New International Competitors to Rev Up U.S. Auto Market

The U.S. auto market is just now recovering from the disaster in Japan earlier this year which affected parts and vehicle availability. In an earlier blog post this month, I highlighted a report that predicted a jump in auto industry advertising in the 4th quarter of this year as Japanese vehicles become available again. Within the next year,  U.S. auto makers will face competitors from a different region and the ad market is likely to experience changes as well.

Both Chinese and Indian auto makers are poised to enter the U.S. market with new models. Companies in these countries already own several well-​known brands sold in the U.S. – including Tata which markets Land Rover and Jaguar, and Geely, which promotes Volvo. However, other companies such as Mahindra and BYD will be rolling out vehicles to the U.S. market.

Analysts who produced the GfK Barometer of Automotive Awareness and Imagery Study say these manufacturers face an uphill battle in gaining market share. For example, 95% of U.S. consumers are prepared to purchase a vehicle produced by U.S. automakers. Only 38% of consumers indicate willing to purchase a vehicle from a Chinese manufacturer and 30% say the same about vehicles from Indian manufacturers. "When a relatively unknown auto brand enters the market, potential buyers are going to have some initial skepticism without a frame of reference into the company's history and differentiators from other brands," said Don DeVeaux, managing director, GfK Automotive.

GfK automotive analysts liken this situation to the one faced by Korean firms when they entered the U.S. over a decade ago. However, Korean-​made vehicles are gaining market share. And analysts say that new entrants to the auto market will have to target the most receptive consumers in order to gain a foothold in the U.S., following the path taken by Korean manufacturers. Specifically, foreign manufacturers should target Gen Y consumers. Over half of these buyers will consider purchasing a vehicle made by a Chinese firm and 41% would purchase an Indian-​made vehicle.

To succeed in the U.S., manufacturers must convince consumers that they’re offering high quality and service. This situation will bring about the need to develop strong branding and promotional campaigns to connect with consumers.

[Source: Only one-​third of potential buyers open to Indian and Chinese manufacturers. GfK Barometer of Automotive Awareness. 18 Aug. 2011. Web. 31 Aug. 2011] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.