BMW Cars in US Car Industry Case Study Example | Topics and Well Written Essays - 1750 words

BMW Cars in US Car Industry - Case Study Example Mini and the 1-series rapidly grew at much higher rate through 2008. Since the early days of the new millennium BMW has been one of the first automakers to utilize flexible factories in which more than one vehicles model could be produced at the same time. This enabled the company to meet shifts in market demand more effectively than BMW's competitors could. BMW challenges to retain its market position in the international market for luxury cars. Many automakers, such as Hyundai with its Genesis sedan or Nissan's Infiniti brand are increasingly successful in realizing higher margins earned on luxury vehicles. BMW is rated behind luxury brands such as Lexus, Porsche, Mercedes, and Infiniti for these reasons 1. The car industry is undergoing a rough phase for some years because of recession set in many parts of world including USA. According to Mr. Kinoshita of Toyota Credit squeeze has made sales and profits tumbling caused by deteriorating demand. . The BMW Group reported a year-to-date sales volume of 70,606 vehicles, which is 29.4 percent, compared to 99,977 vehicles sold in the same period of 2008. Experts project that in future strongest sales growth is unlikely to come from the US and Europe which became more a manufacturing centre. Sales growth is likely to come from Asian countries such as China, India, Middle East and Russia where demand for motor vehicles is increasing. Sales in number of vehicles are shown declining in the following table. Supply side During recession the demand for the product is the primary factor. Supply is usually flexible to adjust with the demand without which products will have to be idle in the market or to be sold at reducing prices. There are so many suppliers in the market and most of them are languishing for want of adequate demand for vehicles. In this situation prices fall. A price war has been set in the premium car market among importers and dealers who are struggling to survive in a market with declining sales. And now BMW has entered the battle for the second time with price reductions. The new pricing of BMW cars are lower by about 15 per cent in Mini and BMW range of models. (Despite sales decline of 38.4 percent) The car market in US is very competitive with so many manufacturers and suppliers. The main competitors of BMW are Daimler Chrysler AG of DAI, Lexus of Toyota of, Audi of Volkswagen, Infiniti of Nissan; Cadillac of GM. Whereas other firms in the automobile sector manufacture commercial trucks, lower market vehicles, and buses as well BMW focuses exclusively on the production of premium personal automobiles and motorcycles. They have fewer brands that are easily recognisable. This specialized product positioning has earned success to the company in the US market with 2% of market share. GM, the local US company held the maximum market share in 2006 but fell down to 19% in May 08. Toyota has increased its market share from 15% in 2006 to 18% in May 08. Ford has lost market share from 17% to 15% in May 08. Honda has increased its market share from 9% in 06 to 12% in May 08. BMW maintained its market share at 2% in May 08. Foreign companies like BMW, Toyota, Lexus and Mercedes Benz repre sent one-third of all cars manufactured in the United States.Their operation is enormous and not infected by