comes to adapting to new circumstances. Cars are typical high-involvement products, and car companies know very well how to build strong brands; how to charge premium prices; how to keep residual values high; and how to keep customers happy.

The main problems are tough competition, overcapacity and low marginal production costs, In total there are 10 key challenges I see facing the automotive industry:

1.  Dealing with overcapacity
2.  Finding the balance between marketing and branding and short-term sales volume
3.  Becoming sustainable – from image to substance
4.  Dealing with simultaneous pressure to be efficient, customer-orientated and build strong brands
5.  Urbanization
6.  Understanding mobility and car culture in the future
7.  Learning from and cooperating with other industries
8.  Applying a modern view on competition
9.  Making money in transparent, commoditised markets
10.  Attracting key talent

Read more about each challenge in a free excerpt available on the 'Auto Brand' product page.

So how can an auto brand address these issues, be successful and stay competitive in this very tough industry?

In summer 1999 I visited Konstanz in the very southern part of Germany to see some friends in the International Business Programme. I spent an entire day in the extensive library, but surprisingly (or maybe not) among the hundreds of books on the automotive industry, there weren’t any that dealt with the problems mentioned above.

Well-founded in research (including a new international study on car buyer behaviour based on 4,700 survey answers and 100 original interviews conducted with CEOs, marketing managers, sales managers, salespeople and after sales managers at all levels from the manufacturer level to small rural dealers, as well industry experts, policymakers, free-standing repair shops and professional organizations) and best practice,  my book Auto Brand was written to fill this gap. I hope this book will give some understanding of key market characteristics and the interplay between supply and demand along with an understanding of the mechanisms that create strong brands and make them successful.


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