that must be adhered to for a car to be standardized and not require

That must be adhered to for a car to be standardized

This preview shows page 24 - 26 out of 42 pages.

that must be adhered to for a car to be ‘standardized’ and not require modifications to be viable in a foreign market. Further, Volkswagen must keep governmental policies such as interest rates for car loan and any import/luxury car taxes for vehicles. Whilst this level of regulation and the global standardization simultaneously increases the unit price of vehicles as increased research and development is required to be innovative whilst adhering to the
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regulations, 42 the costs are arguably recovered in sales and is evident by Volkswagen position in the market. The only exception to this is the financial impact Volkswagen sufered after being caught cheating the Environmental Protection Agencies (EPA) emissions testing in 2015. Consequently, a major political threat to Volkswagen is the fact that politicians, regulators and environmental groups are likely to still question the legitimacy of Volkswagens emissions testing. Almost all of the regulations come from consumers increasing concerns for the environment and the concern for safer automotive. For instance, trade barriers and incentives to the public to buy new cars 9.2.2 Economic Factors Volkswagens biggest threat economically is the lack of control they have over consumer spending rates, income, available credit/interest rates as they are all factors that are directly afect the capability of buying a car. Further, the cost of fuel is another factor that directly afects Volkswagen and is well out of their control. However, an international advantage for them is that they produce both diesel and petrol vehicles. As the price of fuel is contingent on a range of factors including the economy of each respective country, it is fair to assume that when choosing out of a diesel or petrol vehicle a potential purchaser is more inclined to purchase the cheaper of the two at the time. The fact that Volkswagens presence in many countries makes up a large percentage of their respective growth domestic products as well as profit essentially gives them a sense of control. For example, Volkswagen is Germany's biggest private employer and Europe’s biggest carmaker, with about 300,000 workers across the country and 600,000 worldwide. 43 Although there is likely to still be some scepticism amongst consumers as to whether Volkswagen is in fact producing cars that are fuel efficient, establishing a low-cost hybrid into their market may boost consumers trust back in Volkswagen. It would convey o consumers that they are in fact efficient and will ensure they do not continue to lose the market share to their competitor Toyota who already have introduced a low-cost hybrid model. 44 9.2.3 Social Factors The demographics of potential customers and what they want in a vehicle are contingent on several factors such as the label of the car and their needs. For example, younger buyers such as those buying their first car are more inclined to buy smaller vehicles at the lower end of the cost spectrum. However, a young family are usually looking for vehicles on the larger end of the spectrum and have a higher budget to spend.
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