The Motor Vehicle Industry in Australia - Case Study Example

Executive Summary The growth witnessed in the Australian economy has provided an opportunity for every industry to grow. The motor vehicle industry has been one of the bigger contributors towards the economy of Australia and has helped to strengthen the economy. The paper thereby presents the manner in which the vehicle industry has grown in Australia. It also examines the various environmental factors which have led towards the growth of the vehicle industry. The paper examines safety, greenhouse gas emission and changes in consumer needs which have affected the vehicle industry. It also provides the steps taken by vehicle industry to ensure that the environmental factors help the vehicle industry to grow and improve their business. Table of Contents Introduction 3 Purpose of the report 3 Motor Vehicle Industry 3 Safety Concerns in Cars & Roads 4 Greenhouse Gas Emission 6 Change in Consumer needs 7 Conclusion 9 References 10 Introduction Globalization today is gaining prominence as borders are disappearing and countries are entering into treaties with each other which favour free trade. This has made companies expand its reach. Australia has witnessed growth over all the industries which have made it possible for Australia to be one of the developed nations. The contribution of motor vehicle to the economy of Australia is immense and has ensured that the economy flourishes and grows. The report thereby looks into the motor vehicle industry of Australia. Purpose of the report To identify the macro-environmental factors which has an effect on Australia’s motor vehicle industry To identify the motor vehicle industry preparation to combat against safety, greenhouse gas emission and changes in consumer needs Motor Vehicle Industry Australia has millions of vehicles in the country which are registered. The competition in this sector is very tough. It has nearly all the major vehicles producer in the country. This has given rise to price war and customers are getting lots of option. Some of the producers which are there are Ford Motors, General Motors, Chrysler, BMW, Honda and Hyundai. This puts a lot of pressure of different companies. This takes the Australian market towards perfect competition. It also satisfies the assumption of perfect competition as companies here earn only nominal profits (Automotive Industry, 2005). The value chain of Australia’s automobile industry looks as follows Figure 1: Motor Vehicle Value Chain The growth of the automobile industry in Australia helps to identify some macro environmental factors which companies need to look into and devise strategies to deal with those. Safety Concerns in Cars & Roads The increase in rate of road accidents and increasing fatalities is becoming a concern for Australian economy. It has been identified that most of the accidents that happen in car are of people who are in the front seat compared to the back seats highlighting the risk associated with driving cars (Cars, 2009). This has resulted in an increase in compensation paid to the injured and the deceased in road accidents (Compensation, 2011). The increase in the fatalities due to road accidents in Australia is as below   1994 1995 1996 1997 1998 1999 2000 2001 NSW 552 563 538 525 491 506 543 494 Vic. 345 371 382 346 348 345 373 404 Qld 364 408 338 322 257 273 275 296 SA 143 163 162 123 152 132 151 137 WA 195 194 220 184 199 188 185 150 Tas. 52 53 53 29 47 47 39 52 NT 36 56 58 56 59 44 48 43 ACT 15 14 17 17 20 17 16 15 Aust. 1,702 1,822 1,768 1,602 1,573 1,552 1,631 1,591 Figure 2: Accidents Involving fatalities The above chart shows the accidents which happen in Australia every year which is an environmental factor affecting the demand of motor vehicles (Accidents, 2011). The magnitude of the problem magnifies when we look at the number of people dying in accidents every year   1994 1995 1996 1997 1998 1999 2000 2001 NSW 646 620 581 576 556 577 603 524 Vic. 377 418 417 377 390 383 407 444 Qld 418 456 385 361 279 314 317 324 SA 159 181 181 148 168 151 166 153 WA 211 209 247 197 223 217 213 164 Tas. 59 57 64 32 48 53 46 61 NT 41 61 72 60 69 49 51 50 ACT 17 15 23 17 22 19 18 16 Aust. 1,928 2,017 1,970 1,768 1,755 1,763 1,821 1,736 Figure 3: Persons Killed every year in Australia The increase in death rate is a concern which is making the automobile sector look into ways to improve the way car is designed. This has made manufacturers of car to ensure that they design their car in such a way that increases safety. The manufacturers have ensured that the car has safety belts, safety seats and mechanism which help to reduce casualties in case of accidents (Safety Concern, 2011). The increase in accidents has brought about major changes in the framework. The economy has issued safety issues for people who are disabled so that the rise in people due to disability increasing from accidents reduces (Research Note, 1998). The growing concern of safety and increasing accidents is a concern for the motor vehicle industry which has resulted in companies improving the way car is manufactured so that safety becomes a main concern. Greenhouse Gas Emission The Australian government on their part has started with the Carbon Pollution Reduction Scheme with the aim to reduce greenhouse emission. The government has set a cap and will work towards those and ensure that it’s below the limits. The Carbon Reduction Pollution Scheme started by the Australian government is an initiative to reduce carbon emission. “The scheme starts in 2011 with the prime mechanism to reduce greenhouse gas emissions” (DAFF, 2010). The government to ensure that emission levels fall have taken “commitment to reduce it by 60% by 2050 of 2010 level” (DAFF, 2010). The vehicle industry is a big contributor towards emission which has made it important the industry looks towards reducing greenhouse emission. Australia has been able to reduce carbon emitted in the atmosphere by having norms which govern all industries. The carbon emitted looks as (Martin, 2010) Figure 4: Australia's Carbon Emission The above chart shows the decrease in carbon emission which has been possible as the vehicle industry has looked into it and taken steps to control emission. The Carbon Reduction Pollution Scheme as framed by the Australian Government has proposed the cap and trade system to control green house gas emission (CRPS, 2010). The government in this scheme has kept an upper limit to the amount of carbon the country will emit and will reduce it as years pass by on a rolling basis (CRPS, 2010). The vehicle industry to ensure that the emission reduces and is within limits has identified the product life cycle for vehicles which will ensure that the emission is within the cap provided by the government (Greenhouse, 2011). The product life for motor vehicles identified by the industry looks as follows Figure 5: Vehicle Product Life Cycle The above diagram thereby helps to identify that the steps taken by the industry will help to confront with the government cap on greenhouse emission. The steps taken by all industries and the massive efforts of the vehicle industry has helped to ensure that emission released in the atmosphere is the lowest (Bass, 2011). The vehicle industry needs to understand the importance of the environmental factor and the way it is affecting their business and need to design their process in such a way that they contribute towards reducing emission. Change in Consumer needs The Australian economy has witnessed a change in consumer preference towards a product and this has been due to the growth in income and urbanization which the economy is witnessing. This provides an opportunity for the vehicle industry as the growth in income is helping the industry to ensure that the growth matches the rise in demand for vehicles. The growth in the demand for vehicles in Australia is due to growth seen in GDP. The GP is as follows (GDP, 2011) Figure 6: GDP of Australia The growth in GDP has resulted in a rise in demand for vehicles which the vehicle industry has identified and manufactured new models and designs which helps to attract customers of all types. The growth rate has further led towards urbanization which has increased the demand for more trendy vehicles. The graph below highlights the manner in which Australia has moved towards urbanization and predicts the growth to increase in the future (Joel, 2000). The graph looks as follows Figure 7: Urbanization in Australia The above graph highlights the growth in urbanization and also predicts the future growth rate in urbanization for the Australian economy. This present an opportunity for the vehicle industry to develop new models of cars that suits the customer requirements. The vehicle industry by ensuring to bank on it will be able to develop a mechanism which will ensure that the vehicle industry is able to grow and able to sell more vehicles in Australia. Conclusion The different environmental factors prevalent in Australia with relation to safety, greenhouse gas emission and changes in customer needs provide an opportunity for the vehicle industry to use it to their advantage. The paper presents the different environmental factors which the vehicle industry needs to look into so that they are able to grow. Analyzing these environmental factors and identifying the areas that the vehicle industry can work on will help to strengthen the vehicle industry and help them to improve their business. References Automotive Industry. (2005). Australia’s Automotive Industry. Retrieved on March 30, 2011 from http://www.abs.gov.au/ausstats/abs@.nsf/Previousproducts/1301.0Feature%20Article252005?opendocument&tabname=Summary&prodno=1301.0&issue=2005&num=&view Accidents. (2011). Accidents Involving Fatalities. Retrieved on March 30, 2011 from http://www.abs.gov.au/Ausstats/abs@.nsf/Lookup/3875170E8478D171CA256CAE0016268F Bass, J. (2011). Lowest ever CO2 emission. Retrieved on March 30, 2011 from http://www.carpoint.com.au/news/2011/lowest-ever-co2-emissions-24072 Cars. (2009). Safety a concern as young people take to road. Retrieved on March 30, 2011 from http://www.earthtimes.org/articles/news/270504,safety-a-concern-as-young-people-take-to-the-road.html Compensation. (2011). Road Accident Compensation. Retrieved on March 30, 2011 from http://www.roadinjurycompensation.com/ CRPS. (2010). Carbon Reduction Pollution Scheme. Government of Australia Undertaking. Retrieved on March 29, 2011 from http://sites.thomsonreuters.com.au/carbon/ DAFF. (2010). Carbon Reduction Pollution Scheme. Department of Agriculture, Fisheries and Forestry. Retrieved on March 29, 2011 from http://www.daff.gov.au/climatechange/carbon_pollution_reduction_scheme Greenhouse. (2011). Automotive Greenhouse Gas Emission Regulations. Retrieved on March 30, 2011 from http://www.worldsteel.org/?action=storypages&id=272 Joel, M. (2000). Australia. Retrieved on March 30, 2011 from http://ww2.unhabitat.org/habrdd/conditions/Oceania/australia.htm Martin, T. (2010). Australia in on the right road to reduce CO2, but are the targets enough? Retrieved on March 30, 2011 from http http://www.goauto.com.au/mellor/mellor.nsf/story2/7BFED44A028545B9CA2576D90006F3C1 Research Note. (1998). Safety Issues for Vehicle Adapted for Use by Person with Disabilities. National Highway Traffic Safety Administration, Retrieved on March 30, 2011 from http://www-nrd.nhtsa.dot.gov/pubs/98.030.pdf Safety Concern. (2011). What Safety Concerns are Important while taking Children on road trips? Retrieved on March 30, 2011 from http://www.essortment.com/safety-concerns-important-taking-children-road-trips-55850.html Read More