Technological Changes

Technological Changes

Concerns for the economy and global warming have caused the automobile producers to develop alternate fuel vehicles. In the beginning, automakers did not want to look into the development because of the high cost and the many risks involved. Because of new legislation, they had no choice but to come up with the technology to make the fuel-efficient cars. The automakers decided that electric cars would be the best way to meet the legislation demands. “Early models were unpopular because of slow cruising speeds and lack of performance, but by the end of the century, electric car production began to be practical.”(Motor Vehicles) At the end of the 1990’s manufacturers were coming up with the technology to produce internal combustion engine with an electric motor. Toyota and Honda were both selling the hybrid vehicles at retail value in 2001.

Switching from fossil fuel era to hydrogen fuel era will be having technological hurdles, the difficulty of creating a new energy infrastructure will be money swallowing and mind boggling, but could provide health, environmental, climatic and economic benefits and reduce the reliance on diminishing oil supplies and to establish a perfect platform.

Companies have invested hundreds of millions of dollars in fuel cell research with the ultimate goal of removing the automobile from the environmental equation, because they believe the automobile leads the way to the hydrogen economy and a truly sustainable future. A combination of electricity and internal combustion of gasoline, as in hybrid vehicles; hydrogen generated from wind electrolysis; hydrogen generated from natural gas; and hydrogen generated from coal gasification are the various forms of generation of hydrogen fuel.

While the production of carbon dioxide, a greenhouse gas, is undesirable, the process produces about 55 percent less carbon dioxide than does internal combustion.

Dynamics of the Market

On a global basis, consumer perception and evolving demands are driving auto manufacturers towards innovation in order to improve market share. The emergence of hybrid vehicles, combining choice features from cars and light commercial vehicles, has impacted positively on the auto market, in many parts of the US and Europe. As indicated by Peter Dicken Rapid growth in demand is associated with new demand. In the mature markets of United States, Europe and Japan and South Korea sales are more dependent on replacement demand than new demand for vehicles therefore there has been marginal growth in these markets as table 1 indicates, between 2004 – 2005 Japan had negative growth this could be in part attributable to the recovery it has been undergoing from the economic recession. The United States on the other hand had better growth than the other major markets driven by the high consumer confidence as a result of lower taxes that the U.S government had put in place. Also In order to boost sales, the major US players are executing a campaign of heavy discounting in the form of 0% financing and huge cash-back incentive schemes . Companies like Toyota achieved good sales in U.S by introducing newer models which were also in line with high fuel price concerns as well as general environmental concerns. A CNN report (Posted: 0833 GMT (1633 HKT), February 6, 2007) surmises it well �Toyota, Japan's top automaker is cruising past rivals at home and abroad, riding a reputation for making energy-efficient cars, boosted by the halo effect from its popular Prius hybrid and backed by a steady stream of new or refreshed products such as the RAV4 crossover, Lexus LS and Camry sedans’.

The table also highlights the growth that Asia is experiencing as mentioned the Asian market is growing due to the blossoming middle class who are providing the new demand for the automobile industry.

The emerging markets are influencing segmentation and fragmentation of the global market as the big manufacturers adapt to the new markets and try to develop more suited vehicles to local tastes, local conditions and level of disposable income. Manufacturers are looking at developing smaller vehicles for these markets by also taking into consideration the population density and environmental concerns which have become of serious concern in countries like china

Global Passenger Car & Truck Sales by Region (in units)

Source: CCFA Pass. Cars Trucks Total Pass. Cars Trucks Total

2004 2004 2004 2005 2005 2005 Change in sales

Europa 17,657 3,068 20,725 17,851 3,223 21,074 349

Western Europe 14,511 2,291 16,802 14,487 2,375 16,862 60

Central &