The Auto Industry continued: The importance of China

Going off Welch’s post: While many Chinese companies from a variety of industries have attempted to gain a foothold in America (consumer goods, real estate, etc), European companies have also noticed the importance of gaining a foothold in the rapidly growing Chinese market.

In particular, Volvo, a growing player in the automotive market share, has also realized the importance of growth in China and has subsequently hired a new CEO to move towards a “new phase” of bolstering sales and profitability in the growing Chinese auto market. Key to this plan is Samuelsson’s (the new CEO) goal to “double deliveries to 800,000 vehicles by 2020 from 449,255 last year… but the company has cut production this year amid a market slump in Europe.” Given the cut in production due to the recent economic crisis, what strategies could Volvo utilize to continue their movement towards this “new phase” of production in China? Think about our oligopoly models and our discussion of strategies by small brewers in the beer industry to guide your answer.

One thought on “The Auto Industry continued: The importance of China

  1. Note: Volvo is owned by a Chinese firm, even if most of the production continues to be undertaken in Sweden. Does this change the story, or is the location of the people in whose name shares in the company are registered irrelevant to the economic issues?

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