In 1957, Jack Taylor founded Enterprise Rent-A-Car in St Louis, Missouri. Ever since, the company has established itself as a leading global car-hire company. Currently, Enterprise Rent-A-Car has a workforce of over 75,000 employees and over one million cars as part of its global fleet (The Times 100, 2013). Jack Taylor always believe that employees and customers should be prioritized as profits would undoubtedly follow (The Times 100, 2013). The following are the companys business objectives include: to be the premier rental car company, to provide red carpet customer service, and to provide the best place to work to its employees. However, in order to achieve these business objectives, the company is likely to suffer certain consequences.
Main Body
One way through which Enterprise Rent-A-Car can become the premier rental car company is by meeting customer expectations. Andraski defines customer expectations as the needs, wants, and preconceived ideas of a customer about a product or service (2010). The company can expedite service delivery by developing individual customer profiles. However, updating such profiles is time consuming.
Enterprise Rent-A-Car wishes to remain the preferred premier rental car company and to do so, the company must ensure that its rental cars are thoroughly cleaned before clients hire them. However, the company will likely incur an additional cost of purchasing cleaning products. In order to preempt potential competitive threats, the Enterprise must fulfill the needs and wants of its customers (Sheth & Kellstadt, n.d.). Enterprise Rent-A-Car can achieve this by expanding its vehicle rental options to include the most sought-after vehicles. The company shall however incur the cost of acquiring such vehicles.
Enterprise Rent-A-Car also hopes to provide red carpet customer service. Thus, the company must consistently deliver high quality services as red carpet customer service is about giving your customers star treatment (Cutting, 2008). The company can also use the secret shopper strategy as a way of ascertaining that its employees value customer feedback. However, it is costly to maintain such a program. The company could also decide to offer personalized services to its customers so that they feel involved in the evaluation of their needs. However, there is the risk that customer could get frustrated if the company fails to utilize all the information provided.
Enterprise Rent-A-Car is also committed to providing a conducive working environment. Workplace environment affects employees feelings and work habits (Hadfield, Holmes & Fabr 2006). Therefore, the company should consider conducting an employee opinion survey and use this information to institute changes in the workplace. This way, employees feel valued. Also, the companys management could organize quarterly leadership meetings to discuss how best to improve the workplace environment. However, this is a costly undertaking financially and in terms of time. The company can also improve the morale of its employees through purposeful recognition and rewarding. This is an effective and low cost way of uplifting employees morale (University of Washington, 2013). For example, the company could develop an employee of the year award, but there is the risk of having the most popular employees voted repeatedly, thus lowering overall employee morale. Another strategy is to offer the companys employees competitive benefits packages, but the company risks providing less-valuable benefits to its employees.
There has been a common perception which seems to be a fact that an attempt to establish regulations on the usage of cars generates protests.
The protests are raised by motorists who feel that such regulations are infringements on their freedom of movement. An insight into circumstance about cars however gives an indication that there is something special about cars that drive the users into protesting against any element of control on the way they use their cars; there is an “errotic effect” (Diekstra and Kroon 153) associated with cars that people cannot do without.
This point of view is generated by the fact that motorists make sacrifices in using their cars and leaving many available and more reasonable options. Cases such as people maintaining the usage of cars instead of “bicycles or train” and people spending a lot on cars while failing to satisfy some of their basic needs have been noted (Diekstra and Kroon 148).
There are also reports that as much as every Dutch is pledging commitment to environmental conservation, almost only a quarter of vehicle owners are willing to reduce the extent to which they use their cars. Politicians have also been identified to be reluctant to enact stern regulatory measures despite the fact that a high number of people die every day in the European Union countries from road accidents. There is therefore a force of unwillingness to enact or accept regulation on usage of cars (Diekstra and Kroon 148).
History of Driving Behavior
The preference for a car over the other affordable means of transport such as the train started long time ago. Following his journey from “Berlin to Italy and back in an open Adler Phaeton” (Diekstra and Kroon 148) in the year 1902, Otto proclaimed that a car was better that a train (Diekstra and Kroon 148).
He later revealed more of his reasons for preferring a car. According to him, there was more freedom when travelling by a car that was not realized in other modes of transport; “The car increases human power and speed to such an extent that it also constitutes an increase in a qualitative sense; with the aid of the car, man is capable of claiming territory practically anywhere in the world” (Diekstra and Kroon 151).
The restrictions in a train that are, for example, not experienced in cars include fixed time tables and the closed nature of the train vessel. Another historical advantage that cars are credited for is the social class identity that the use of train had undermined.
Trains mixed every traveler in the system and that seemingly did not please the noble classes. As cars then emerged later at prices that could only be afforded by the very rich, it was associated with social superiority bringing back the social stratification that was formerly felt. Time however realized the proliferation of the motor vehicle industry with companies such as General Motors, Ford, Volkswagen among others coming up to offer diversified brands of vehicles that were affordable by the other lower classes in the society.
The status associated with cars has however not diminished as some brands like Mercedes and BMW are meant to distinguish classes in spite of the fact that an individual is on car wheels and the power associated with it remains to be a fulfillment (Diekstra and Kroon 148).
The association between car models and social class together with the satisfaction derived from driving indicates that driving behavior also depend on psychological factors. One of the key motivational factors to driving is its liberalizing effects from dependence on nature for human movements.
This has as a result offered the freedom to freely move at an individual’s will and with a lot of ease. Power that is associated with cars has also been a motivational factor to their usage; “When driving a car, man undergoes a personality change and a motivational reverse, no matter how little he may himself be aware of it” (Diekstra and Kroon 152).
The ability to move with relatively high speed and the offered opportunity to be present at a place within reduced time period has brought some fulfillment of over control of distance and territories: “the car at high speed-is also a source of stimulation for the central nervous system”(154). Power over territories due to ownership or driving a car is felt even by “simply driving there or packing” (Diekstra and Kroon 150). The comfort that is presented by using a car is also motivational.
Availability of “sound systems, carpets, colorful upholstery and air conditioning” Diekstra and Kroon 150 among others also contributes to the influence into using cars (Diekstra and Kroon 150). There is also a significant psychological influence that a driver feels once he or she is on the wheels; “the car itself also acquires a personality, becomes a companion or even a partner” (Diekstra and Kroon 153).
This illustrates a natural significant impact that driving has on people and this impact institutes a desire to always be on the wheels. Identity that an individual gains following the ownership of a car is also a motivational factor into ownership and usage of cars. The level of influence that is felt from cars is intense that it poses threats to lives (Diekstra and Kroon 150).
Due to the established power by car drivers, protection measures of other people from dangers of car users have been identified to be a necessity. Psychological approaches such as the use of road signs together with regulating production of cars as well as infrastructure and restricting movements of cars have been identified steps to control the power acquired by car users (Diekstra and Kroon 148).
Conclusion
Cars have a great influence on the way people feel. Though cars are associated with some dangers no absolute control measure is available over the usage of cars as the proposed steps will only limit the usage of technology without adequately controlling the threats of cars.
Works Cited
Diekstra, Rene and Kroon, Martin. Cars and behavior: psychological barriers to car restraint and sustainable urban transport. Hague, Netherlands: Leiden, 1997. Print.
Better Place’s (BP) idea to roll out electric car charging points is a step in the right direction. Electric Vehicles (EVs) as offered through BP’s scheme are quite promising because most challenges associated with EVs have been addressed by the organisation. Prospects for future improvements are also quite high as indicated through current innovations.
Analysis
Energy sustainability
Environmental concerns have been the major reason behind the push for greener sources of energy on the roads. Electric vehicles are a possible solution to increased dependence of most countries on imported oil. Weaker economies have suffered as a result of their energy choices. Climate change concerns have also become a major preoccupation among the G8 and many other developed nations of the world (Lee & Lovellette, 2011).
Consumers have realized that they have a serious role to play in taking care of their environment. They now want to minimize their personal carbon impact and thus contribute towards a more sustainable environment. Electric motor vehicles appear to be a viable solution to this need in the long term and the short time. Better Place is contributing to this resolution through its innovative strategies. A number of EV opponents have argued that these cars are not that environmentally friendly owing to their long term green gas emissions.
These opponents believe that for electric vehicles to be energy efficient, they need to rely on green powered electric power plants. Some of them have cited examples of electric vehicles that rely on coal generated powered plants and have asserted that such vehicles would increase green house gas emissions by as much as twenty percent. Better Place has already realized this and has partnered with green electric power generators.
In countries such as Denmark, Better Place is collaborating with electricity generators who rely on wind. In Israel, the firm is working on solar powered electric generators. The company is looking for ways of offering an all-round approach to the sustainability problem. A lot is yet to be done in this realm though; more infrastructures will have to be built in Australia in order to support green electricity sources. This would give clients sufficient support even when markets expand.
It has been estimated that in the next nine years, the electric vehicle industry will minimise carbon based emissions by a whooping forty percent. This will be possible through inter-industry collaborations between power generators and electric vehicle providers like Better Place. (White, 2011)
Car performance issues
Better Place and other electric vehicle stakeholders have worked on the inefficiencies that had plagued the electric vehicle market in the past. Previously, there were concerns about the life of the EV battery. Most batteries had a short lifespan and needed to be recharged on a regular basis. Innovators responded to this challenge through creation of the Lithium ion batteries. These devices have proved to be more effective than previous trials because it is now possible to store more energy in the electric car (Better Place, 2011b).
Furthermore, it has been shown that the capacity of the Lithium ion battery is two times as high as previous models. A lot has changed in the past few years and if this battery innovation is anything to go by, electric vehicle performance will keep improving. All BP has to do is to focus on continuous innovation that will address any hurdles consumers may be facing.
Better Place was started with very noble intentions. Previously, electric car users needed to stop at electric charge points for long periods of time in order to get their batteries charged. Every time a driver uses an electric car, the battery is discharged. After a while, the battery will need to be recharged in order to power up the vehicle.
In older electric vehicle charging schemes, most clients needed to stop at electric charge points for long periods of time as the process took very long. However, Better Place dealt with this dilemma through the introduction of a battery swapping system. Instead of waiting for one’s battery to charge up, Better Place simply swaps the discharged car battery with a charged one. They have revolutionised the electric vehicle industry owing to convenience that they provide clients (Fung, 2011).
Electric cars are also quite attractive in terms of their performance. Most of them now go faster than the conventionally powered vehicles. This has been made possible by the good power-to-weight ratios prevalent in the latter vehicles types.
Faster acceleration can be attained at lower speeds in the electric vehicle than in petrol powered ones. As a result, the car feels smoother than the other kinds of vehicles. It is also important to note that electric vehicles make less noise than the other conventional vehicles, so they would lead to a better driving experience and cleaner environment.
In the past, car range issues were (and still continue to be) a huge challenge for all electric vehicle suppliers. However, credit should be given when credit is due. Performance range has been improving dramatically over the past few years. Right now, most electric vehicles can do approximately 160 km. however, with continuous technological advancement, these numbers could increase to 200, 300 and even more.
The beauty about BP’s scheme is that no driver actually owns a battery; the batteries belong to BP. Therefore, if batteries improve to provide better ranges, drivers can switch to the better devices since all they have to do is get to a switching point. Better place has given consumers a great option of upgrading to new battery types as soon as they are developed.
Such a quality is imperative in any newly developing industry because several changes are likely to take place in the near and long term. Many hybrid vehicles have been placing a lot of risks on the consumer who must buy the battery upfront. Better place has transferred battery ownership and thus made the electric vehicle industry quite manageable to car users.
One of the attractive things about Better Place is that battery swapping will not just be restricted to those clients who subscribe to BP. The company will allow other clients to tap into their charging system. They will then work out billing systems between themselves and the electric vehicle providers.
This collaboration will be imperative for the growth of such a new industry. Customers will also enjoy the convenience of not having to look for their respective providers before charging. BP could emerge as the EV infrastructural leader and provider because of this condition. If electric vehicles hope to compete with petrol powered cars, they need to have a comprehensive charging point network that accords flexibility. (Hammerton, 2011)
Installation of charging networks
It is likely that these electric vehicles will lead to better results owing to the installation of various charging points around the country. In order to compete with conventionally powered vehicles, any electrically powered car needs to access charging points conveniently and safely. Better Place has already stated that it plans on building one of the largest electric car networks in the world by the year 2013. In Canberra, the firm has identified five public charging points and two private charging points.
Sydney will have about eleven public charging points while Albury, NSW will have one private charging point (Better place, 2011a). Since Better Place is an international company with a worldwide network of battery switch points, car users from Australia can enjoy switching their batteries at Better place charging points anywhere around the world. Such a mechanism is quite promising because it would offer clients a vast number of selections.
This strategy will work well if the firm adopts a targeted market development strategy. In other words, BP should identify areas with early adopters of electrically powered vehicles. The organisation should then start developing these areas first before it can spread out to other less-enthusiastic parts of the nation.
The early adopters are likely to demonstrate that the electric scheme does work and would cause other car users to try it as well. Better Place would get more effective results this way than if it evenly distributed its charging networks around Australia. Currently, the organization is using a different approach in the selection of locations around Australia. The chief executive of BP Australia- Evan Thornley explains that Canberra was chosen as the pioneer because most residents in the location have two cars in their garages.
Fifty four percent of them have two cars while eighty nine percent have off-street parking. The organisation believes that since garages are suitable charging points, then people with more garages need to be considered before others. This approach will work for the organisation at the beginning because the electric vehicles have not yet been released into the mainstream, but as the cars get into the mass market, Better place will need to study its client base so as to assess who the early adopters are.
Investments and prospects for the future
Better Place appears to have collaborated with very reputable corporate figures in Australia. Already the organisation has partnered with ActewAGL. They have signed a ten year contract worth 60 million dollars that will ensure provision of renewable energy for the vehicles that will be employed (TMR, 2011).
Consumers and stakeholders who are concerned about sustainability issues will be rest assured by this deal. Furthermore, if a corporate body can trust BP to the extent of investing millions of dollars, then chances are that they have seen something worthwhile in the organisation (White, 2011).
Another organisation that has worked hand in hand with Better Place is Lend Lease. Their contract with Better Place is worth ten million dollars. The firm started working with BP from 2009 in order to the build charge point infrastructure that is needed to keep the scheme up and running.
This organisation has been working with Better Place in order to acquire sites for the recharge points. Construction of the BP visitors centre as well as the battery exchange stations have been managed by Lend Lease as well (White, 2011). Better Place appears to be moving very fast in terms of these developments and is likely to continue doing so.
Better place has identified a number of other foundational members that it plans on collaborating with. They include CIC Australia, Land Lease, National Conventional Centre, Rock Development Group, Capital Hotel Group, Crowne Plaza, ACT electric vehicle council, Hindmarsh and TransACT.
These companies are collaborating with BP through various capacities. Some of them are building developers and want to have electric charge points in their premises; CIC Australia is one these partners. It has established some facilities at Googong, which possess required wiring for electric vehicle charging. The next step will be to roll out these stations. Melbourne has also supported the initiative in order to help it raise approximately one billion as planned for the next three years (Leyden, 2010)
Renault is one of the car manufacturing firms that have pledged to collaborate with Better Place in order to roll out electrically compatible vehicle models. BP has already introduced the Sedan in Australia and plans to increase the fleet of vehicles available in the nation. By working with an experienced automaker like Renault, BP is demonstrating its seriousness and commitment towards the EV initiative as it forges ahead.
Pricing challenges
A number of pricing issues have been cited by opponents of the electric vehicle industry. Car users have objected to the excessive pricing of electrically powered vehicles. However, Better Place seems to be offering a solution to this problem and is likely to garner positive responses.
First, customers will pay a membership fee that will be assessed through one’s mileage. It has been estimated that Renault will deliver a fleet of sedans which will cost 30,000 to 35, 000 dollars. Batteries will cost $12,000 (not inclusive of monthly fee). The monthly fee is likely to be lower than what consumers pay for petrol in their conventional vehicles.
The company executive explains that customers may be able to pay as little as a seventh of what they are currently paying for petrol per kilometre. However, these savings will be enjoyed more by long distance drivers than shorter ones. Many drivers in Australia are high-kilometre drivers so most of them would realise these benefits. Better Place is poised to do well in this country owing to this issue.
Costs savings will not just be realised by car users alone; the government is set to benefit from this scheme. Current expenditures on petrol fuel are approximately 30 billion dollars. Sometimes these amounts may increase if the dollar rate increases and if the oil price increases as well.
If the same number of cars were powered by renewable energy sources, the government would be spending only 5 billion dollars per year on fuel. It is not likely that this may happen immediately but if Better Place continues to roll out more charging points and keeps developing its network, then this scheme may create a lot of economic benefits within the country. These changes require small steps but will eventually become quite formidable.
Many petrol vehicle users have been complaining about the price fluctuations of their fuel source. In fact, the major problem with conventionally powered motor vehicles is that consumers rarely get to plan their fuel usage expenditures because these keep changing from time to time (Daniel & Gordon, 2009).
However, Better Place will be offering a totally different scheme. Consumers will be expected to pay a monthly flat rate so most of them can easily plan their expenditure without being anxious about this challenge. It will be a strong point that could lead to the success of the scheme.
Success in other parts of the world
Better Place maybe rolling out charging points in Australia for the first time but the organisation is not inexperienced in the electric vehicle industry. It has been doing well in other parts of the world such as Israel and Japan. Since Australia is keen on handling its energy needs then the scheme will do relatively well in this kind of market in the future.
Israel rolled out charging points in March 2011. Consumers are already enjoying the benefits of this system. They take five minutes to exchange their batteries and are already starting to save on monthly vehicle costs (Israel21c, 2011). The firm got very enthusiastic responses when it introduced its first fleet of electric vehicles from Renault.
Almost seventy percent of the one hundred vehicles brought in Israel have already been sold in these first few months that the scheme has been in operation. Other test trials have been carried out in other parts of the world like Tokyo, San Francisco, China and Yokohama. In Yokohama, Japan, Better Place released a new initiative in which a swapping pad and battery shuttle were used for swapping and a good reception was reported.
Tokyo implemented a trial run between 2009 and 2010. Approximately two thousand batteries were swapped in this project. Extension of that demonstration illustrated that the public responded well to the Better Place scheme. These test trials are an indication of what is to come; Australia can reap the benefits too.
Conclusion
Better Place should roll out charging points because the program has been successful in other parts of the world. Furthermore, powerful stakeholders in the corporate arena are already involved in this initiative. The company appears to be financially ready to deliver. Better Place has dealt with pricing and battery charging issues through is battery swapping scheme.
It intends on using green sources of energy thus making it sustainable. Furthermore, its pledge to have a wide network of charging stations is likely to create a strong infrastructural backup for electric vehicles in Australia. The scheme could revolutionise the auto industry through these advantages.
References
Better place (2011a). Charge spots: Right here right now. Better Place Australia Company Website. Web.
Better place (2011b). Why go electric? Better Place Australia Company Website. Web.
Daniel, S. & Gordon, D. (2009). Two billion cars: driving towards sustainability. Oxford: OUP
Fung, D. (2009). How Better Place plans to revive the electric car. CNET Website. Web.
Hammerton, R. (2011). Better Place expands EV charging network. Go auto Website. Web.
Israel21c (2011). More millions invested in Better Place. Israel 21st c Innovation News Service Website. Web.
In Abu Dhabi, like in most other developed cities, car rental is a thriving business. With modernization, technology has found its way into the business, especially in the form of computer usage in the assignment of cars to clients and in the tracking of the vehicles when the hand-over is complete implemented by world class rental service providers like Avis or Europcar.
This proposal focuses on the analysis phase of the project involving various steps. Typically the analysis phase involves the developer eliciting user requirements. This includes fact gathering, analysis and user requirements documentation.
Detailed scope of the proposed system
The project has been defined through a thorough requirements collection and evaluation process. Based on these requirements the development team commenced a detailed analysis to determine the viability of an online car rental system. Summarily the system will:
Enable customers to login or register with the company.
Submit vehicle type, and registration to check if it is available
Access the hire requirements for the particular vehicle chosen
Access the car hire contract form for perusal and signing
Submit the agreed charges through a suitable form of electronic funds transfer after perusal of the car hire contract details.
Pick the car from company premises and counter sign a copy of the agreement form.
Detailed description of the current system
The current system is mainly manual and inefficient and proceeds in the following steps:
A client comes to the company office and makes enquiry
The employee checks the file to see the available cars
The list is passed to the client for perusal.
The client makes a choice and fulfills the requirements including the payment of the hire charges
The car is availed to the client after signing the car hire details form.
Detailed description of the proposed system
AutoXpress Car Rental will fundamentally help in the collection and storage of details about the client. As such, it will provide slot for the input of the customer’s name, government-assigned identification number, employment/business number and contact details. The following are the process of the system.
The company employee will perpetually update the details in this master file to reflect the current state of the file. Among the details submitted will be the car description and make, capacity, type, registration number, and daily charges.
The details from this file can be accessed online by a prospective customer either by car make or by registration number.
The customer can proceed to find the charges or rate of hire for the particular car of interest.
The system will also capture the registration details of the customer and avail a car hire contract form with the details to the customer for signing and eventual system validation.
These details are captured and stored in the hire contract file.
The system will also allow the customer to pay using their credit cards where the system will capture these details in the paid contracts file.
The car can then be availed to the customer according to the hire contract and the customer will approve and sign a copy of the form that is carried back to the office for filing.
Every car is fitted with a global satellite positioning system for ease of tracking. A penalty fee is payable if the car is not returned to the hire office at the expiry of the contract or if it is damaged by the customer.
AutoXpress car rental system will employ a webmaster who ensures that the uploaded system is available 24 hours, and 7 days a week. The webmaster will liaise with the company management to update regulations for the hire service. A database administrator will also be employed by the company to manage the system’s database and ensure that data integrity and security is maintained.
The system will have a number of business rules governing the transactions. A logon process requires the customer to register once and acquire a username and password. Additionally, the transactions accepted by the system are strictly cash on delivery-based.
The system will rely on open ended architecture to enable scalability and adaptability. This will reduce costs incurred because of adaptive maintenance. Only registered customers can transact with the system.
Functional description of the proposed system
Based on the proposed plan for the online car rental system the following are the various levels of data flow diagrams depicting the main process as well as the logical data model for the process. The data flow diagram is a graphical representation of the processes within a system indicating the entities involved data stores and the process.
The following diagram represents a context level for the AutoXpress car rental system.
The following diagram represents a level 0 data flow diagram of the user access process to the AutoXpress car rental system
The following diagram represents a level one data flow diagram of the customer car hire service request process
Recommendation for the next phase
Following the analysis phase will be the design phase. Having gathered the user requirements for the proposed system, the system developers will embark on the translation of the system requirements into a working system. This requires a tendering process where the hardware and software needed for developing the system are acquired from short-listed vendors in a competitive tendering system.
The business analyst and programmer will then interpret the user requirements gathered during the analysis phase. The development team will closely liaise with the user representative to define and program the processes and define the database requirements for the proposed system.
The development approach used will be bottom up where individual components of each process are programmed and tested and approved separately before they are integrated and tested under integration testing. Finally the user representative will be called upon to participate in user acceptance tests to ensure that the developed system meet the initial user requirements.
The final system can then be approved and uploaded to enable online access and processing. In the development of the software, the first guiding pointer is that it will be used by individuals with varied computer understanding levels.
Consequently, it will only be prudent to ensure that its interface is as simple as is practically possible. The page layout will be made in such a way that unnecessary clutter is left out, in order to make the software less strenuous on the computer’s operating system. Simplicity will also provide for easy updating and error rectification.
The software will be designed in such a way that it can be used with almost any available operating system. The most obvious ones are Microsoft Windows (in all its formats) and Mac OS. The software should easily work in tandem with other drivers such as the ones providing the connection to the printer and the company’s database.
This will help in streamlining of operations, from the front desk all the way to the administration office. Any available software whose functionalities can be borrowed will be considered in the development of the AutoXpress car rental system. This will go a long way in ensuring that the time spent in development is kept at a minimum.
Another aspect for consideration during the design process is error detection and recovery. This is because customers will tend to go for products that will give them minimal incidents of crashes. The software will be more appealing if it can self-recover without requiring the user to go the extent of rebooting the system.
The coding of the software will be to a great extent open-ended in order to allow for further development and upgrading. The choice of the compiler, interface and database will be determined after an assessment exercise of the available variety in order to ensure efficiency and desirability.
Algorithms will also be settled on depending on immediate needs and requirements, with the provision of combination whenever need arises. Testing and maintaining the software will be dependent on established industry frameworks, with the initial process involving the direct participation of the targeted users.
Project plan
The following table highlights the stages of the project’s analysis phase and the respective durations of each stage. From this breakdown a definite work breakdown structure can be derived that will govern the eventual system development process and ensure a disciplined approach to the process.
The work breakdown structure helps the development team and project sponsor to monitor the system development process and ensure that it proceeds according to the cost, time, quality, and resources.
Phase
Work package
Tasks
Duration (Days)
ANALYSIS
Fact finding
Gathering the user requirements for the proposed system
2
Fact analysis
Evaluating requirements for the proposed system
1
User requirement documentation
Compiling the user requirements (Analysis) report
4
According to the project plan the analysis phase will take one week. It is assumed that the team will work throughout the week with no break at the weekend to meet the tight development deadline. Currently the analysis stage is at the documentation stage.
China is one of the rapid growing economies in the world. The country has a high potential of growth in the future. Various economic sectors have witnessed rampant growth. For example, with regards to the motor industry, the country’s ranking has undergone significant annual improvements since 2005. In the first quarter of 2010 the country’s market was ranked 3rd in the world. The Chinese established economy dates back to 1949. It was able to progress after reforms and a lot of openness in the economy.
In 1993, the country incorporated effective market mechanisms which contributed towards the economy undergoing significant positive transformation.
The recent global economic crunch affected all the countries across the world. As a result, various economies experienced a slow economic growth. Currently, China is considered to be one of the economies with a strong growth momentum in the world. In 2009, the country was the second largest economy of the world.
With this achievement, the country’s growth rate is above average. It is very undeniable that with all this, the country has a great potential that will lead to continued and sustainable growth in the long run.
One of the unique issues related to the Chinese economy is that it outperformed other economies during the period characterized by global economic crisis. For example, over the past three years which have been characterized by a severe global economic crisis, the country’s Gross Domestic Product (GDP) has been maintained at an average rate of 8% to 10%.
Despite the economic crisis, the country’s motor industry has witnessed a steady positive growth due to the growth associated with the economy. Currently, the country is the market leader with regard to vehicle sales. It should also not be forgotten that the county has a high population that guarantees a ready market for motor vehicles. China’s motor industry has outperformed other countries in growth over the recent years.
There is still a great growth potential in the market. This arises from the fact that these markets have not been fully exploited. Most sales are currently being witnessed in the Western parts of the country. This means that business can still thrive in the country.
Currently, 50% of the country’s motor sales are being experienced in the coastal eastern side of the country. As the economy has been growing steadily, there has been a general rise in the level of disposable income within the population. This therefore means that most of people can afford to spend their extra income on luxury goods such as cars.
Urban households who own most of these cars have seen their income rise considerably. This has opened a new frontier where companies can strive to capture this market. There is a long term growth prospect for the country’s motor industry and these calls for a more strategic approach in making it more lucrative. In this perspective, it implies that sales are going too increase as time goes by. Profitability is set to continue increasing thereby attracting more investments in the country.
Luxury car sales have been increasing in the country. One of the most notable models whose sales have increased is Mercedes. This therefore implies that the luxury car market is growing as people’s income increases. In 2009, Mercedes sold 67, 000 units and there is a good outlook in 2010 as sales are projected to increase to 100,000 units.
Market development of luxury cars in China is still growing with various dynamics that need to be looked at. Those companies that need to sale luxury cars in China can still do so and exploit new opportunities since the market is not yet developed and saturated like other leading economies.
Discussion
Luxury car market
Because of the recent changes in economic realignments, the world’s premier car brands have found new markets apart from the usual European market. This has mostly been in emerging economies such as China that present a good and lucrative market for these companies. A growing economy, vibrant stock exchange market and a new crop of affluent buyers makes China a good market for luxury cars. Some of the luxury cars in the market include; Porsche, BMW, Ferrari and Audi (Wei 7).
The affluent, wealthy and rich market segments are growing much faster in emerging markets such as China compared to other established economies of the west. As a matter of fact, premium and luxury car makers can still focus on this market segment and make good vehicles for them.
The luxury car market in China is estimated to be over 4% and this is expected to grow considerably over the next five years. This means that there is a great potential in the market. From the county’s statistics it is projected that there are almost 345, 000 dollar millionaires (Ohnishi 3). With this number, this is a good gesture that they are likely to buy luxury cars.
Luxury car sales are estimated to be over 260,000 units in a year but this number has been rising due to an increment in the number of wealthy consumers. China has been growing at a growth rate of 9.5% driven by high savings and a young population. In addition, the country has registered a double digit growth in the number of affluent consumers. Because consumers in this market are more demanding for latest features and technologies, premium and luxury car makers are focusing more attention to these customer categories.
Audi, which is a luxury car, has seen sales increase making China one of its most prestigious export markets. In 2008, it is estimated that the carmaker will have sold almost 60,500 units (Starr 5). Growth has been driven by efficient network management and high investments in production of cars well suited for the market.
Porsche has also had good prospects in China since it first set shop there in 2001.It has grown because of a good strategy capable of delivering world class customer standards. The carmaker has enjoyed an annual growth rate of over 70% with sales topping 4,000 units (Wei 9). This represents a 4% of the total world global sales. BMW on the other hand has also followed suit and it is now building cars in China. In 2007, the company sold 51,000 units in China with most of them (36,000) being locally built (Keidel 14).
Another active player in the luxury cars market has been Ferrari. The car maker has solely decided to focus more on the super-luxury segment. The company sold 177 cars in 2007 which was a significant growth from the previous year by 48% (Keidel 16). With long term strategies in place, they expect this momentum to continue and make China their number one market. Ferrari has focused on more brand awareness as a way of driving their sales up. This is necessary because the market seems to be attracting a lot of luxury carmakers.
Even after the global economic crunch, economies such as China are expected to grow significantly and become a haven for global investors. This implies that luxury carmakers are likely to continue directing most of their efforts in this market. With such a high population China will continue offering a dynamic market.
Regional disparity between regions of China
China has many regions and it appears that there are disparities in GDP per capita and rural consumption and income. The country has 31 provincial administrative units (Ohnishi 7). This means that the general consumption patterns and household incomes are divergent. Although there are gaps in static measures, the country has differences in regional wellbeing with a specific focus on consumption and income levels. Coastal and interior provinces have differences with regard to the levels of income.
On the other hand, these regional disparities have been well used by the government to implement successful reform programs. Most of the country’s current urban dwellers have their origin from rural areas (Wei 10). These regional inequalities are less for urban areas than they are for rural areas. Coastal regions have higher levels of income compared to those regions located in the interior. This means that individuals working in these regions are well remunerated compared to other regions.
In a large perspective, these income disparities between regions seem to be large enough especially when looked at from the coastal- interior dimension. There are also differences in the growth rates. The average growth rate has always varied between the coastal and interior regions. These regional income disparities and their level of income vary significantly. There is a consumption inequality pattern in the country which provides an evidence of weaker divergence (Keidel 17).
The levels of consumption in the north coast regions are more so like those ones in the interior regions. Although these levels are close, the coastal regions have high consumption levels than those ones in interior parts. On the other hand, other regions have been registering an improvement in consumption levels. While looking at income and consumption patterns the level of growth has been growing consistently across all regions. This explains why the county has experienced rapid economic growth.
There are also some inequalities in the level of poverty in the county based on regions. Because there is a high household saving rate in the country, some regions have high incomes than consumption levels (Ohnishi 8).
Of course there are some factors that have brought about these regional disparities in the county. Most of these disparities have been policy oriented. There is an argument that the country’s economic growth is only benefiting the rich more than the poor. This has been further used to reinforce the idea of regional disparity.
Regional disparities in the county have had an impact on Chinas economy and the car market in general. In the first place, these inequalities have not been able to balance the economy well. There seems to be a big gap between the coastal region and the interior parts of the country. Some of the policies that the government has undertaken have not been effective enough in correcting this problem (Keidel 13). This is to say that regional disparities have brought about an imbalance in the economy.
These regional disparities have ultimately also had an impact on car sales (luxury and premium) in the country. Disparities have created imbalance in that some regions have a high incomes compared to others. As a result, more sales have concentrated in the coastal region than any other part of the country.
This is because the region has high levels of income. The eastern coastal region accounts for 50% of the sales while the western region accounts for 23% of the overall sales (Ohnishi 16). The rest though not much are from the north east and central region of the coastal side.
This means that car sales are concentrated in specific areas on the county. For any car maker that intends to position itself effectively in the market, they have to be aware of the market patterns. This will contribute towards the firm succeeding. More so, for luxury car makers it is important as they will be able to know where to concentrate their marketing campaigns and efforts in a bid to increase the number of customers.
Determinants of the luxury car market
For the country to experience high sales in luxury cars and sales in general, there are a number of determinants which must be considered (Starr 5). There are two determinants of market development for luxury cars market in China. These include demand and government policies.
China has had a high market demand for luxury cars in recent years. This demand has been brought about by an increase in the number of wealthy people. By being wealthy they have become more affluent and spent more in buying luxury cars.
China’s economy has been growing by 9.5% every year and this has been maintained for a long period of time even whenever there has been a crisis around the globe. As a matter of fact, the country’s economy is the second largest after the United States. This means that it has created a good investment climate for car makers to establish their business there (Park 9).
In addition to these, the country, due to its vibrant economy has emerged as the second largest trading nation thereby becoming the second largest importer of goods and services. This implies that there is a high demand in the country. This general ability of the economy having a high demand has determined how cars are sold in the country. Demand has been created by the growing number of millionaires in the country. Millionaires have emerged because of a good investment climate that has existed in the country (Spence 12). As a result, they have been able to invest and increase their net worth.
In the process, they have become more affluent in the way they spend their money thereby creating a high demand for luxury cars. The more they become rich is the more they compete amongst themselves for these cars. The Chinese citizenry has been increasing its expenditure on luxury goods in recent years. The country’s statistics shows that it is experiencing an upsurge in demand for luxury goods that were sometimes inaccessible to the majority of the population.
The government has come up with policies and regulations aimed at ensuring that the market for luxury cars is stable (Park 13). There have been auto related industry policies that have protected the industry and led to this increased growth. The motor industry is one of the pillars of the economy and as such needs the best policies and regulations to grow efficiently.
There has been a concentration of motor industry sales in the coastal region of the country more than it is in the western region of the country. After the government saw this imbalance it had to come in and intervene to ensure that growth is uniform (Spence 2). More efforts were directed to the western region so that it should not be left behind as the rest of the country experiences growth in this important industry and sector of the economy.
To increase investments in this sector (in the western region), the government came up with more friendly regulations that were meant to create a more comfortable field. New regulations were mostly seen in taxes and the process of establishing business there to encourage more car makers to diversify in the area (Park 21).
The government was also concerned with increasing car sales in this region and this was mostly done by encouraging more dealerships. Dealerships were meant to increase more activity in the areas that were initially less covered by these dealers.
Most of the country’s foreign investments have been done in the coastal region.
Majority of the market is in the coastal regions of China
China has become the world’s largest auto consumer. The rate of consumption has increased to 24% from 3% it had in the year 2000 (Keidel 7). The motor industry has been maturing over the recent years and it is undoubtedly among the best in the world.
Currently, the eastern part of the coastal region has the highest number of vehicles per 1,000 inhabitants and this figure is expected to grow as time goes by. This growth momentum has been made possible by good policies in place. By ensuring that good policies are in place the government has made it possible for the industry to be protected.
Car ownership in China has been increasing because of a good and performing economy where people have more disposable income and as a result are able to spend on more luxurious goods. This has made the country to become a large consumer of motors. As a matter of fact, knowing that the economy is performing and that there is a large demand for motors the country has seen an increase in the number of carmakers willing to established businesses there.
The coastal region alone accounts for 50% of all the total car sales in the country (Lewis 5). Coastal regions have better levels of income compared to those regions that are found in the interior. This means that the region is well remunerated than other regions. Since there are high levels of income in this region, more car makers have concentrated their business efforts here. This has been made possible by the willingness to buy from the population.
The population has been more ready to buy cars because of an increase in their incomes. This means that an increase in consumer income levels has culminated into a shift in their consumption patterns.
As a result of an increase in consumer income, consumers increased their urge to attain a higher societal status and in the process buying a car has been one of the ways. These regions have had more sales because of the population that is more urban like compared to other regions that have a high rural population.
The urban population has a different lifestyle compared to the rural population (Gao 13). It can be noted that these population will have more preference for luxurious things such as cars. The same cannot be said of the rural population that seems to be comfortable without cars. Since most of the car owners in China are first time owners, some of them have been migrating from rural areas to the coastal region increasing demand.
This increased demand has seen more market activity concentrated in these regions (Lewis 14). The coastal region has low levels of poverty which means that there is a high level of saving. Saving is an avenue through which people can use to grow their investments.
As this has been going on, the region has witnessed vibrant economic activities take place (Gao 16). This has attracted more dealers who have reached out to a large number of customers increasing the market for cars in the coastal region.
This is because most of the reforms that have seen the country emerge as an economic powerhouse began from the coastal region. This means that the region has more mature established market structures that have enhanced business in this area. Majority of the market is in the coastal region because of labor costs and productivity. The cost of labor in this area is relatively low. This has attracted more business into the region.
How to encourage luxury car dealerships to invest in the western region
This region only accounts for 23% of the total sales in the motor industry in China. It is very low compared to the 50% that the coastal region seems to have. From the discussion above, the reasons why the coastal region has more market activities compared to the western region have been identified. This means that the government has to be more vibrant in ensuring that this region is not neglected and that there are more investments in the area.
Western China comprises 70% of the country’s size (Keidel 7). Considering the fact that the region is the least performing in the country, the government has launched a go west policy that is aimed at increasing investments in the area. Luxury car dealers have been looking at ways of reaching out to the rest of the county but they have not had an opportunity to do so because they do not trust the western region.
Because the region is currently growing at par with other regions, it should not be ignored and luxury car dealers need to be encouraged to invest in the area (Gao 18). To encourage them more to invest in this region, the government should look at its legal and regulatory framework. The framework in place should be able to encourage dealers to do business instead of it being opaque, complex and inconsistently enforced.
There is need to improve on infrastructure development.
Investors and in our case luxury car dealers will only go to these areas if they are sure that the necessary infrastructure is in place to support their activities. Since they are dealing in luxury goods (cars) they require a good infrastructure platform that will support their business activities and operations well (Lewis 13).
Infrastructure should be developed in a wide perspective including the transport system. There is need to guarantee them enough energy that will be needed to make the places they are investing in more lively.
Information transparency should be improved since it has mostly been practiced in the coastal region that had these policies in place early enough. Information is very important as far as business is concerned and it will be good if it is more transparent (Gao 25). If this is done, luxury car dealers are more likely to invest in the western region of the country.
The government should support these dealers by offering them a relatively low cost of capital. Capital is necessary for them to support and fund their expansion programs effectively. Most of these dealers are established in the coastal region.
In addition, they would like to invest in the western region as a way of expanding their business but they have no capital. The government can promote their investments by ensuring that the cost of capital and cost of acquiring capital is low in the western side of country. This is likely to increase investments in this area.
Partnerships will also help to encourage these dealers to invest in the western region. The government can establish a good working environment by ensuring that there is fairness in the market (fair competition). It should only regulate but not control what the market is doing. Chinese culture values strong relationships in business and through such, the dealers will find a level field that they will use to grow further.
New vehicles
Majority of the country’s motor owners are first time owners (Barboza 64). This means that they are acquiring their first car as the economy continues to grow. On the other hand, the government has introduced some tax rewards that are aimed at ensuring that luxury cars that are imported and produced are energy saving. In addition to these, there is a tax reward for those who develop electric vehicles.
The government has realized that the country’s population is increasing incredibly and with the continued economic growth it means that more people are going to own vehicles. Increased usage of vehicles implies that there will be a lot of energy required to ensure that the industry operates effectively (Deng 15).
This increased vehicle usage will also mean that there will be some environmental problems as a result of using fuels (carbon). To ensure that this is well taken care of, the government has come up with various tax rewards that will ensure that this is achieved (Alon 5).
There is tax abatement for those who produce energy saving cars in the economy to encourage the sale of energy saving eco-cars that will not pollute the environment. On the other hand, those who produce cars that consume a lot of energy are highly taxed to discourage their use (Barboza 17).
Car producers and manufacturers are also supposed to come up with an environment protection technology as the government does not want to see a situation where emissions from these cars end up polluting the ecosystem.
In cases where cars that are manufactured end up not meeting this emission requirement, they cannot be sold in the country. All along, the government has strived to reduce the vehicle purchase tax for those consumers who want to purchase passenger cars. There is also an additional consumption tax for these passenger cars. The government has a long term strategy with these taxes in place to ensure that citizens acquire cars more cheaply and efficiently.
With regard to environmental protection, the government projects to ensure that there is a high usage of eco friendly cars (Alon 13). The continued use of energy saving eco cars is likely to ensure that the country saves on energy costs and this extra energy can be directed to other areas of the economy.
Consumers are supposed to ensure that they help in the enforcement of this law as they are punishable if they purchase vehicles that do not meet the required emissions. This will be attained via imposition of taxation legislation (Barboza 23).
For those consumers who will purchase cars that are 20% superior of the required fuel consumption limits, they will be given a higher tax reward (Alon 9). This is meant to encourage more consumers to use such vehicles in the country. As much as it will save the government revenues it will also save consumers from spending a lot on fuel. Manufacturers are encouraged to come up with electric vehicles. The amount of reward will vary depending on whether it is a hybrid power electric vehicle or a pure electric vehicle.
These measures have been put in place to ensure that the country is in the right direction as far as environmental issues are concerned. In a broad perspective, these measures are meant to ensure that the country has more innovative ways that will help to save fuel. All this has been achieved because the country is experiencing a high population growth.
New business
As the motor industry in the country continues to expand, it is important for the relevant authorities to come up with new frameworks that will support the sustainability of the industry. There has been a lot of interest from luxury car makers to invest in China. This has been mostly because of the vibrant economy; though there are other factors that have made this possible. In addition, as the economy continues to grow at a rate of 10% these investments are set to continue increasing.
The government has identified areas that need to be improved on to ensure that the business environment is improved (Lewis 27). This has been necessitated by the fact that the western region is less developed compared to the coastal region. As a matter of fact, more businesses have been encouraged to diversify and invest in the western side of the country.
The coastal region is more developed because of the policies that the government had put in place. This can be explained from the fact that the policies that led to the vibrant development of the economy were first started in the coastal region.
It is notable that the government has encouraged new inventions in the motor industry. This inventions and investments have been mostly focused on ensuring that there are no emissions that will interfere with the environment (Ohnishi 21). In a bid to enforce this, it has introduced tax rewards for those manufacturers coming up with vehicles that don’t produce a lot of emissions.
The government has also encouraged the manufacture of energy saving vehicles that won’t use a lot of energy as the economy needs to use it (Spence 37). This has also been reinforced by tax rewards for those who comply and tax punishments for those who encourage the use of high energy consuming vehicles. With all this in place, there are new business opportunities in place that need to be explored. This is more so in the motor industry.
As new businesses are developed, they need to work together in ensuring that the business environment is favorable for all players. In a broad perspective, businesses need to work with financial institutions to ensure that all their ventures are successful. When they work together they will widen their ability to serve the market well (Starr 6).
It is quite obvious that when customers are satisfied they will tend to appreciate what the market offers them by buying what they have. An example by which these car makers can work together is a case where Mercedes Benz China establishes a good relation with Mercedes financial services. This will help to improve the leasing business in the country thereby benefiting car makers in the long run.
Leasing business has not really picked up in the country and needs to be developed and enhanced especially in the motor sector (Gao 8). By incorporating this strategy into the market, car makers will be able to run their operations more cost effectively. Though this is a good avenue that these companies need to embrace in a bid to enhance growth they have been incapable of achieving it.
This is one of the reasons why these firms should work with financial institutions so that they can fund these viable ventures (Park 5). Apart form funding, financial services will help them to know where to invest and in what capacity so that they don’t end up loosing their investments.
History has proved that no business can succeed without the support of the necessary financial services in place. This is necessary to ensure that China encourages more investments in the luxury car sector as the country will continue experiencing a high economic growth (Deng 5).
Although the government needs to be appreciated for its efforts in ensuring that the county attracts new businesses it needs to ensure that the necessary business environment frameworks are put in place. This will enhance development of the motor industry as it has shown good future prospects.
Conflicts and uncertainties
Any progressive business environment is bound to have some problems like conflicts and in this case Chinas’ motor industry is bound to face the same. These conflicts are bound to continue emerging because there are various businesses with diverse interests that are likely to collide with those of their competitors in the market (Keidel 3).
We have seen that the country has very many car makers like; Audi, BMW, Porsche and Ferrari (Wei 15). These foreign outfits have established themselves well in the country but their presence has ultimately led to conflicts with the local players. Conflicts have arisen because foreign car makers come with different ways of carrying out their business which must be contested by the local industry players.
Because car makers have their interests well known to them, they need to ensure that their operations do not lead to any conflict with the local players. Although there are different perspectives by which these conflicts have come about by, they can still be avoided (Gao 21). Proper conflict management is bound to ensure that the country has a good business working environment in place.
This is necessary because the consumption patterns are changing and this will be doing so in relation to tier 2 and tier 3 cities. In addition, supply will be determined by their business performance strategies. These strategies can in many occasions lead to conflicts. As a matter of fact, there are many uncertainties in the luxury car market in China that need to be addressed.
Conflicts in the industry are likely to be seen in sharing of technology and managerial issues between foreign based automakers and their local players. There are also dealership management issues that need to be addressed to make this sector more sustainable. Constraining factors are likely to be seen in transportation, energy and environment. These are important factors that can have implications on the performance of motor industry in China.
As a matter of fact, there is need to involve all the industry players in coming up with a better way of dealing with this problem (Alon 23). The solution that is arrived at must be long term because the auto industry is still growing and will continue to do so at a high rate because of good prospects in the economy.
Technology is availed for everybody and should be shared by all the players’ equally. But, in different occasions, industry players can have problems sharing technology because one of them might be having an upper hand over others. To solve these conflicts in sharing technology, the government has to ensure that foreign and local players are given the same preference. There should be no favoritism as it is bound to create a bad working environment in the industry.
Because foreign automakers might have more funds to acquire the most sophisticated technology, the government has to ensure that the costs of acquiring technology are low so that local players who don’t have enough funds can also access it. There is need to have a good decision support system that will control the way technology is shared. Decisions that are made must be comprehensive and not questionable in any way for them to be binding.
Since technology can be initiated by any player; they need to pool their resources together in coming up with more innovative technological advancements. After these technological advancements have been initiated, they will come up with the best ways by which this can be shared. Technology can be advantageous but in many occasions it turns out to be a constraining factor that needs to be looked at.
There are also cases where there will be managerial conflicts between local and foreign automakers. This can mostly arise from the sharing of the necessary resources. The government must ensure that everybody has access to the available resources. In the long run, nobody should have a controlling stake over others. This should be done in an open and transparent manner so that everybody is satisfied that what they are getting is what the market is offering.
Managerial conflicts can also be solved by involving all the players in coming up with policies that will be used in the industry. When this is done, they will feel that they were involved in crafting these given policies and as such will cooperate amongst themselves to ensure that they are successful.
In addition, these conflicts can also be solved by encouraging partnerships in the industry. These partnerships will enable them to understand each other well and know the best ways of conducting their business without conflicting. Partnerships will also redefine the way they conduct business and thereby improve on their operations.
Future trend
The market is ready to accept the popularization of vehicles with the continued growth of the economy. This is because more and more households are likely to continue owning cars which is good for luxury car makers (Liu and Xiao 12). The government has put in place the right measures to ensure that this market continues to grow with the tax rewards it has put in place.
Car makers have been encouraged to manufacture electric vehicles as a way of saving on energy and a likely trend that will help to revolutionize the market. The government has a tax reward for those manufactures who manufacture pure electric vehicles and hybrid electric vehicles (Eberhand and Tarpenning 18). This is set to have a larger energy saving outcome than the normal traditional diesel fuel vehicles.
This is the future trend that the country is set to follow as a way of ensuring that it is sustainable as far as energy is concerned. For luxury car manufacturers, it means that they have to invest a lot in research and technology to come up with more energy saving and efficient vehicles to remain in business. This is necessary as every other car maker is set to follow suit.
In addition, the government has a policy and market outlook that is geared towards electric driving. This can be well demonstrated from the policies that it has put in place in a bid to encourage this; in both short and long term.
Conclusion
Chinas motor industry has outperformed other countries in growth over the recent years. There is still a great growth potential in the market with sales now going towards the western side of the country. This means that business can still thrive in the country. Currently 50% of the country’s motor sales are in the eastern side of the country.
As the economy has been growing steadily, there has been a general rise in incomes of the population. This therefore means that most people can afford to spend their extra income on luxury goods like cars. China has become the world’s largest auto consumer. This has been an increase by 24% from 3% it had in the year 2000. The motor industry has been maturing over the recent years and it is undoubtedly among the best in the world.
Currently the eastern part of the coastal region has the highest number of vehicles per 1000 inhabitants and this figure is expected to grow as time goes by. This growth momentum has been made possible by good policies in place. By ensuring that good policies are in place, the government has made it possible for the industry to be protected.
Because of the recent changes in economic realignments the world’s premier car brands have found new markets apart from the usual European market. This has mostly been in emerging economies like China that present a good and lucrative market for these companies.
A growing economy, vibrant stock exchange market and a new crop of affluent buyers make China a good market for luxury cars. Some of the luxury cars in the market include; Porsche, BMW, Ferrari and Audi.
The affluent, Wealthy and rich market segments are growing much faster in emerging markets like China than other established economies of the west. As a matter of fact, premium and luxury car makers can still focus on this market segment and make good vehicles suit their needs.
The luxury car market in China is estimated to be over 4% and this is expected to grow considerably over the next five years. This means that there is a great potential in the market. From the county’s statistics it is projected that there are almost 345, 000 dollar millionaires. With this number, it is a good gesture that they are likely to buy luxury cars.
Works Cited
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The automotive industry is one of the major industries in Australia. Australia is capable of designing and making automobiles. The isolation of Australia necessitated the local production of cars. This was more economical than importing cars from distant locations. Holden and Ford Australia are the major automobile manufacturers. Holden is a subsidiary of General Motors. In addition, Toyota Australia also manufactures various models in the country.
The Camry is one of the major models that Toyota Australia manufactures. Ford Australia was the first automobile company to manufacture automobiles in Australia. However, Holden was the first company to engage in mass production of cars designed in Australia.
Australian automobile companies generally specialise in the production of ‘large’ passenger vehicles. However, there has been a steady decline in the market of cars in this category. This has resulted in cutbacks and shutdown of various plants that used design and manufacture cars in this category.
Closure of the Mitsubishi Motors plant in Australia is a clear illustration of the dwindling fortunes of companies that manufactured cars in this category. Currently, most Australia imports most of its cars from Europe and Asia.
The global automotive industry is one of the most complex global industries. There is a high likelihood that the complexity of the industry would increase in the future. The complexity of the global automotive industry makes it difficult to predict the future changes in its structure.
Government policy is one the variables that determines the structure of the global automotive industry. However, it may not be one of the major variables. Therefore, it is difficult to predict the future changes in the industry with a high degree of certainty.
Increased globalisation has several effects on the Australian automotive industry. The presence of excess capacity globally necessitates the Australian automotive companies to improve their performance. In addition, increased competition in the domestic market also necessitates the companies to improve their performance. The government’s assistance program is one of the major factors that has helped in sustaining the industry.
However, the government is reducing the assistance that it offers various companies in the industry. The level of intervention of the government is one of the critical factors that helps in shaping the industry. The decision of the governments of other countries also helps in shaping the industry.
There are a few dominant companies in the global automotive industry. However, overseas operations of these companies accounts for a sizeable percentage of their revenue. These companies usually strive to ensure the sustainability of their overseas operations.
Ford and General Motors are the parent companies of the automobile companies that are dominant in the Australian market. Therefore, the pressure that these parent companies exert on the Australian subsidiaries is one of the major factors that helps in shaping the industry.
Passenger motor vehicle (PMV) is one of the major market segments in the Australian automobile industry. Australian automobile companies that manufacture PMVs usually compete with their parent companies. Parent companies usually have several options to supply a certain region with a certain model. They may source the model from various locations. This creates competition between the parent company and the subsidiary.
Changes in the global automotive industry have led to several changes in the Australian automotive industry. In the past decade Australian automotive industry has experienced significant changes. The automotive manufacturing industry has been under intense pressure to improve its performance. Reducing costs and increasing productivity are the major factors that enable automotive manufacturers to improve their productivity.
Government Policy
Tariffs
The government plays a major role in shaping the Australian automotive industry. Tariffs and subsidies are the major tools that the government uses to safeguard the industry. However, various parties claim that there is no justification for the use of these measures to safeguard the automotive industry. They claim that it is wrong for the government to use tariffs to safeguard an industry that’s is destined to fail.
The Australian government uses tariffs to protect the domestic automotive industry. Previously, the government imposed a tariff of 10% on all imported vehicles. This reduced the ability of imported vehicles to compete with locally manufactured vehicles. However, from 1st January 2010, the government reduced the tariff from 10% to 5%. The 5% tariff is applicable to all PMVs and light commercial vehicles.
In addition, the tariff is also applicable to the components of these vehicles. A tariff of $12,000 per vehicle is also applicable to all second-hand vehicles imports. This measure is aimed at reducing the attractiveness of buying imported second-hand vehicles.
Reduction in tariffs led to a significant reduction in the price of imported vehicles. This enabled them to compete with locally manufactured vehicles.
Figure 2.1 effect of tariffs on price of imported vehicles
Significant reduction in the price of imported vehicles increased their demand in the local market. Customers were willing to buy more imported vehicles. In addition, increased demand of imported motor vehicles had a flow-on effect on the entire industry. It increased the demand for components of the imported vehicles. This had a detrimental effect on the local parts manufacturers.
Figure 2.2. Effects of tariffs on demand of imported vehicles
Increased demand of imported vehicles reduced the demand of locally manufactured vehicles.
Figure 2.3 effects of tariffs on demand of locally manufactured vehicles
Australian imports usually attract a sales tax of 22%. Imported vehicles also attract this tax. Imported goods also attract a tariff o between 3% and 5%. However, motor vehicles attracted a tariff of 10%. This was significantly higher that the tariff of other products. The tariffs increased the price of imported motor vehicles.
This reduced their ability to compete effectively with the locally manufactured vehicles. However, tariffs reduced the affordability of motor vehicles. This had a detrimental effect on the economy. Therefore, it was vital for the government to reduce the tariff on imported motor vehicles. This increased the affordability of motor vehicles.
Tariffs helped in insulation local automobile manufacturers from competition by importers. However, it led to complacency in the costs and quality of motor vehicles. This made customers not to get value for their money. Therefore, it was vital for the government to reduce the tariffs. This would increase competition in the automotive industry. Increased competition would lead to a significant improvement in the affordability and quality of motor vehicles.
The government also reduced the tariffs on imported motor vehicles since they had a negative effect on the economy. The tariffs distort the manufacture and consumption of motor vehicles in the Australian market. This makes them to lead to more economic losses. Spreading the indirect tax across all goods and services would reduce the economic losses due to the tariffs on imported motor vehicles.
Subsidies
The Australian government provides subsidies to safeguard the automotive industry. In the last 13 years the government has provided more than $ 6 billion in assistance to the industry. The government provides production subsidies to encourage Australian automotive companies to increase their production. The government also provides capital subsidies to companies in the automotive industry. Research and development subsidies facilitate innovation in the industry.
Parties that support the government subsidies usually claim that for every dollar that the government provides in subsidies, the companies give back at least $5 to the economy. On the other hand, failure to provide subsidies may lead to the ultimate collapse of the industry. It would make the industry be less competitive. However, over the past few decades, the government has reduced the amount of subsidies it provides to the industry considerably.
Subsidies reduce the operating costs of companies in the automotive industry. The government covers some of the costs associated with the production of motor vehicles. Reduced costs of production enables companies in the automotive industry to increase their production capacity. Therefore, increase in the subsidies that the government provides leads to a corresponding increase in the production capacity of companies in the automotive industry.
Figure 2.4. Effects of subsidies on number of vehicles produced locally
Reduction in the operating costs enables the automotive manufacturers to pass the reduced costs to their customers. The subsidies cover some of the operating costs of that the manufacturers would incur in the production of the vehicles. Therefore, increase in subsidies would lead to a corresponding reduction in the price of motor vehicles.
Figure 2.5. Effects of subsidies on price of locally manufactured vehicles
Reduction in the price of vehicles due to the increase subsidies that the government provides to companies in the automotive industry increases the affordability of the vehicles. Increased affordability enables customers to purchase more vehicles. Increased sales of vehicles increases the profitability of companies in the industry.
Figure 2.6. Effects of subsidies on number of locally manufactured vehicles purchased
The government may also provide subsidies to the buyers of motor vehicles. Provision of subsidies to the buyers of motor vehicles would increase their purchasing power. This would enable them to buy more vehicles.
Figure 2.7. Effects of subsidies on price of locally manufactured vehicles bought
However, provision of subsidies to customers would have limited effect on the price of motor vehicles. It is a fact that increase in subsidies would lead to increased demand for motor vehicles. This would necessitate the automotive companies to increase their production capacity. This would enable the companies to benefit from economies of scale. However, the automotive companies are less likely to reduce the prices of vehicles due to the economies of scale.
Figure 2.8. Effects of subsidies on price of vehicles
Subsidies help in supporting the automotive industry. They enable companies in the industry to increase their production capacities. In addition, they facilitate quality improvements in the industry. Failure to provide subsidies would reduce the attractiveness of the industry. It would also make it hard for local manufacturers to compete effect with imported motor vehicles.
The government also provides subsidies to prevent collapse of the industry. The automotive industry employs a sizeable percentage of Australians. Therefore, its collapse would have detrimental effects on the economy. In addition, export of motor vehicles enables the government to earn valuable foreign currency.
Australian Market Trends
Key
Months
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Mar
1
5
9
13
17
21
25
29
33
37
41
45
49
53
57
61
Jun
2
6
10
14
18
22
26
30
34
38
42
46
50
54
58
62
Sep
3
7
11
15
19
23
27
31
35
39
43
47
51
55
59
63
Dec
4
8
12
16
20
24
28
32
36
40
44
48
52
56
60
64
Figure 3.1. Quarterly sales of motor vehicles from 1994-2009
From the graph it is clear that the demand for motor vehicles is seasonal. The demand is highest during the second quarter of the year. Summer is usually the month when most people travel around the country. Australia has conducive weather for travelling during the summer.
This increases the demand for motor vehicles during the summer. The graph shows that the demand of motor vehicles has been increasing steadily. During the 1990s the demand for various motor vehicles was very low. Passenger motor vehicle is the category that has the highest demand.
From the graph it is clear that between June and September 2008 had the highest demand of motor vehicles. During this period, the Australian economy had unprecedented economic growth. This increased the purchasing power of most Australians. During this period, imported vehicles still attracted a 10% tariff. This reduced the ability of imported vehicles to compete with locally manufactured vehicles.
The global financial crisis was detrimental to the economic well-being of the Australian economy. It reduced the purchasing power of consumers. Therefore, it led to a significant reduction in the number of vehicles sold. From the graph it is clear that the first quarter of 2009 had one of the lowest sales motor vehicles. During this period, the Australian economy faced several problems. This necessitated the government to reduce the subsidies that it offered various companies in the automotive industry.
The graph shows the sales of motor vehicle prior to the reduction of the tariff on imported motor vehicles. It does not capture the effect the reduction on tariff on imported motor vehicles on the sale of locally manufactured vehicles. The graph that there were signs of recovery of the Australian automotive industry.
Therefore, the reduction of the tariff on imported motor vehicles may have prevented the full recovery of the local Australian automotive industry. The effects of the global financial crisis is one of the major factors that led to the collapse of the Australian Mitsubishi plant in 2008.
The Australian automotive industry has been unable to fully recover from the effects of the global financial crisis. Analysts expect the gloom outlook of the Australian automotive industry to persist. Currently, Toyota, Holden and Ford Australia are the major automotive companies in the Australian markets. However, Ford Australia faces imminent collapse. The company has reduced its output and employees significantly since the reduction of the tariffs on imported motor vehicles.
Marketing Power of the Australian Motor Vehicles Industry
The Australian automotive industry is worth more than $100 billion. It provides employment to more than 50,000 Australians. Therefore, it is vital for the government to support this industry. Collapse of the automotive industry would have detrimental effects on the Australian economy. The Australian government supports the automotive industry using subsidies and tariffs. Australian automotive manufacturers usually export motor vehicles to nearby countries.
This makes the Australian automotive companies to compete with their parent companies. However, Australian automotive companies are usually disadvantaged. The cost of production of the vehicles is usually than in other countries. This reduces the profit margin of Australian automotive companies.
Australian automotive companies face stiff competition from imported motor vehicles. Tariffs on imported motor vehicles increase their costs. This reduces the ability of the motor vehicles to compete effectively with Australian automotive companies. The government skews the competitive forces of the market to favour the Australian automotive companies.
In addition, the government restricts the importation of used motor vehicles. In a perfect competition, the government does not interfere with the market forces to make them favour a certain party. The market forces are the major factors that determine the price of various products.
Therefore, interference of the Australian government makes it not to be perfectly competitive. Tariffs increase the price of imported motor vehicles. This reduces the ability of the motor vehicles to compete with locally manufactured vehicles. This measure helps in safeguarding the industry. The government also provides subsidies to Australian automotive companies. The subsidies increase the competitiveness of Australian automotive companies.
Subsidies on research and development enable Australian automotive companies to develop high quality products. In addition, subsidies on acquisition of assets enable the automotive companies to acquire assets that are vital to their activities. Therefore, the subsidies violate the perfect competition in the automotive industry.
However, the major assumption is that the governments of the companies that manufacture the imported motor vehicles do not provide them with subsidies or other incentives. Provision of incentives would provide the companies with an unfavourable advantage over other companies. However, it is a fact that most governments provide subsidies local automotive industries. The subsidies facilitate the development of the industries.
The government can increase the power of the Australian automotive industry by putting more emphasis on investments in research and development. This would facilitate the development of innovations that would improve the competitiveness of the Australian automotive companies. This would enable them to compete effectively with imported motor vehicles. The automotive industry is a technology intensive industry.
It is vital for Australian automotive companies to ensure that they adopt new technologies at an early stage. This would enable the companies to compete effectively with companies that use the advanced technologies. However, the Australian automotive companies should ensure that they do not violate the patents of companies that developed the new technologies. Patent violation may lead to costly litigation. In addition, it may reduce the image and reputation of the Australian automotive companies.
In addition, consolidation of the supply chain would help in improving the power of Australian automotive companies. Consolidation would enable them to achieve a global scale. However, it is vital for the supply chain to retain its core capabilities after consolidation.
Improvement of the supply chain would help in reducing some of the inefficiencies that are inherent in the current supply chain. Inefficiencies in the supply chain reduce the competitiveness of Australian automotive companies in the global market. Therefore, improvements of the supply chain would enable Australian automotive companies to venture into the global market successfully.
Future Prospects
The Australian automotive industry has a shaky future. In the past, government subsidies and tariffs have helped in sustaining the industry. However, the government is reducing the subsidies and tariffs slowly. In addition, there has been a significant reduction in the number of consumers who are willing to buy locally manufactured vehicles. Consumers are opting to buy smaller imported cars. This has forced local manufacturers to cut their output and jobs.
This is in line with the significant reduction in the demand of the locally manufactured vehicles. Various parties that federal support also delay the inevitable collapse of the automotive industry. They claim that local manufacturers should strive to find new buyers of their vehicles. Unless they do so, the industry would collapse within 5 to 10 years.
Technological innovation is one of the major factors that would guarantee the future growth and profitability of the Australian automotive industry. Ford Australia is one of the leading companies in technological innovation in the industry. Technological innovation would enable companies in the industry to build vehicles from the ‘ground up.’
However, technological innovation may also be the subject of criticism from parties that advocate for ‘human centred’ approach to production. Currently, there have been more innovations among blue collar-employees of the automotive industry. There has been a shift towards the implementation of lean production systems in the Australian automotive industry. The Toyota plant is a clear illustration of the lean production systems.
The Australian automotive industry is not sustainable. Tariffs and subsidies have helped in sustaining the industry. The operational costs of Australian automotive companies is twice that of companies in Europe. In addition, it is four times the operational costs of companies in Asia. Tariffs and subsidies have helped in reducing the operational costs. Therefore, if the government did not provide the subsidies, the automotive industry would have collapsed many decades ago.
However, despite the provision of subsidies, Australian automotive companies have collapsed one after another. Currently, there are only 3 major automotive companies in the Australian market. These include Ford Australia, Holden, and Toyota. In the next 3 years analysis expect only two companies to be in existence in the Australian market due to the imminent collapse of Ford. Analysts claim that the continued support of the automotive companies has made them be addicted to subsidies.
This has reduced the sustainability of companies in the industry. The closure of the Mitsubishi firm is 200 is a clear illustration of the lack of sustainability of sustainability of the industry. Therefore, it is vital for the government to reduce the support that it offers these companies. This would necessitate the companies to formulate strategies that would enable them to increase their sustainability.
The end of the government support on the automotive industry would cause a seismic shift in the industry. It would necessitate industries to formulate innovative strategies that would help in increasing their productivity.
The government would divert the funds to other major infrastructural projects. This would help in improving the Australian economy. It is a fact that it is better to end the support on an industry that is not sustainable. The support siphons billions of tax payers’ money from the government’s coffers.
Hybrids have become quite popular among the general audience over the past few years. Car-manufacturing industries are left guessing what exactly triggered this popularity. Whether it was the environmental concern, the fascination with new opportunities or just the necessity to get a taste of something new, Hybrids seem to have become a huge hit. Their advantages and drawbacks, however, are yet to be explored.
Starting with the positive aspects of the given product, which immediately made the public’s enthusiasm escalate, was the fact that Hybrid cars were completely environmentally friendly and did not pollute the environment.
Another strong feature of modern hybrid cars is that it allows for numerous variations in combining a gas engine with electric motor and batteries. As Hybrids 101 says, there are parallel and series hybrids, full and mild hybrids, plug-in hybrids, full electrics, etc. Thus, choosing a hybrid car turns into a much more flexible process than the choice of a diesel car; a potential owner can practically find the car adjusted exactly to his/her needs.
Speaking of maintenance, a hybrid car does not require “any special maintenance beyond what a regular car needs” (Hybrids 101. Guide to Gasoline-Electric Hybrid Cars and Powertrains). The last, but not the last argument in favor of hybrids is that there is no friction in the engine; therefore, less damage is caused to the latter.
However, hybrid cars also have their weak aspects, and the most notorious one is their vulnerability to the effects of the outside factors, especially weather. Being lighter than traditional cars, hybrids can be damaged considerably in case of a storm. Temperature fall can also serve as the fatal blow to a hybrid car; since the batteries, which hybrids work on, are not prone to changes in temperature, when the weather changes suddenly, the hybrid’s performance quality is most likely to drop.
The last, but not the least argument brings one back to the environmental issues, which the creators of Hybrid cars claim to have finally solved. True, the car does not affect the environment when being used – at least, it does not affect it as badly as a diesel car does. However, in the process of manufacturing Hybrid cars, twice as much harm is being made to nature (Hybrids and Diesel: Do They Save Money?).
With that being said, one must agree that Hybrid cars need improvements. The premise for their creation is truly fascinating – people need to take care of the environment. The price, however, is too high, with the production process being as much, if not twice as much, as harmful as the effects of a regular car.
Like the use of diesel cars, the use of hybrids has its pros and cons. While one can argue that hybrid cars harm the environment to a lesser degree, do not require maintenance as frequently as traditional cars and draw a lesser tax, they, nevertheless, have their doubtful downsides, among which, the fact that hybrids are more prone to various road accidents seems to be the most negative.
Therefore, it cannot be denied that hybrid cars need more time to be perfected and improved. Presently, hybrid cars seem more of a second choice next to a more comfortable and by far more usual diesel car. Nevertheless, hybrid cars have potential. With that being said, it can be assumed that with several more changes that will help bring the negative issues down a few notches, hybrid cars will oust the conventional ones from the then market
Did you know that hybrid cars are more expensive to buy and maintain? The greenfootsteps.com website notes that the hybrid cars are very expensive, challenging to handle, and have relatively low power. By a show of hands, how many of you think otherwise? There are many disadvantages of hybrid cars which I intend to address.
Being a proud owner of a Prius hybrid and the regular gas-powered Civic cars, I feel knowledgeable to talk about this topic. By the end of this speech, you will realize that hybrid cars have more disadvantages that the regular gas-powered cars.
Disadvantages of hybrid cars
Less power
Although hybrid cars have enough power to the benefits of their users, the power output is generally lower than the same car model that is powered by gas. The lower power could be due to the modifications due to the need to create engines that conserve power and emit lesser emission into the atmosphere.
For instance, the Prius hybrid car would go for 1,000 miles within 22 gallons. On the other hand, the Civic model consumes an average of 34 gallons for the same distance (Barron, 2012). The difference in the fuel consumption is due to the differences in the engine structure. On the road, the Civic model would be faster since it has more engine power than the hybrid counterpart (Frankle, 2013).
Cost aspects
The hybrid cars are generally more expensive than the exclusively gas-powered cars. The hybrid cars are made within the concept of ‘clean driving’. The concept has been modified to embrace the aspect of status which comes at a price. Although the hybrid car may have same specs or even lower power than the gas-powered car, the cost of hybrid car is higher. For instance, the Prius hybrid would cost $20,000 while the Civic model would sell for $14,000. The two cars have same specs with the hybrid having lower fuel consumption (Kinicki, 2013).
However, from an economic perspective, the Civic would be more economical even after three years. Since the hybrid model consumes twenty two gallons for every one thousand miles and averages twelve thousand five hundred miles per year, the number of gallons it will consume in three years would be “12,500 miles x 3 years x 22 gallons for every 1,000 miles= 825 gallons. Since it gallon retails for $4, the total gas budget for the Prius hybrid would be 825 gallons x $4 per gallon= $ 3,300” (Kinicki, 2013, par. 6).
In comparison, the Civic model, which is not hybrid, consumes an average of thirty four gallons for every one thousand miles and averages twelve thousand five hundred miles per year, the number of gallons it will consume in three years would be “12,500 miles x 3 years x 34 gallons for every 1,000 miles= 1275 gallons. Since it gallon retails for $4, the total gas budget for the Civic model would be 1,275 gallons x $4 per gallon= $ 5,100” (Kinicki, 2013, par. 7). From the above calculations, it is apparent that the hybrid car would save about $1,800 in gas for its owners when the two cars share similar distance in three years.
I know you may think that the Civic model consumes more fuel than the Prius hybrid. Look at it again! The cost of the above hybrid car is $20,000, which is $6,000 higher than the cost of the Civic car which is not hybrid. Therefore, it is apparent that the owner of the hybrid car will have spent an average of $20,000(buying) plus $3,300 (gas) which totals to $23,300. On the other hand, the owner of the non-hybrid car will have spent $14,000(buying) plus $5,100(gas) which totals to $19,100. In summary, despite similar performance and same operational history, the owner of the non-hybrid car will only spend less than $20,000 to buy and operate the car for three years.
Maintenance cost
Unlike the non-hybrid cars, the hybrid cars are more complex in engine structure. Therefore, it would be more challenging to repair a hybrid car since the concept is still as new as it was more than a decade ago. The hybrid cars have not penetrated the market as was expected. Thus, have fewer qualified maintenance centers and mechanics as compared to the non-hybrid cars (Hantula & Voege, 2009). Due to the complexity of the engine, it would cost the owner of a hybrid car more money to repair his or her vehicle when it has the same mechanical problem as the non-hybrid model.
For instance, in the region of Delaware, there are only 11 maintenance centers for the hybrid cars. Within these maintenance centers, the mechanics trained in maintenance of the hybrid cars are estimated be 6 in number in each center. On other hand, the maintenance centers for non-hybrid cars within the Delaware region are more than 100 besides numerous backyard garages spread across the neighborhood (Hunting, 2013). The number of mechanics specialized in the non-hybrid cars are many.
Thus, the owner of a hybrid car within the Delaware region will have to seek for specialized services from the 11 centers. In the event that the six hybrid car repair specialists in each center are committed, the owner may have to book a repair hour. If the car was not hybrid, it would be easy to just move to the next garage and get the services instantly. From the above analysis, it is in order to state that the hybrid car is complex to repair as compared to the non-hybrid cars. The higher costs are as a result of the complex engine, few specialists, and few maintenance centers (Hunting, 2013).
Difference in handling
Hybrid cars are made in a way that their body structure is light in weight. The light weight concept is meant to lower the fuel consumption. However, the light weight may have compromise the handling of the hybrid cars. Although the challenge may be minor, the hybrid car may not be as easy to handle as the regular car which is gas-powered. For instance, a regular gas-powered Civic car weights 2.1 tons. The hybrid Prius weights 1.7 tons. The difference in the weight makes the hybrid car a little bit challenging to handle especially in high speed. Although the hybrid car may go at a speed of more than a hundred miles per hour, such speed may compromise the ease of handling it (Randall, 2012).
Conclusion
To sum up my speech, I am convinced by the above evidence that hybrid cars are very expensive to buy, operate, and maintain. Besides, the hybrid car has power due to modifications in its engine. In addition, the light weight may compromise its handling. Do not buy a hybrid car if you have an alternative! The cost of buying and maintaining a hybrid car is not pocket friendly, especially to young people.
References
Barron, B. (2012). Disadvantages to hybrid cars. Web.
In today’s society, image is everything. In most cases, we are judged and judge others according to the dress code, the car that one drives, or the region that one lives. These aspects can tell you a lot about someone. For example, posh cars symbolize elegance, wealth, and status, while muscle cars show that a person is confident and adventurous. This paper shall set out to detail an observation made regarding a Subaru outback.
Car description
On my way to the market, I saw a Subaru outback (4 doors station wagon) parked outside the supermarket. The car was light green in color, with a black line crossing centrally from the front bumper to the rear bumper. It had alloy rims and was squeaky clean. The rear seat was folded to create larger storage space. It looked new (or rather, well maintained), and I could say it is the second-generation Subaru outback (2000-’04). The interior was customized with leather seats and a CD player. In addition, a tree-shaped air freshener was visible as it hung on the interior rearview mirror. The number plate was standard, and there was a sticker on the rear left with the message “my drive to achieve”. Similarly, the car had a large Subaru sticker on the windscreen. Generally, the car looked simple but elegant.
Inferred personality
Arguably, people buy specific car brands in order to fulfill a specific emotional need. This is attributed to the fact that people are emotionally committed to look and feel like they are rational decision-makers. They often want to seem ethical and smart in their social circles. A Subaru Outback is a car that achieves this aim in more than one way. It shows practicality and nurturance. In addition, it says that the owner is intelligent and stable. This is because the car is relatively expensive and consumes more fuel than an average car.
The exterior, as well as the interior aspects of the car, indicated that it belonged to a professional woman who is married and has children. This is attributed to the fact that maintaining a Subaru outback is normally expensive, and creating more storage space is indicative of a large shopping. The simplicity and cleanliness of the car show that the owner needs to be in control while maintaining a low profile. The size of the car indicates that the owner is bright hearted and has plenty of room for everyone. In addition, it shows that the owner loves children and does not mind a little clutter.
In regard to ethnicity and religious affiliation, the owner is definitely an American and most likely a Christian. These assumptions are based on the fact that the car is popularly owned by Americans and the religious CDs on the dashboard shows that the owner is a Christian. The marital status is deduced from the fact that station wagons are mostly owned and preferred by women with children due to their flexibility, size, and convenience. Such a car has the ability to comfortably transport a family consisting of two parents and three children. The large storage space at the boot and the metallic rails on top of the car provide enough space to carry luggage without necessarily having to squeeze the passengers.
In regard to education and socio-economic status, it is clear that the owner is educated (at least a degree) and employed in a company that pays well. These assumptions are based on the fact that Subaru is expensive cars and requires a significant amount of financial commitment to maintaining them. The outback, in particular, consumes more fuel, and the spares are costly. As such, to drive such a car requires an individual that has money. The owner’s ability to maintain this vehicle shows that she is responsible and intelligent.
To a large extent, the car that an individual drive shows the values that the owner holds. A Subaru is indicative of a strong personality. It shows that the owner is independent and likes to be in control. The color chosen is indicative of the emotional status of the owner. For example, red normally infers that the owner is not afraid to test life. Green, as is the case with the car in question, shows that the owner has a calm personality and avoids confrontations.
Conclusion
Our mannerisms play a pivotal role in defining who we are. The choices we make when acquiring our material wealth reflect on who we are and what we represent in society. This paper set out to evaluate the extent to which a car can be used to identify the personality, gender, ethnicity, and religious affiliation of its owner. To this end, a detailed description of the internal and exterior features of a Subaru outback has been provided. Using these features and commonly held perceptions, it has been articulated that the owner is a married middle-aged woman who is educated and earns a good salary. As such, cars should not only be viewed as a means of transport but as a reflection of our personality.
Hybrid cars have become automobiles of choice today. The rising economic crisis and financial constraints are driven by the current recession, which has led to the acceptance of hybrid cars. Many people want them because of low fuel consumption, low pollution, and their environmentally friendly designs, among other benefits (Juettner 43). Hybrid cars consume little fuel and emit less gas and other substances that pollute the environment (Haluzan 22). Despite these advantages, several controversies exist in connection to the real significance of hybrid cars in today’s world. First, critics argue that hybrid cars possess power systems that are not- friendly to the environment.
They claim that the battery that powers the engine is inappropriate. Secondly, they possess low acceleration abilities that they claim are disadvantageous to drivers in many instances (Haluzan 24). Thirdly, they are highly prone to accidents because of the high voltage reserves they possess. Critics argue that the high voltage circuit that transfers power from the reserve to the engine is highly susceptible to harm if a short circuit occurs (Haluzan 26). These controversies have existed for long. However, they have not stopped people from purchasing hybrid cars because benefits present override possible weaknesses. Precisely, hybrid cars are the future because of two main benefits: low fuel consumption and their environmentally friendly nature.
Discussion
Hybrid cars are important because of their benefits in terms of economic, technical, and environmental aspects (Juettner 34). Technically, their design is different from non-hybrid cars. They are economical in fuel consumption and produce few emissions that do not pollute the environment.
The manufacture of hybrid cars involves the combination of a battery and an engine. The engine powers the generator to produce electric power (Juettner 31). As such, a hybrid car’s engine uses two power systems that work in coordination. This enables them to consume little fuel hence produce fewer gases. The design of the braking system allows for the tapping of kinetic energy generated in the braking process. Recycling involves its conversion to electrical power used to charge batteries (Juettner 33). These batteries are lighter than those used in electric cars are.
Secondly, hybrid cars are financially economical. The inclusion of a battery system in the engine design means that they consume less fuel (Haluzan 45). With the current financial downturn, less fuel consumption saves more money. This motivates more people to purchase hybrid cars. Countries that use hybrid cars reduce dependence on other countries for fuel. In addition, buyers save additional money in the form of tax levies, free parking lots, and free entry into carpool lanes. This is an effort by governments to promote and encourage the purchase of hybrid cars.
Thirdly, hybrid cars are environment-friendly. Consumption of less fuel leads to the emission of less gas, thus reducing pollution of the environment. They emit less carbon dioxide that is a major pollutant (Haluzan 48). This is advantageous with regard to recent efforts to reduce global warming and keep it at lower rates. In addition, their manufacture involves the use of less metal. This means the utilization of other types of materials that are different from those used in the manufacture of other cars. These materials make hybrid cars safer and reduce pollution, as most of them are recycled materials.
Fourthly, hybrid cars are important in recent times when prices of fuel are on the increase and with an increased danger of depleting the little available oil resources. Reduced dependency on fossil fuel and countries that supply it is advantageous in that it reduces the pricing of fuel in the international market (Haluzan 60). Increased dependency hikes prices because of increased demand by many users globally. Analysts have predicted that there is a possibility of the depletion of available oil resources in a few years to come if alternative ways of powering automobiles are not established. As such, hybrid cars serve as an alternative way in an effort to conserve available fuel resources.
The high cost of hybrid cars has also elicited controversy. Compared to non-hybrid cars, hybrid cars are a little more expensive because of their high cost of production. Their manufacture involves the use of rare materials such as dysprosium and neodymium (Lang et al. 78). This makes customers shy away from purchasing them. Despite high costs, customer demand has increased over the years. Hybrid cars are also heavier compared to non-hybrid cars, and therefore controlling them is different and difficult (Lang et al. 81). This results from heavy batteries used in the power system. Contrary to criticism, their heaviness is important because it lowers the center of gravity and therefore improves stability. They are more stable compared to non-hybrid cars.
Their acceleration is a critical issue. Hybrid cars’ acceleration is considerably low as compared to non-hybrid cars. Critics claim that low acceleration is disadvantageous to drivers in some instances, such as overtaking (Lang et al. 89). However, users of hybrid cars claim that they prefer low acceleration speeds because they enable them to take proper control of cars. As such, incidents of accidents are few, and controlling them is easy. Precisely, low acceleration speed makes them easy to handle because of their heaviness that improves their stability.
Conclusion
Hybrid cars present several advantages that override the disadvantages expressed in controversies facing them. There are technical, environmental, and economic benefits. Technical benefits arise from the inclusion of a two-way engine that is comprised of a battery and a fuel engine to generate power. Environmental benefits resulting from a few emissions that do not pollute the environment. In particular, hybrid cars emit little carbon dioxide that is the main pollutant emitted by automobiles. This helps in managing global warming that currently poses serious dangers if not checked (Juettner 24). The consumption of little fuel by hybrid cars presents the economic benefit. Buyers save money and reduce the number of visits to fuel stations. Their disadvantages are not strong enough to validate the criticisms that they have elicited.
Their high costs, heaviness, and low acceleration speeds are the major disadvantages cited (Lang et al. 73). However, their low acceleration speeds improve their handling, and their heaviness improves their stability. Their high prices result from the use of rare and expensive materials in their manufacture. There are expectations that with future improvements in the manufacture of hybrid cars, more affordable and readily available materials will be used, and this will make them cheap and affordable. Hybrid cars are the best bet in ensuring proper management of global warming that includes contributions from automobile emissions. In addition, it is important to conserve the available fuel resources, and with the current recession, saving money is vital in the improvement of lives.
Works Cited
Haluzan, Ned. Hybrid Cars Advantages and Disadvantages. 2010. Web.
Juettner, Bonnie. Hybrid Cars. New York: Norwood House Press, 2009. Print.
Lang, A., Schueking, M., and Stellet, J. Hybrid Cars Today and in the Future. New York: GRIN Verlag, 2011. Print.