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Alternative Fuel Automobile Sector

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Alternative Fuel Automobile Sector Tabitha Kastner Lester Mooney Nate Ramirez Peter Sitton Lea Ann Hart-Chambers Tyler Redden Define Sector The sector focus is on ... – PowerPoint PPT presentation

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Title: Alternative Fuel Automobile Sector


1
Alternative Fuel Automobile Sector
  • Tabitha Kastner
  • Lester Mooney
  • Nate Ramirez
  • Peter Sitton
  • Lea Ann Hart-Chambers
  • Tyler Redden

2
Define Sector
  • The sector focus is on alternative fuel
    automobiles
  • Automobiles that do not solely depend on gasoline
    or diesel
  • With in the sector of alternative fuel
    automobiles we will be focusing on the
    Gas/Electric Hybrid cars
  • The Gas/Electric Hybrid cars are starting to
    become a new trend in automobiles and also
    becoming popular among consumer.

3
Major Competitors within the Sector
4
Toyota- Overview
  • Toyota has been the best success story as far
    as hybrids are concerned. Their Prius was the
    first hybrid to go into mass production, and
    claimed well above half of the market share in
    2005. They offer a Highlander hybrid SUV and they
    have plans to introduce a Sienna hybrid minivan
    in 2007.

5
Toyota
  • Strengths
  • They hold most of the market share of hybrid cars
    and because they mass produce their hybrids they
    will be able to take better advantage of
    economies of scale
  • The Prius has dominated the market and has almost
    become synonomous with the word hybrid giving
    Toyota brand name equity towards the hybrid market

6
Toyota
  • Weaknesses
  • There is such a high demand for the Prius that
    Toyota now has a waiting list close to six months
    before you would actually have the car in your
    possession
  • As other companies are coming out with new hybrid
    models. Toyota has used the 2004 Prius to satisfy
    the 2005 model which may leave some customers
    unsatisfied with the options available from
    Toyota.

7
General Motors- Overview
  • GM has launched a hybrid propulsion program that
    is targeting the highest fuel consuming vehicles
    first such as transit buses, full size trucks,
    and SUVs. They have delivered more than 345
    hybrid-power buses to 22 U.S. cities. If that
    number reached 1,000 than the annual savings for
    the U.S. would be more 1.5 million gallons of
    fuel. They will have a mid-size vehicle hybrid
    option available to consumers in 2007.

8
General Motors
  • Strengths
  • They have teamed up with cities to help reduce
    pollution, and therefore developed a relationship
    with the government which will help their market
    share as new fuel-efficient technologies come
    about
  • They offered the worlds first full-size hybrid
    truck in 2004 when the Chevrolet Silverado hit
    the market with an estimated 10 improvement in
    fuel efficiency

9
General Motors
  • Weaknesses
  • They have fallen behind in offering a hybrid
    model car which may cost them market share when
    they attempt to launch the hybrid Chevrolet
    Malibu in 2007
  • Even though they are the only company who offers
    a hybrid truck the technology can easily be
    imitated and it will not provide a sustainable
    competitive advantage

10
Honda - Overview
  • Honda was the first automobile manufacturer to
    launch a gasoline / electric hybrid in the United
    States with the debut of the Insight. The Insight
    is still the most fuel efficient vehicle in the
    two seater class. Honda has also debuted hybrid
    versions of the Civic and Accord models.

11
Honda
  • Strengths
  • First to launch a gas electric hybrid in the
    United States.
  • Maintain some of the highest fuel economy numbers
    in the market.
  • Combine power, luxury, and fuel economy with the
    Accord Hybrid

12
Honda
  • Weaknesses
  • Do not offer a sport utility hybrid as of yet
  • Honda Accord is one of the more expensive hybrids
    with the price starting above 30,000
  • No plans to develop any other models of hybrids
    in the near future.

13
Ford-Overview
  • Ford currently offers two hybrid vehicles, the
    Mercury Mariner and the Ford Escape. Both of
    these vehicles fall into the sport utility
    category, but plans are definitely in the works
    to debut a pickup with the Ranger Hybrid.

14
Ford
  • Strengths
  • First company to release a hybrid SUV in America
  • Ford Escape has beaten the EPA estimates of fuel
    economy in testing situations
  • Escape Hybrid was named the North American truck
    of the year in 2005

15
Ford
  • Weaknesses
  • Immobility of the hybrid SUV as seen with the
    Lexus and Toyota hybrid SUVs being released this
    year
  • Do not offer a hybrid car, and this may cost them
    the market of buyers who do not need SUVs

16
Macroeconomic Impacts
17
Dominant Economic Traits
  • Growing sector
  • Global market
  • High barriers to entry capital intensive
  • Threat of rivalry Honda vs. Toyota
  • Threat of substitutes other fuel efficient cars
    that cost less
  • Threat of buyers lots of car choices

18
Market Size
  • Hybrid cars are a growing sector, but still less
    than 1 of all vehicles in use.
  • 88,000 hybrids sold in 2004
  • 92,738 sold in first half of 2005

19
Market Growth
  • U.S. car market 2 growth annually
  • Hybrids 2000-2004111 growth annually
  • Estimates
  • Sales plateau at 3 in 2010
  • OR
  • 80 of car sales by 2015

20
  • How fast are hybrids growing?

21
Competitive Rivalry
  • Compacts Sedans
  • Toyota vs. Honda
  • SUVs
  • Toyota vs. Ford

22
International Domestic Issues
  • Gas Prices
  • If we raise fuel efficiency standards in
    American cars by 7.6 mpg we would save enough to
    eliminate 100 of our gulf oil imports into this
    country.
  • Tax Deduction for hybrids
  • 2,000 in 2005 and 500 in 2006
  • Pollution and the environment

23
Sector Health/Vitality
24
Porters Competitive Forces
  • Threat of New Entrants
  • Growth Niche many are entering
  • Threat of Substitutes
  • Regular Fuel Vehicles with MPG 30
  • Other Alternative Fuels CNG, LNG, Bio-Diesel, EV
  • Threat of Buyers
  • Currently more buyers than vehicles driving the
    market
  • Threat of Suppliers
  • Not much price competition for special HEV
    components
  • Threat of Industry Competition
  • Overall in auto industry this is huge
  • Toyota currently dominates hybrids others are
    chasing

25
HEV Appeal
  • Hybrids are a growing niche in the auto market
    competition is gearing up based on demand factors
    and consumers have been so far willing to pay
    more for green vehicles
  • Buyer demographics from JD Power Survey
  • Innovator - Early Adopters (but a little older
    than avg.)
  • Higher level of education
  • Higher income avg.100,000
  • Females are a bigger share of group
  • Betting that fuel will continue upward trend
  • Want to help environment
  • Drive less and keep their cars longer

26
HEV Success Factors
  • Differentiation Appeal to niche buying
    demographic then to mainstream
  • Price of Oil/Gasoline - MPG
  • Lower Emissions Green
  • Mass Production - Price of Vehicles/
  • Competition amongst automakers
  • Quality Dependability Reliability on par with
    traditional vehicles

27
HEV Competition
  • Current Players Recap
  • Toyota
  • Honda
  • Ford
  • Future Competitors Jumping in later this year
  • GM (Now in California, Washington, Oregon,
    Nevada, Alaska and Florida. )
  • Daimler- Chrysler
  • 2005 - 2008

28
Comparison of Firms
29
Comparison of the Automakers
Global Sales of Light Vehicles (Cars and Light Trucks) Global Sales of Light Vehicles (Cars and Light Trucks) Global Sales of Light Vehicles (Cars and Light Trucks) Global Sales of Light Vehicles (Cars and Light Trucks)
Maker 2003 2004 Forecast 2005
GM 8654 8633 8409
Toyota 6770 7470 7646
Ford 6460 6570 6547
DaimlerChrysler 4053 4159 4244
Honda 2918 3189 3253
30
Opportunities Issues
  • Economies of Scale are not yet fully in effect in
    this market
  • Tax incentives may continue or be curtailed
  • Growth all lines dont have HEV options
  • Minivans, Large Trucks, Vans, Luxury Cars
  • Many hurrying into niche to compete
  • Consumer prices should drop
  • Continued growth forecast in U.S. expected to
    continue (J.D. Power)
  • 0.5 sales in 2004 projected at 3.5 by 2012

31
Opportunities Issues
  • Possible backlash from environmental groups
    against makers of those making hybrids only for
    the power boost could taint appeal
  • Gas Prices driving market could plateau or drop
  • Competition from Turbo-Diesel and Bio-Diesel
  • J.D. Power estimates that this market will grow
    to 7.55 of U.S. by 2012
  • Hydrogen fuel/fuel cell vehicle development could
    make for a short lived market
  • Testing is already underway, but fueling and
    supply issues remain
  • Buyers concern over special needs vehicle
    maintenance and higher cost may slow market
    adoption

32
Future Issues
33
Future Issues
  • Drivers for change
  • Decreasing amount of Oil available, Worldwide
  • Non-renewable resource
  • Increasing Gas Prices
  • Global Exchange, in partnership with Rainforest
    Action Network, is asking Ford and its
    competitors to improve the efficiency of their
    vehicles to 50 mpg by 2010
  • Jump Start Ford Campaign

34
Remote Environment
  • Remote
  • War in regions of the world that have majority of
    oil reserves
  • New Oil Reserves discovered
  • Driving a hybrid car is one way to take a real
    step toward reducing our dangerous addiction to
    oil.

35
Competitor Movements
  • GM and DaimlerChrysler, reformed hybrid
    Naysayers, signed a strategic alliance December
    2004 to develop hybrid gasoline-electric engines
    together.
  • Volkswagen, Down on hybrids We are not
    interested in making cars which dont make money.
  • Toyotas commitment to minimizing the
    environmental impact and maximizing quality at
    every stage of the vehicle's lifecyclefrom
    production, through use, and disposalis viewed
    as an integral part of 'kaizen', (continuous
    improvement).

36
Future
  • The number of hybrid electric models on the
    market is expected to increase from 10 in 2005 to
    44 by 2012
  • The number of diesel models is expected to grow
    from 14 to 26.
  • Saturate the market
  • Economies of Scale
  • Increasing Production of Hybrid Models
  • Price and cost will go down.

37
Impacts of Change
  • Will there be one superior technology
  • (VHS vs. Beta)
  • Hydrogen fuel cell
  • Diesel or Diesel/Electric
  • Gas/Electric Hybrid
  • GM and Daimler-Chrysler Alliance
  • Build an industry standard?
  • full hybrid, mild hybrid, plug-in hybrid,
    parallel hybrid and serial hybrid...

38
Moving Forward -gtgt
  • US Consumption spurred on industry change toward
    alternative fuel autos.
  • Hybrid cars already exist as commercial products
    and are available to cut pollution now. On the
    other hand, fuel-cell cars are expected on the
    same schedule as NASA's manned trip to Marsand
    have about the same level of likelihood.

39
Sources
  • Common Dreams News Center http//www.commondreams
    .org/
  • The Detroit News
  • http//www.detnews.com/2005/autosinsider/0507/25
    /0auto-258263.htm
  • Fuel prices connection http//home.businesswire.c
    om/portal/site/google/index.jsp?ndmViewIdnews_vie
    wnewsId20050627005270newsLangen
  • Hybrid Cars.com http//hybridcars.com/
  • J.D. Power and Associates http//www.jdpower.com/
    news/releases/pressrelease.asp?ID2005086
  • General auto industry good stuff Standard
    Poors http//www.netadvantage.standardandpoors.c
    om/NASApp/NetAdvantage/login.jsp?url/NASApp/NetAd
    vantage/showIndustrySurvey.do?codeaup
  • Good hybrid information including current sales
    data and split http//www.greencarcongress.com/20
    05/07/hybrid_sales_in.html
  • Growing competition market segmentation
    http//www.detnews.com/2005/specialreport/0501/09/
    B01-54328.htm
  • Market growth hybrid effect on US market
    http//news.kypost.com/apps/pbcs.dll/article?AID/
    20050518/BIZ/505180398/1014/NEWS02

40
Sources Cont.
  • Sales and future forecast of hybrid diesel
    sales http//www.cnn.com/2005/AUTOS/06/28/bc.auto
    s.hybrids.reut/
  • Star Tribune Newspaper http//startribune.com
  • Toyota already looking to differentiate
    http//www.aiada.org/article.asp?id44803
  • Toyotas hybrid expansion strategy
    http//waw.wardsauto.com/ar/auto_hybrid_expansion/
    index.htm
  • The Washington Post
  • http//www.washingtonpost.com/ac2/wp-dyn/A9389-20
    04Dec17
  • Wired Magazine http//www.wired.com/wired/archive
    /12.09/start.html?pg2
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