Governed the development of the post war european

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governed the development of the post-war European industry, albeit with fits and starts engendered by that region’s distinctive social and cultural politics. And it was the model upon which the Japanese manufacturers relied as they shot up the global league tables having made timely and effective adaptations that were overlooked, for a while, by the once-dominant U.S. industry.
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PROBLEM STATEMENT Competition for customers and the expense of differentiating products have forced vehicle manufactures to look downstream for new ways to create and capture value. Two main approaches have emerged. The first, “follow the car,” is to participate more extensively in the stream of post-assembly transactions relating to a vehicle, beginning with the initial retail sale and ending at the scrap yard (or recycling center). The second, “follow the customer,” is to build and exploit more durable relationships with customers over their vehicle-buying lifetimes. Both of these require radical changes in the ways that vehicle manufactures define and serve their markets. Vehicle manufactures in North America and Europe are saddled with expensive, outmoded networks of franchised dealers that have lost their economic advantages and generally do a poor job of serving customers. These networks transfer vehicle manufactures returns to channel intermediaries while diffusing control and reducing the effectiveness of marketing programs. Consolidation has already whittled down the number of U.S. franchises. Now, in the United States, aggressive, well-capitalized retailers are seeking to build dealer networks with their own brands, threatening to further cut off the vehicle manufactures from their customers. At the same time, the inefficiencies of the dealer system have spawned a host of new intermediaries promising better service, including brokers and Internet based buying and referral services. In Europe, protected national distribution systems are threatened by EMU convergence, which will arbitrage away remaining price differentials, and the relaxation of so-called “block exemption” rules, which confer upon new car dealers the exclusive right to sell profitable replacement parts. In addition, the increasing popularity of leasing programs makes vehicle manufactures active participants in the used car market, which is larger and growing faster than the market for new
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cars. In the United States, leasing accounts for almost 40 percent of new car sales. Vehicle manufactures now have strong economic interests in maintaining the value of used cars, both to reduce their out-of-pocket costs when leased cars are returned and to lower the cost of ownership at the first sale. This puts them at odds with their franchised dealers, who already make more money on used cars than new cars and are happy to “buy low, sell high” at the expense of captive finance subsidiaries.
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ALTERNATIVES To keep more of the delivered consumer value and to continue to enhance that value, vehicle manufactures must become more capable marketers and take control of the purchase experience.
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