Moving to new markets is a necessity, since virtually all growth is in emerging markets. There are regional differences, and fundamentally cheaper cars are needed. Product design and marketing are also different. Local manufacturing is desirable, and that means more investment. And by the way, there are two other areas which vacuum up money.
1) Regulation is tough in US and elsewhere
There are the increasingly restrictive emissions and fuel-consumption requirements we mentioned in the previous article. That doesn't make things easy in the US, because the entire model lineup is held to the same requirements.
In the US, low fuel prices combine with the preferences of consumers who want trucks and SUVs. These conditions don’t make it easy for the producers. Customers just don’t want smaller and more efficient vehicles. Improving fuel efficiency is expensive, and the prices of new cars are already very high. Furthermore, no one really knows which technology will be the right one. Partnering with others may help to split the costs and spread risk.
2) Digitization of the driving experience
Consumers do like and want new technologies such as blind-spot warnings or automatic pre-collision braking. Automated parking assistance is also popular. However, the design and production of smart cars is rather costly.
Possible way out: Scaling up
Companies in the automotive industry need to decide what their strength is. Then they can invest in scale in order to strengthen their position in the chosen area.
-jk-