Customers buying a Tata Nano in India will have to pay a variable transportation charge depending upon the purchase location, with the car costing 11% more in Mumbai than in New Delhi. This novel approach may inspire other companies to follow suit with pioneering distribution strategies, which in turn could bring much-needed reform to the country's finished vehicle logistics industry.
Finished vehicle logistics is of vital importance to automakers and although there has been a greater emphasis on the inbound supply chain in the past, manufacturers now need a holistic approach to logistics. Changes in production patterns provide an opportunity to re-assess structures throughout the supply chain, including areas which have not previously been central to the logistics strategy.
The current economic turmoil is hampering the automotive sector but the aftermarket, while not completely unaffected, remains resilient. However, key aftermarket players are having to face up to uncomfortable challenges, with the commodities price bubble boom and bust, severe pressure on consumer spending, low cash flow levels yielding insolvencies, and global car registrations in reverse.
According to recent surveys, the number of uninsured drivers in the UK has risen, and many in the industry are preparing for an increase in fraud claims as well. Insurers will have to be proactive in dealing with these threats to their profitability, as it is likely that the recession will continue to increase the number of uninsured drivers and fraudsters for some time.
Car makers in India are struggling due to a slump in car sales caused by the on-going financial meltdown. However, the growing radio taxis segment in India, which is expected to be a stable revenue stream for at least the next three to five years due to upcoming sporting events in the country, provides manufacturers with an alternative sales channel.
The financial health of the US automotive industry threatens to hold significant consequences for the outsourcing industry. The failure of the Big Three - General Motors, Ford and Chrysler - to secure a $14 billion government bailout could cripple future revenue streams for outsourcing companies, with major firms suffering exposure.
