Type: News
The USA´s big three GM, Ford and Chrysler have lost so much market share and profitability during the first decade that all their efforts have been focused on survival. GM and Chrysler were forced to reconstruct while Ford managed to stay afloat on its own. Significant changes are currently being carried out within the businesses and the companies that emerge will look considerably different. GM is downsizing its operations and model range and is investing in catching up to the markets´ demand for cars. Ford has abandoned the multi-brand strategy and is focusing on "one Ford". Chrysler will, under management of Fiat, find the form that will deliver a future. The Government has become a significant partner of GM and Chrysler, which at the beginning of the decade would have been considered an impossibility.
The merger of the century between Chrysler and Daimler proved to be a failure. It is difficult to say whether it was the cultural differences or unrealistic expectations, but it did not work out and they went their separate ways. Daimler gained the power to deal with its own situation and develop the company with both large and small cars and with many and interesting environmental characteristics.
New big players have entered the markets
Toyota has positioned itself in the running in several areas. It has recently exceeded GM with respect to quantity of cars manufactured to take the leading position globally. In terms of profitability it has experienced an extremely strong decade and perhaps most important of all, it has taken a substantial lead in the area of hybrids with the Prius.
VW has developed strongly during the decade. A good model structure, several brands for various target groups without excessive internal competition. VW is the only company with the clearly expressed ambition to overtake Toyota during the coming decade.
Fiat, the company that GM paid two billion dollars to avoid fulfilling a previously entered into cooperation agreement, has made a remarkable turnabout. Sergio Marchionne and colleagues rescued the company from the brink of ruin and brought profitability and belief in the future. Fiat´s self-esteem has become so strong that it has taken it upon itself to turn Chrysler around and bring order to the company. Now that takes great self-confidence.
The French passenger car industry started the decade on a strong note but towards the end has slipped somewhat. The Renault-Nissan constellation currently has strong ambitions to become the leading electric car manufacturer and Peugeot/Citroën, PSA group has seriously started its search for a collaboration partner and has approached Mitsubishi.
New countries investing heavily in car manufacturing
At the beginning of the decade China manufactured 2 million vehicles per year and today that figure has increased to 12 million vehicles per year, and 2009 car sales are estimated to be over 13 million. China is therewith the largest car manufacturing country and the largest car market in the world. China is in the process of going from dependence on collaboration with foreign car manufacturers to its own brands with its own development. Geely, Brilliance, Great Wall, BAIC and BYD are examples of Chinese manufacturers with own brands that are now seriously starting to target world markets. China is investing heavily in electric car technology and will most likely produce many exciting new vehicles within this area during the next few years.
Korea is already a strong established car manufacturer with manufacturing in Korea and abroad. Hyundai and Kia have gained considerable success on the global car markets and the company has clear ambitions to be at the forefront of environmental car development.
India has forged a strong position on the small car market. Tata has created a new term — "ultra low cost car" with its Nano car, which has challenged many other manufacturers to follow suit. Above and beyond supplying the gigantic Indian market, India has export ambitions — small cars to developing countries and trucks to the world markets.
Environmental cars
During the decade environmental car development has gained serious momentum. Traditional engines have been made efficient to a level that seemed impossible at the beginning of the century. New fuels have been developed, but there is still uncertainty regarding the path to take. Hybrid technology has emerged from the testing stage and is now available for purchase by ordinary drivers. Electric cars are not, as yet, widely available on the market, but it sure feels like it is waiting just behind the scenes.
Small can be expensive
Mercedes and BMW have, with the A class and the mini respectively, shown that there is a market for small cars and that these do not need to compete in price but instead with features and design.
Suppliers underrated
During the past decade suppliers have been producing more and more of value added in cars and have also been responsible for a considerable level of the development. When EU politicians spoke about more stringent fuel demands and the auto industry protested, the suppliers immediately explained that they were prepared to accept the challenge and felt that there were good chances of meeting the 120g CO2 per km demands. In the ongoing auto crisis suppliers have been hard hit. Even before the crisis suppliers had been greatly pressured by the car industry as it watched its profits shrink. The auto crisis´ bailout packages have focused on the carmakers but the suppliers have been just as hard hit.
Auto industry has become domestic politics
At the beginning of the decade most EU countries and the USA were probably entirely in agreement with respect to condemnation of government ownership involvement or other aid to the auto industry. We now know that opinions have changed. Germany, France and the USA have, through various methods, found ways to support the domestic auto industry. China, Korea, Japan and Russia also have ways to distribute aid, but it is directed more towards development rather than just aiding manufacturers in crisis.
Politics has become more explicit and tougher in their demands on manufacturers with respect to the environment. Consumption norms are being introduced on many of the large auto markets and requirements will successively become more rigorous. As a result of the ever-increasing price of fuel during the decade, fuel consumption has now become an important competitive factor.
Diminishing Swedish passenger car industry
Saab is in the process of being shut down and Volvo Car Corporation is being sold to a relatively little Chinese carmaker with global aspirations. We certainly did not believe this would be the case at the beginning of the decade. Volvo Car Corporation and Saab were the icing on the cake in two giants´ considerable model range. Exclusive, prestigious and successful were the characteristics we wanted to believe in. It didn´t quite turn out that way as developments went in another direction. The reason will certainly be discussed for a long time and more importantly — what can we learn from them?
Strong Swedish truck industry still faces an uphill climb
Scania and AB Volvo had an extremely strong decade behind them. Products and market share were impressive. When the financial crisis struck the large truck markets declined by 50% and suddenly warehouses were being filled up, cars were taken back and production was curbed. AB Volvo hade hoisted all sails when the winds suddenly turned and tough times were upon them. Scania slammed on the brakes but did not have as much volume to stop. The markets will now begin to recover and Volvo and Scania will be ready — but until then times remain tough. Both manufacturers have strong foreign shareholders — Volvo partly owned by Renault and Scania with majority owners VW. The Swedish roots are most likely so deep that it will not affect the businesses in Sweden negatively in the future.
Next decade
It is always exciting to look to the future and speculate about significant events to come and what these will lead to.
The environment will become increasingly important — fuel efficient cars, hybrid and electric cars. Alternative fuels are being developed but gasoline and diesel remain the most important.
Large cities will limit private vehicle traffic and public transportation will develop with respect to availability and comfort and vehicle features will be environmentally adapted.
Private cars will become smaller, safer, offer various engines and will be used in a more effective way — i.e. not be used to sit in traffic with. Car ownership will change to joint ownership in car fleets, rental cars and leasing for private persons.
Fuel prices will continue to rise, which will hasten the transition to hybrids and electric cars.
The number of employees in direct car manufacturing in Sweden will decrease. On the other hand there will be an increase of automotive consultant companies working with assignments from the growing automotive industry in developing countries. Construction, development, design and testing will be areas where Swedish suppliers will take a strong place on the global supplier market. The truck industry will continue strong but will face rising competition from new foreign manufacturers.
China, Korea, India will establish themselves as major carmakers with global markets. New constellations among manufacturers will arise and we will see approximately 10 strong global carmakers supplemented by 20 or so niche manufacturers.
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2009-05-29
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2009-05-08
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2009-04-16
