The aim of this report is to complete a market research analysis report of the automobile market in Australia that will help the Great Wall motors of china to undertake a strategic planning and make future growth plans.
The report will assess data and then make recommendations and conclusion to the management of the great wall motors that will the company to achieve its strategic objectives. The report will use Australian market information to identify and evaluate current and future market opportunities, demand trends within the Australian market and also make an analysis of product types and market segments that could provide growth for the company.
Great wall motors, an automotive company established in 1976 is the leading SUV manufacturer in China (Global times 2010). The company got a licence to produce sedans in 2008 after two decades of producing trucks and has been hailed as one of the leading exporters of automotives in China, having entered the European market with an incredible success.
Currently, it exports it products in more than 60 countries and the major question in this paper is whether this company can succeed in Australia the way it has succeeded in Europe and other countries (China daily 2010).
How is Australian automotive market different from these other markets that the great wall motors has succeeded in? It is on record that Australia is one of the few countries worldwide that have facilities to design vehicles and produce them from scratch to dealership and most of the vehicles used in Australia are produced domestically (Lynn 2010).
Australia is known for producing large sized passenger vehicles though there is a growing market for sports utility vehicles and sedans. One of the government policies that have had a huge impact on the Australian automotive market is global integration where the government has lowered the tariffs, providing the industry with an opportunity to adjust.
The government helped the industry to internationalize while at the same time making sure it remains stable. There are four major manufacturers operating in Australia. These are Ford, Toyota, General Motors and Mitsubishi. Productivity in the automotive industry has improved significantly over the last ten years due to the benefits of market liberalization (Unescap 2009).
Unlike Australia which favours PMVs, not many other markets have a huge propensity for PMVs. Modern markets are tilting towards small fuel efficient vehicles which is also a trend identified in Australia. Due to the skyrocketing oil prices around the world, people have resorted to buying vehicles that can economise on fuel and that is where the great wall motors should focus its attention on.
There are two consumer segments that can provide economic growth for this company. These are the sports utility vehicles segments and the small trucks market segment. Sports utility vehicles have been a source of competitive advantage for great wall motors and will continue to be because the company has already made inroads into that segment. The small trucks segment is an area that has been avoided by many automakers meaning that foraying into this segment can provided the much needed growth.
The Australian automotive industry has four major players and all the manufacturers are subsidiaries of overseas giants meaning that there is no indigenous automotive manufacturer in Australia. The size of the industry has grown over the recent years with sales hitting 0.8 Million annually with the passenger vehicles taking the biggest chunk of the market.
There are also heavy trucks being assembled in Australia but there is no production of light trucks in Australia at the present. All light trucks are manufactured outside. Local manufacturers confine themselves to passenger motor vehicles because this is the dominant characteristic of the Australian motor industry.
The long distance between major cities in Australia and transport infrastructure that can cater for larger vehicles has made the consumers to value the PMVs. Fuel prices in Australia are also low and the PMVs have features that make travelling in the country comfortable. However Australians are moving towards small inexpensive vehicles that facilitate travels within cities.
There may be stiff competition between the manufacturers of PMVs but the modern shift towards small inexpensive sedans has created an opportunity that can be utilised by any automotive manufacturer. One characteristic of the Australian market is their disregard for the sports utility vehicles. Apparently, no automaker in Australia assembles or produces sports utility vehicles locally. Australia imports sports utility vehicles from Europe, Japan and Australia.
There exists opportunities in Australia for light trucks and small sedans and any player planning to venture in the Australian motor industry must exploit the void in the Australian motor market. Australian major automotive markets overseas are concentrated in the Middle East, the leading consumer being Saudi Arabia which takes 50 percent of the Australian automotive exports.
Other leading consumers include Oman, Kuwait, Qatar and the UAE which means that any automotive maker planning to venture into Australia must be able to exploit these overseas opportunities that have already been created by the existing automakers (Kraft 2010).
There are certain characteristics of the Australian overseas market especially in the Middle East that any player has to factor in. The products that Australia exports to the Middle East are not the same as the products consumed locally. Due to the availability low prices of oil in the Middle East, fuel efficient vehicles are not easily marketable in the region meaning that Australia exports top of the range vehicles to this market segment.
As opposed to the domestic market in Australia, Passenger Motor vehicles are not in high demand overseas especially in the middle east where there are low populations and high preference for the top of the range vehicles because the consumers in most of these country are economically endowed.
From the above analysis of research information, it is evident that the Great Wall Motors may not easily find a market share in Australia. The Australian transport infrastructure and customer preferences favour Passenger Motor Vehicles which the Great Wall Motors does not deal in currently.
Currently there are four major competitors in the Australian motor industry meaning that an additional competitor would find it hard to compete with the existing automakers. The major disadvantage for Great Wall Motors is that it does not have the facilities to produce the kind of vehicles that are in concordance with the Australian market characteristics.
Secondly the Great Wall motors specializes in sports utility vehicles which are largely unpopular in Australia meaning that it would hard for the company to make a breakthrough in the country. However, the future of the automotive market in Australia may favour the Great Wall motors because as mentioned above, people in Australia are now inclined towards small inexpensive sedans.
Currently, the competition in this segment is not as stiff and there is an opportunity success in this segment. I would recommend that Great Wall Motors target this emerging opportunity in the Australian market because the company already have facilities that can create a competitive advantage in this segment.
Great Wall Motors should therefore set up plants in Australia for manufacturing the small inexpensive sedans and also transfer some of its SUV operations to Australia to target the Australian overseas market especially in the Middle East.
The current marketing strategies that Great Wall Motors uses by great wall marketing may not succeed in the Australian market because of the nature of the market that favours Passenger Motor Vehicles meaning that the company has to rework its marketing strategies to favour its new line of production. In Australia, the best strategy that can enhance its competitive advantage is market segmentation which will help the company to create niche markets (ABR 2008).
Market segmentation will help Great Wall Motors to develop products that suit different classes of people in the country ensuring that each class or market segment is served with its own type of product (Kynge 2009). This is the only strategy that will help Great Wall Motor to penetrate the tricky Australian automotive market. There are some additional resources that will be required to support the above recommendations for market segmentation.
This includes a strong and effective research team that will study the Australian market so that the company can make strategies that are in line with the preference of the Australian customers. The Great wall motor company also needs a string sales and marketing team that will promote the new products in the Australian market and also ensure that the company attains a competitive advantage in the new market (China auto web 2010).
The company also needs to invest in the state of the art plants to ensure it delivers products that are of higher quality than what the existing players deliver to the Australian and overseas automotive customers because this will be another source of competitive advantage for the company. All in all, it may not be easy for the company to excel in Australia but if the above recommendations are considered, the company can in the long run become a competitive player in this tricky automotive market.
Automotive Business Review (ABR) (2008) Great Wall Motor looks towards EU for exports. (Online) Available at: http://www.automotive-business-review.com (Accessed 22 April 2008).
China Auto Web (2010) Great Wall Plans More KD Assembly Plants Overseas“. (Online). Available at: http://chinaautoweb.com/2010/08/great-wall-plans-more-kd-assembly-plants-overseas/. (Accessed 21 October 2010)
China Daily (2010) Great Wall banned from exporting GW Peri mini car. (Online). Available at:
http://www.chinadaily.com.cn/bizchina/09gzautoexpo/2009-11/25/content_9050939.htm (Accessed 21 October 2010)
Global times (2010) Great Wall Motor’s vehicles hit Cambodian market (online) Available at: http://www.globaltimes.com/great wall motors. (Accessed 18 January 2010)
Kraft, R. (2010) Shaking the Globe: Courageous Decision-Making in a Changing World. Melbourne: C.U.P
Kynge, J. (2009) Great Wall Motors Launches First Chinese-Made Cars into Australian Market themotorreport.com. (Online). Available at: http://www.austrade.gov.au/Automotive-to-China/default.aspx. (Acessed, 12 July 2009
Lynn, J. (2010) What is missing in the Australian automotive market. (Online). Available at: http://www.themotorreport.com.au/4538/whats-missing-in-the-australian-automotive-market/ (Accessed 21 October 2010)
Unescap. (2009) Australian Automotive Market. (Online). Available at:
http://www.unescap.org/tid/publication/part_two2223_aus.pdf (Accessed 21 October 2010)