Reyhan Huseynova

Business Management
Dec/Thu/24/2020
Activity: 16.5
ACTIVITY 16.5
China’s auto market growing rapidly
At 23, Chang Lingxi bought his first car. He
considered a Ford Focus, but last week he
negotiated a huge discount of 35,000 Yuan off a
brand new Volkswagen (VW) Lavida. Like millions
of other new motorists in China, he does not plan
to use it much – it’s too hard to find a parking
space – but he looks forward to the freedom the car brings.
China’s auto industry is now growing by
around one million extra vehicles a year – a rate of
12% in 2013 to reach 20 million units. It is now the
largest car market in the world having overtaken
that of the USA in 2009. No wonder 100 global and
Chinese vehicle manufacturers are now competing
in this market. The best sellers are the Ford
Focus followed by the VW Lavida – VW has a 21%
market share. The luxury car segment is growing
fastest – both BMW and Mercedes have announced
annual sales increases in China of 21%. Many
Western car makers – including VW and GM – have
joint ventures with Chinese manufacturers such as SAIC.
[15 marks, 20 minutes]

1)Using examples from the article, explain the

differences between: Market size, market
growth and market share. [9]

2) Explain two benefits to VW of having:

a) a large market share in China [3]
b) one of the best-selling models. [3]

1. Market size is the absolute degree of deals of all items inside a market. -
yearly deals increments in China of 21%. Market development is the
rate change in the absolute size of a market throughout some undefined
time frame. - Their industry is presently developing by around
1,000,000 additional vehicles a year, a pace of 12% in 2013 to arrive at
20 million units. Piece of the overall industry is the level of deals in the
all out market sold by one business. - VW has a 21% piece of the overall
industry.
2. a) a huge piece of the pie in China: It builds its upper hand when we think
about VW if different models. Another advantage is that they will have more
deals in China in the event that they have an enormous piece of the overall
industry.

b) a standout amongst other selling models: People will think about the brand
and how great they are, which will help increment deals as individuals are as
of now mindful of the model. They will likewise realize that their items are of
acceptable quality.