Invest or Not? Does A Fuel-Efficient Car Make Sense Today? Harvard Case Solution & Analysis

IMD-2-0118 © 2005
Steger, Ulrich; Gensch, Carl-Otto; Griesshammer, Rainer; Manhart;, Andreas; Salzmann, Oliver

Lars Eklund; CEO of Autostar; a (fictional) Nordic automotive business is seriously considering the debut of a fuel-saving auto into the European marketplace. His final decision has to consider various factors including pressure to bring in cost of capital a stagnating market increase; a tendency towards more powerful engines and much more customization; rising and volatile fuel costs; and regulatory pressure to reduce emissions.

In a scenario; in which some competitions are actually intending to withdraw their models (e.g. Volkswagen the Lupo 3L); and others already successfully take their niche (Toyota with their Prius version); does it make sense to go for a marketplace launch? If yes can Eklund do it most effectively?

Subjects: Fuel-efficiency; Corporate sustainability; Europe; Automotive sector
Settings: Europe; Scandinavia; Automotive; Euros 5.5 billion turnover; Mid-2005

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