Sunday, September 15, 2013

2013 Frankfurt Auto Show – Opportunity or Challenge?

The biennial auto show at Frankfurt, Germany will start during the week of September 12th. With more than 100 years of history, 2013 Frankfurt Auto Show is definitely going to be a turning point for Germany's three global auto giants, Volkswagen AG, BMW AG and Daimler AG's Mercedes-Benz unit. In past five years, many European auto makers have been struggling with the local demand issues. The decreasing new vehicles demand in Western Europe forces auto makers to either improve their products or explore new overseas markets, such as China, Latin America, Southeast Asia and U.S. These are exactly the goals three auto giants eager to achieve in this year’s Frankfurt Auto Show. 
Take Volkswagen's Audi as an example, improving products to meet new needs from different markets is one of its most important marketing strategies at this moment. The company will showcase a revamped lineup of compact cars and SUVs, including an A3 convertible scheduled for its debut at the show and the Q3 sport utility. Meanwhile, adjusting and diversifying its customer base are vital for the success of auto makers’ marketing strategies. Take the above example, the Q3 sport utility will be targeted on young consumers in China and U.S. Another example would be Mercedes, which is launching its new product and showcasing in this auto show due to the fact that small SUVs are increasingly popular in Europe.

On the top of that, these three German auto giants almost target on the same overseas market – China at the same time. Especially, they set affluent Chinese as their target customers for their luxury brands. Since the dramatically increasing numbers of high wealth individuals, China has become the top picked market for a variety of industries.  These auto makers believe that those high wealth individuals will insist on BMW or Benz taking less into account of its high price. Furthermore, high-performance cars and less polluting models would be another possible reason for customers to care less about affordability. For example, Audi's Quattro sports car concept car features a plug-in hybrid drive system that delivers 700 horsepower. BMW will unveil its i8 plugin sports car and a plugin hybrid version of its BMW X5 sport utility.
Although according to a survey by the consulting firm Alix Partners, over 50% of Europe's 100 largest auto plants are operating below 75% capacity. In other words, these auto plants are actually not as profitable as people thought. In order to survive and outstand in this fiercely competitive auto industry, every auto makers need to invest enough sources in innovation&improvement, adjust marketing strategy promptly as well as search for any potential markets consistently – even giants need to. For these who fail to do so, soon or later they will become just parts of the history. 

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