Strategic Management European Automobile industry

What follows is an overview of the larger context of the European market, followed by a road map for the next 5 years, with special emphasis product range, Research &amp. Development, Marketing, on based on a detailed analysis of the market trends and the company’ unique strengths, and assess the financial commitments needed to realise these objectives.
The strategy will address the concerns of all stakeholders in our company namely, you as investors who risk their money in our business, banks which fund our short and long term debt leveraging our equity, our consumers without whose custom we cannot exist and the larger external society in addressing whose ecological concerns, we have always been at the forefront.
The European passenger car market is the largest in the world exceeding even the huge US market in terms of units sold. However, despite its size (‘ 13 Million units annually), it is intensely competitive with 6 major producers (with production capacities far exceeding demand) aggressively competing for market share in a stagnant market, which has shown little growth for the past several years. The only beacon in this rather gloomy scenario is UK, which is booming both in terms of unit realisation and volume sales.
This trend is likel
This trend is likely to continue, if not deteriorate, in the foreseeable future, owing to higher crude prices, which peaked at US $ 70/barrel in the last 18 months, leading to higher retail fuel prices. People prefer to pedal these days or walk for shorter hops.
Increased environmental consciousness among the EU states about automobile-generated congestion and the attendant pollution has also contributed to sluggish demand. Greece has banned the use of cars on specific days of the week, while London became the first European city to introduce Congestion Charging. Paris will shortly initiate radical action to reduce severe clogging of the city streets. Some EU states are planning to launch higher taxes on 4×4 and SUVs, which latter has been dubbed Somewhat Useless Vehicles.
In an increasingly cut-throat market, product differentiation with "value for money propositions" have further eroded margins, already under pressure in an aggressive market.
In the meanwhile, the cost of crucial inputs such as steel and aluminium have registered steep hikes, owing to booming demand from China, India and other emerging economies, further squeezing the already slim profits.
New EU initiatives, such as the End of Vehicle life directive of 2002, which obliges companies to remove their products from circulation at the end of their natural life and the proposed legislation to allow import of generic parts to replace branded spares and components, which will directly undercut the only high profit activity for a car company, have all contributed to further whittling down the returns.
Under these circumstances, the following questions naturally