Economic conditions that freeze capital and reduce the amount of credit available for prime borrowers can collapse entire segments of the auto industry relatively quickly. The last three years of the recession has constrained credit for high risk, first time buyers and as a result the demand curve for entry-level, low-end autos has resisted even the most aggressive pricing strategies to drive sales (Chu, Su, 2010)
Consumers then rely on more than just price to determine which vehicle to purchase, and it is more dictated more by which customer and psychographic segment they are members of (Visnic, Wielgat, Winter, 1998) and the effects of the dealer in defining pricing stability while influencing the purchasing decision (Cassel, McCormack, 1987). Favoritism or Ethnocentrism between Trade and Income in the Automobile Industry The globalization of the auto industry is being driven by the need to continually adjust and align production strategies, raw materials costs, and the development of more effective cost control programs over time (Kim, McCann, 2008)
These factors are explored in detail throughout this analysis. The continual improvement of these factors streamline and increases the value of the customer experience, thereby making demand even more elastic the higher the price of the vehicle (Wetzel, Hoffer, 1982)
The country's economic growth has increased the potential for the industry in t his market, since there is an increase in demand for passenger vehicles by general citizens. This has made the market favorable for new entrants, and for existing market participants to grow and prosper (Holweg, Luo, and Oliver, 2005)
For purposes of this analysis the quote-to-order process these auto manufacturers and others like them also use to translate customer demand into high quality vehicles is used (Selladurai, 2004). Describing the Quote-to-Order Process between Chrysler and Toyota The purpose of the quote-to-order process is to streamline the capturing of customer needs, preferences and requirements and translate them into the highest quality vehicle possible (Bilek, 2010)
First, a member of the auto manufacturer's selling organization will meet with a representative of a fleet buying group or buyer who is going to place an order for up to a hundred units or more which is often how rental care companies buy vehicles (Chow, Choy, Lee, 2007). In the past several years, Chrysler and Toyota have led auto manufacturers with the development of online product configurators which guide potential customers through the series of vehicle options and alternatives, allowing them to build their own preferred car and then order it (Roehrich, Parry, Graves, 2011)
Figure 2: Streamlining the Quote-to-Order Process Each of the procedure improvements shown in the process workflow diagram in further underscore how quote-to-order strategies can be measured in terms of profits and performance (Roehrich, Parry, Graves, 2011). When a quoting process or procedure is working as effectively as possible, it can deliver significant competitive advantage, with the greatest being time-to-market and meeting and exceeding customers' expectations (Stalk, 1992)
The RER is defined as follow: RER = P (t)/p (nt) where p ( r ) is the price index of tradable commodities and p ( nt ) is the price of non-tradable ones." (Latruffe, 2010) The real exchange rate has a powerful impact on the supply chain of automotive companies, especially those automakers with rather targeted markets such as the Volvo brand