Political and Economic Change in the Automobile Industry

Diplomarbeit von Claudio Cosentino

Definition of problem This paper deals with the future strategic orientation of manufacturers of luxury cars. The sociological, political, ecological, technological and economic environmental factors and their influence on corporate orientation will be highlighted and analysed. This fundamental problem for car niche brands is investigated through the example of Maserati, an upmarket brand which has become, like no other, both a trendsetter and a victim of the expectations of its patrons and customers and is now struggling for market shares together with its parent company. This paper will initially highlight influencing factors and also the need for efficiency in manufacture and production, as well as the new tasks and challenges arising from legislation. Macroeconomic factors, such as the shrinking purchasing power in developed countries like the U.S. due to inflation (and stagflation) worries (which result from the daily rise in raw material prices), exert just as great an influence on car sales figures as the growing number of super-rich in Third World countries. The question concerning the shift of target markets arises. Do the raw materials inhibit sales for these products? Or is the clientele immune? What innovations are demanded, and are they compatible with the attributes associated with super sports cars and luxury cars? Ferrari, Maserati, Lamborghini, and even Aston Martin are manufacturers who boast that they make cars with horrendous power ratings, fuel consumption, and emission levels. Their customers love the sound of the engines, comparable as they are with aircraft engines. They produce engines with eight, ten or even twelve cylinders, epitomising power, but at the same time are more suitable for the race track than for the road if one compares their figures with those of classic mass-market cars. The customers rate performance and sound higher than fuel consumption per litre and environmental awareness. These are geared to basic male instincts. Beauty of form, brute force and eroticism are mostly described in terms of beautiful women or sins or mythological mental attributes. The marketing is concerned with lifestyle, passion, and the child in people, the Freudian id. A man simply wants to own these mighty projectiles; forget common sense. The owner of such a car is, according to this car’s marketing image, the one who has created it. He is successful, healthy, rich and good-looking. A majority of the world’s male population tends to know more about a new product in this sector than about one in a sector with which they are directly involved. Cars are still status symbols for most people. Given that emission legislation, fuel prices, and rising criminality are making inroads into these childhood dreams, or that these manufacturers profit from the current trends by proving to be trendsetters in other ways, or that the substitution markets are large enough to guarantee continuous growth, we have to consider only that these brands are business enterprises for which financial figures and planning data apply as for any other company.

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Chapter 2.2.1, Impact on employment The automotive industry has been very important to its home economies. The total share of the automotive industry in global industry is around 9,6% (2007) and for the producing countries around 14%. As the production is predominately mechanical but still needs a great deal of workforce to develop and build cars, numbers can be kept up easily. Workforce might shift to low-cost countries, but manpower is still needed to assemble a car. As suppliers and industries work around the car industry, rubber components, the steel industry, the plastic industry, the leather and glass industry or even the design, internet or marketing industry work around a car that has to be sold. A car is a high-involvement product with many decisions made around it and criteria that have to be followed and considered. The latest numbers have shown that in countries of the Triad, around 1 mln employees (European members) and 4 mln employees per country work for the industry directly, and 25% of the other industries benefit from this industry’s activities. A huge lobby for the United States, they often have such a high influence that subsidies and decisions about where to produce components become political issues, and company investments benefit from state interventions’ adding millions or billions to keep labour in the countries of origin and to help innovation. As subsidies are mostly banned from the EU countries, these interventions are often declared as money used for destroying old cars or investments in environmental or ecological issues.