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CHINA IS THE BATTLEGROUND FOR THE GLOBAL AUTO INDUSTRY
Chinese brands as a group are expected to enjoy the greatest growth in the global automotive market over the next five years, according to KPMG’s 12th annual Global Automotive Executive Survey.
The majority of the 200 senior executives from the world’s leading automotive companies who were interviewed (86 per cent) believe China, the world’s biggest auto market, will continue to enjoy the greatest number of car sales and produce the most vehicles by 2015. China is also considered the biggest investment target.
The survey was conducted in September and October last year and canvassed the opinions of motor manufacturers, suppliers and dealers in Europe, the Middle East and Africa (51 per cent), Asia-Pacific regions (27 per cent) and in the Americas (22 per cent) on the current state and future prospects for the automotive industry worldwide over the next five to 10 years.
Emerging markets continue to accelerate and China clearly dominates – 42 per cent of respondents expect domestic sales in China to exceed 18 million by 2015.
Overcapacity, however, is a concern with 50 per cent of respondents believing that China’s automotive industry will have an excess of capacity by 2015, although the majority (two thirds) believe the United States, Japan and Germany have the most overcapacity.
China’s auto output surged 39,4 per cent year-on-year to 9,7 million units from January to July of 2010. Meanwhile, China’s auto sales ‘only’ increased to 8,2 million in the same period, up 28,6 per cent from the previous year.
In comparison with the 2010 survey, merger and acquisition activity appears to have gone down for all types of automotive business, the new survey has found. Respondents felt that mergers would be more common in the east (excluding Japan), with Chinese and Indian companies being the main buyers, as evidenced by Geely’s acquisition of Volvo from Ford for $1.8 billion in August 2010.
The biggest driver behind mergers and acquisitions were access to new technologies and access to new markets.
Respondents agreed that the two most effective strategies to achieve profitability were rationalisation and the building of strategic alliances.