In the next few years, China is saying that they are going to be investing billions of dollars into Hybrid technology. Honda is a automobile company who is well known for developing ad researching hybrid technology. They have been on the forefront of this new technology and for this reason they will be a top choice for this new hybrid technology. They will need to show the Chinese government that their technology is worth investing in. If they manage to do this, they will be bale to receive large amounts of money to use for the development of new hybrid technology.
The Chinese government is also aiming to put some millions of hybrid cars into use within China within the next few years. Seeing as how Honda is already producing hybrid cars, they will be able to expand and increase the production of these cars to fill the wishes of the Chinese government.
There are also however, restrictions being placed on car ownership is many large Chinese cities. This is to reduce congestion and traffic. This means that because of possible increases in taxes and/or legal restrictions, there may be a fall in demand for cars, which will result in Honda losing sales and perhaps revenue.
Oil prices have recently been rising and will most probably continue to rise as the world’s oil sources are depleted. This means that there will be a fall in demand for petrol cars and a rise in demand for Hybrid cars. On one hand, Honda produces a lot of hybrid technology and for this reason, they will be able to impose and introduce their new hybrid technologies, which will seem more attractive due to higher oil prices. On the other hand, the rise in oil prices will mean that consumers will be less likely to buy Honda’s petrol cars which means they will see a loss of revenue in this sector. This means that although Honda has Hybrid technology to offer, the fall demand for their petrol cars may cause them to break see no change in revenue (at least in the short run). In the long run, as Honda adjusts its production to more hybrid or electric technology, they will see more revenue gained.
Also, if Honda decides to make a big change to hybrid technology, they will see other companies dominate the petrol car industry and gain much more market share.
The Chinese automobile market has grown by 1/3. This means that there is a lot more room for automobile companies like Honda to expand and grow. Honda will be able to increase its production and sales as the market will be bigger.
Consumers are not yet fully convinced by hybrid and electric technology, which means that there are not many firms producing and developing this technology. This means that there is not very much competition in this market sector. Since Honda is a company who does produce and develop Hybrid technology, they have a much better opportunity to make money here. Since they will see little competition, they can attract a larger consumer base. In the short run, Honda may see a larger market share in this sector but as more and more firms decide to move to hybrid technology, more competition will arise.
Consumers are currently looking for better gas mileage and performance in cars that they buy. Honda’s hybrid cars has very good gas mileage, however, they do not have as good performance as petrol cars. This means that even though Honda’s hybrids are appealing due to their gas mileage, consumer may still stick to petrol cars because of the better performance. Honda will need to develop better technology to satisfy consumer wants.
Chinese consumers have been revealed to be much more feature-loyal than brand-loyal. Essentially, they are much more interested in the new features a car has to offer than the actual brand and company that produces it. This means that Honda could easily gain a much larger market share by introducing a new feature. On the other hand, other companies could do the same and in this sense, Honda has to be careful so that its consumers are not “stolen” by another automobile company’s new feature.
The newest and most revolutionary technology currently being developed and sold in the automobile industry is hybrid and electric technology. Hybrid technology is becoming more efficient and recognized and since Honda has devoted a lot of money to developing and producing hybrid technology, they are one of the top producers of it. This means they will be able to gain a larger consumer base as this technology becomes more recognized. On the other hand, companies such as General Motors and Toyota have been having more success with their hybrids and may have an advantage in this market sector over Honda. General Motors has also invested in a new kind of technology that converts waste product into ethanol, which can be used to run cars. If General Motors eventually produces this technology, they may gain an edge over Honda.
In China, there is a growing demand for hybrid technology. This means that if Honda wishes to expand in this sector, they should look to expand into China.
There has also been a new hydrogen fuel cell technology developed which enables a car to run fully on electricity. Honda has already developed some prototypes using this technology.