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Auto Industry Cyclicality: Difference between revisions
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* W'''ere even able to exceed the deliveries recorded in 2008. This is mainly due to our attractive model range, but also to incentive programs and support measures resolved by many countries''' to mitigate the effects of the financial and economic crisis on the automotive industry in particular. As announced, we gained additional market share worldwide during the crisis as a result of the good delivery situation. | * W'''ere even able to exceed the deliveries recorded in 2008. This is mainly due to our attractive model range, but also to incentive programs and support measures resolved by many countries''' to mitigate the effects of the financial and economic crisis on the automotive industry in particular. As announced, we gained additional market share worldwide during the crisis as a result of the good delivery situation. | ||
* '''€6.2 billion of funds were released from working capital, mainly because of the pronounced reduction in stockpiled inventories and lower receivables'''; in the previous year, the division had reported funds tied up in working capital of €2.1 billion. As a result, cash flows from operating activities rose sharply, by 45.6% to €12.8 billion. | * '''€6.2 billion of funds were released from working capital, mainly because of the pronounced reduction in stockpiled inventories and lower receivables'''; in the previous year, the division had reported funds tied up in working capital of €2.1 billion. As a result, cash flows from operating activities rose sharply, by 45.6% to €12.8 billion. | ||
'''At €5.8 billion, investments in property, plant and equipment in the Automotive Division were 14.6% lower year-on-year in fiscal year 2009.''' The ratio of investments in property, plant and equipment to sales revenue (capex) was in line with our expectations at 6.2% (6.6%). '''At €1.9 billion, capitalized development costs were lower than in the previous year (-12.1%) <br />''' | |||
[[File:Screenshot 2024-03-13 141228.png|center|thumb|643x643px|https://www.annualreports.com/HostedData/AnnualReportArchive/v/OTC_VWAGY_2009.pdf]] | [[File:Screenshot 2024-03-13 141228.png|center|thumb|643x643px|https://www.annualreports.com/HostedData/AnnualReportArchive/v/OTC_VWAGY_2009.pdf]] | ||
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==== General Motors ==== | ==== General Motors ==== | ||
'''Why did it failed?''' | '''Why did it failed?''' | ||
GM’s financial stability had been crumbling prior to the 2008 economic recession and many blame management as being more concerned with turning a profit than pursuing quality and innovation. In 2005, the company reported a massive loss of $10.6 billion; this loss grew to $38.7 billion in 2007, and the following year the company warned that it would run out of cash around mid-2009 without the support of government funding, a merger, or selling off its assets.<ref>https://www.dividend.com/how-to-invest/how-to-bankrupt-a-multi-billion-dollar-company-general-motors-gm/#:~:text=What%20Pushed%20GM%20to%20Bankruptcy,than%20pursuing%20quality%20and%20innovation.</ref> | |||
* It became clearer during the 2000s that demand for less fuel-efficient vehicles, typically trucks, was losing momentum. Rising gas prices and changes in consumer preferences collided to make for a powerful storm that would help knock down the already financially-fragile GM. | |||
* During the ’80s and more so in the ’90s, the push towards fuel efficiency crippled GM in another way. Because the company was accustomed to making the biggest profit on its larger, less fuel efficient models, it failed to innovate on the product development front and was left behind.<ref>https://www.dividend.com/how-to-invest/how-to-bankrupt-a-multi-billion-dollar-company-general-motors-gm/#:~:text=What%20Pushed%20GM%20to%20Bankruptcy,than%20pursuing%20quality%20and%20innovation.</ref> | |||
* After the 2000s, GM continued to make what people saw as noncompetitive vehicles. GM was mainly selling poorly designed cars that were expensive to build. In the end, General Motors was put face to face with excess production capacity. . The company was known to focus mainly on profits from finance rather than building better vehicles and improving the current ones. Customer needs and expectations, innovation by competitors, and the availability of new technologies still didn’t force GM into making improvements.<ref>https://medium.failfection.com/general-motors-and-how-this-huge-company-lost-its-way-daeb4e01e7eb#:~:text=General%20Motors%20failed%20due%20to,Hummer%20was%20a%20big%20deal.</ref> | |||
* The company had mostly fixed costs for its manufacturing process. When sales went down, the costs didn’t. This is what affected GM the most. The company couldn’t keep itself afloat or even manufacture vehicles if it cut costs. On top of that, General Motors was known for having fixed costs on union contracts. They had to respect the legacy of healthcare costs and company pensions even if they tried to cut down on costs in other ways. | |||
== 2001 Recession == | == 2001 Recession == | ||