SUVS POWER ON IN CHINA

U.S. and European auto- makers are looking to China for most of their growth
potential in the next two decades. The Chinese middle class is expected to grow
to 600 million by 2020. That is a market that is equivalent to the ENTIRE
population of the Unites States AND every country in the European Union
combined.

This growing middle class in China (it stood at less than 300 million in 2012) has
spurred a huge demand for sport utility vehicles (SUVs). Ford, BMW, Mercedes-
Benz, and
Porsche are all selling SUVs at a significant clip. The success of these brands
spurred Chinese auto makers to dramatically grow their SUV offerings. Chinese
automakers now sell 8 of the 10 bestselling sport utility vehicles.

The total SUV market in China is predicted to reach more than 7.04 million units
in 2018, up from 4.32 million in 2014, according to researcher IHS Automotive.

Growing consumer prosperity is leading to the push for SUVs. BusinessWeek

reported seeing the same trend in China that has been seen in the United States,
with women
in particular being drawn to the flexibility of the SUV. A Ford spokesperson said
that "For Tiger Moms and other moms -SUVs offer great appeal as the whole
family can be transported safely and in style." The sharp increase in demand has
drawn in the ultra-high-end car companies as well. Maserati and Lamborghini
have both announced new SUVs for the Chinese market.

BMW has approached the market with products that they sell around the world,
including the BMW X5. This is an example of a global organization. On the other
hand Mercedes-Benz is producing a Chinese-built GLK SUV that is tailored to the
market. This is an example of a multi-domestic organization. Figuring out how
to address global markets is a key strategic area for any management team.