Global Automotive Industry Overview
The auto industry manufactures and sells motor vehicles including passenger cars and commercial vehicles. It is a leading driver of global economic growth.
Global motor vehicle sales reached about 85 million units in 2013, an increase of 4% compared to 2012, according to the Organisation Internationale des Constructeurs d'Automobiles (OICA).
Automotive parts and supplies industry is also an important part of the global automotive area.
Passenger cars were the largest segment, contributing 63 million units in 2013; commercial vehicle sales were 22 million units in 2013, according to OICA.
Automobile Key Markets
China and Japan were the top countries for motor vehicle production in 2013.
China’s motor vehicle production grew by 15% in 2013 to reach 22.1 million units, according to OICA, while Japan’s production fell. Volume in the U.S. grew by 7% to reach 16 million units in 2013. By 2014, 30% of automobile production is forecast to come from Brazil, Russia, India and China (the BRICs), according to the Boston Consulting Group.
Automotive Key Players
According to company reports, Volkswagen AG was the top automotive company in 2013 with a 16% share of the global market. Toyota was the second largest company with a 12% share.
Volkswagen, based in Germany, is a provider of passenger and commercial vehicles, motorcycles, engines, and turbo machinery. It sells passenger cars under the marques Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Škoda and Volkswagen. Western Europe and Asia-Pacific were the two largest regions for Volkswagen with 3.6 million units each in 2013 according to the company.
Toyota, based in Japan, manufactured more than 10 million vehicles in 2012, according to OICA. It produces vehicles under 5 brands, including the Toyota brand, Hino, Lexus, Ranz, and Scion. It was one of the first companies to mass-produce hybrid gasoline-electric vehicles.
Automotive Sales Forecast
Global automotive sales are projected to increase from 85 million units in 2013 to 100 million units by 2018, according to IHS. The market value is expected to increase from $1.7 trillion to $2.3 trillion during the same period.
The U.S. automotive market will be driven by demand for lighter cars. In Western Europe, replacement of old cars and a rebound in small car sales will drive growth. The Asian market is expected to show variations. India is expected to see good growth under the new Modi administration. In China, however, there is a danger that the end of the credit boom might lead to a slow-down in car sales. Japan is already experiencing a decline due to a 3% consumption-tax hike.
Key Trends and Strategies to Generate Growth in the Automotive Industry
A key trend in this industry is the development of networked and smart cars. By 2020, about 25% of cars will be connected according to McKinsey. According to Machina, connected services to and from vehicles will reach a value of $400 billion by 2022. Automotive companies should invest in network technologies and develop partnerships with telecommunications companies in order to exploit this trend.
Automotive services will also be a key element in the automotive area development.
Emerging markets continue to offer lower development and manufacturing costs to automotive manufacturers. Wage cost account for 3% to 15% of revenues for Indian manufacturers as opposed to 20% to 40% of revenues for U.S. manufacturers, according to the Automotive Component Manufacturers Association of India (ACMA). Companies should outsource production of auto parts to these emerging nations to reduce manufacturing costs. General Motors plans to source $1 billion worth of auto parts from India over the next two years.
High fuel prices are one of the major challenges in the automotive industry. This is driving demand for low-emission cars. About 76% of automakers believe that internal combustion engine downsizing and optimization is an effective way to lower fuel usage, according to KPMG. Automotive companies should continue to develop more fuel-efficient engines to decrease fuel costs for customers and reduce pollution.
Environmental concerns about the impact of carbon fuels on the climate changes are driving the development of EV (Electric Vehicles), hybrid cars and fuel cell technology. Toyota plans to introduce a fuel cell hybrid vehicle concept for its Prius model in 2015, while Honda already has a model in the marketplace. Implementation of LED lights is also key for energy savings. Automotive manufacturers need to move fast to gain a place in this expanding market segment.
Leading Industry Associations
- Organisation Internationale des Constructeurs d'Automobiles - OICA
- Global Automakers - www.globalautomakers.org
- American International Automobile Dealers Association - AIADA
- European Auto Manufacturers' Association - ACEA
- Japan Automobile Manufacturer’ Association - JAMA
- Automotive Component Manufacturers Association - ACMA