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TMCNet: STRATEGY ANALYTICS New Auto Strategies Adapt to Ultra Low Cost Car Market

[July 21, 2008]

STRATEGY ANALYTICS New Auto Strategies Adapt to Ultra Low Cost Car Market

BOSTON --(Business Wire)-- The Strategy Analytics Automotive Electronics Service today published its report forecasting demand for the "ultra low cost" and "low cost car" segments, as exemplified by the Tata Nano and Renault-Dacia Logan. "Ultra Low Cost and Low Cost Cars: Birth Of A New Philosophy," forecasts high growth, approaching 34 percent, (CAAGR) for these segments in emerging economy regions, and accounting for 20 percent of global production volumes by 2015.


While profits are slim in these segments, established automakers cannot ignore this growth as mature economy markets flatten. Strategy Analytics concludes that carmakers will neither meet the $2,500 price benchmark set by the Nano nor be flexible enough to cope with changing consumer and mandatory requirements, by merely stripping out features from an existing vehicle design. Therefore Strategy Analytics expects OEMs to develop new design philosophies in order to achieve viable products.

"These products need long life cycles to be financially viable. The key requirement will be the strength of design, assisted by low cost local systems development and production. Otherwise, automakers will suffer with uncompetitive products in one of the few high growth segments in today's market," says Kevin Mak, Automotive Electronics Analyst. "Vehicle OEMs and suppliers also have the opportunity to learn new low cost production lessons that could be transferred elsewhere to boost profitability."

"Despite the low cost emphasis, global brands cannot compromise their reputations with unreliable products. Scaleable state-of-the-art electronic components will have an essential role, particularly in enabling these vehicles to cost effectively meet emission and safety mandates," added Chris Webber, Automotive Vice President at Strategy Analytics.

About Strategy Analytics

Strategy Analytics, Inc. focuses on market opportunities and disruptive forces in the areas of Automotive Electronics and Entertainment, Broadband Connected Home, Mobile & Wireless Intelligent Systems Implementation Strategies and High Frequency Market intelligence. www.strategyanalytics.com

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