MACRO – ECONOMIC ENVIRONMENT
Market Attractiveness Decreased Wealth Spending: A decrease in consumer wealth as a result of higher prices for consumer goods and lower stock market and housing prices. In the third quarter of 2006, household wealth rose to a record $54.1trillion, meanwhile household savings hit record lows. Over the last 5years, leftover gross income has decreased by more than 6%. Interpretation: Lower wealth will cause consumers to spend based on their income rather than their net worth. Evaluation: As a vehicle intended to sell to the wealthy as opposed to those with high incomes, this market trend is a moderate threat. Statistics:
•Hybrid sales in the first 7months of 2007 were up 49%
•All new vehicles sold in first 5months of 2007, 2.1% were hybrid vehicles •Japanese brands accounted for 96% of the hybrid vehicles registered •1.83% US market are hybrid sales
•By 2015 hybrid sales in US market analysed to be 30-35%
Lexus is gaining momentum as consumers gain confidence that the economy is slowly recovering. The introduction of new models and the willingness of consumers to make more expensive purchases have begun to satisfy the pent-up-demand of premium vehicles created during the recession. China’s growth rate for third quarter of 2010 was 9.1%, this coincided with September’s unemployment rate in the U.S; also 9.1%. Supporters contend that China’s policy of managing the Yuan’s value against the dollar is a cause of America’s unemployment woes. An undervalued currency makes a country’s goods more competitive and attracts manufacturers seeking lower production costs. While the market in general is beginning to slow down, Lexus sales are not shrinking as much as others. This indicates their strong presence in the premium market and our continued ability to grow market share and volume through product and brand awareness going forward.