How do you feel about the financial situation right now?
The debt level in the EU countries poses a risk and is a problem that could affect development.  The situation in Greece is going to put the EU to the test. The risk in the powerfully globalized world we live in is that there are always bubbles popping up in the economy. They pull in capital and resources for a period of time and then burst, with negative effects felt throughout the rest of the world. I think it´ll calm down a little when interest rates get to more normal levels. Money´s cheap now, and this is attracting speculation in many areas.

Looking back ...The first decade of the new millennium is at an end — what were the big events that affected the automotive industry?
The biggest influence was the CO2 debate, which put pressure on politicians and legislators. Then came the rising oil prices. This led to a transformation that, looking back, has gone amazingly fast. USA has a tradition of big cars with big engines, since gas has always been — and still is — comparatively cheap. This tradition in the US put domestic manufacturers in serious trouble when the situation changed so quickly, but now they´re up and running again. I think that in the future, the US is going to have to raise gas taxes to European levels. This would lead to vehicles with reasonable fuel consumption levels and would help to balance the US budget deficit.

How quickly is the transformation progressing in the US?
Fast! Ford is bringing EU models to the US and saving development costs and time. Fiat will be bringing Fiat technology to Chrysler and GM also has European vehicles they´re using to keep up with the changes.

Why do so many countries want to make cars? Isn´t it one of the toughest industries out there?
“National Pride" is an enormous propellant behind automotive industries and national airlines. It wasn´t long ago that every country had to have its own airline with direct flights to New York — whether they had any passengers or not. It´s about the same story with automobile manufacturing. Many countries want their own industry for the domestic market, but to maintain a healthy financial position, you also have to export.

There are some new countries producing cars. Will they have an effect on the global market?
We laughed at the Japanese when their cars came. It took 30 years for them to reach the top. It took the Koreans 20 years and it will take the Chinese 10. The new automotive manufacturing countries are often not burdened by old tradition and knowledge. They dare to think freely and in new directions. Old knowledge can be a burden.

What do you think is in store for the second decade of the 21st century?
Europe has a market for external “automotive engineering" of about three billion Euro. Of these three billion, two billion are in Germany. This means that Germany will continue to lead Europe on the automotive front.
A lot of European technology and models are going to be brought to the US. By tradition, the US is open and unsentimental about change when it is needed. The US car market is going to become more European.
The greatest growth on the automotive market will be seen in Asia. The Chinese automotive industry will be consolidated and already has a few of its own makes. China will be active on the global market, but will have its biggest export potential, apart from the Asian market, on the Russian market east of the Urals. Asia will also be a leading contender in many respects on the technical front. Just look at flat-screen TV´s  — LG has established itself as a global name in a very short time.  It could be the same thing with new technical areas in the automotive industry. BYD (leaders in battery technology) and other expansive companies, backed by their proficiency, will seize their opportunity.

How about in the area of features — what will happen in the next decade?
Fuel consumption will sink dramatically, which is positive thing from all aspects, CO2 debate aside. Reducing fuel consumption saves money and resources, which is important for virtually every country.
Active safety will increase traffic safety, which will be valued highly by many car buyers and benefit the automotive manufacturers that are out early in this area.
New markets are coming. Russia has an enormous need for building infrastructure and has resources, but these have thus far primarily ended up outside the country. This will change. Trucks and busses will be needed on a large scale when the old Eastern bloc is rebuilt to modern standards. The old Eastern bloc is just as big as the US and there is great potential there for an expansive automotive market.

What will be the role of suppliers in the next decade?
Production will not be a primary area of focus for automotive companies. Brand name, overall concept, technical development and customer relations will be more central. Manufacturing will take place outside the company. Import duties on many markets will also force dispersed manufacturing.
We´ll see big suppliers powerfully driving technology ahead in their specialized areas, companies like Bosch and Autoliv.
We´ll get more partnerships over company lines. Car buyers don´t see 80% of the vehicle´s contents and don´t care so much where it comes from. One million cars are required per platform for good profitability, and that means that partnerships are essential when the company itself can´t reach those volumes.
On the issue of fuel, liquid fuels will dominate. We´ll see a lot of different types of hybrids, which provide fuel savings, and we´ll see pure electrical vehicles in busses and work vehicles operating within designated areas. The battery issue is the Achilles´ heel. Lead batteries have been denounced for a long time, but they´re still around. Developments in the area of batteries are not proceeding at the same pace as other developments.

A few current issues.

Toyota is currently experiencing a confidence crisis of considerable proportions — how could things get so bad for them?
Hierarchy and culture may have delayed rectification measures, but now the problem is being enormously exaggerated in the US — and lawyers and US car manufacturers are not above egging it on. Toyota is a very professional company that has certainly gone over the top with a giant recall to be on the safe side. But many are enjoying giving Toyota a kick while they´re down.

Volvo Car Corporation and Saab — how do you think that they´ll be developing over the next decade?
Both have strong names. Without that strength, Saab wouldn´t be around today. Both stand for quality, safety and comfort. If they keep to their areas and strengthen their companies, they´ll be successful. Safety, comfort and quality are especially appreciated on certain markets and Saab and Volvo CC have great potential in this area. If they stay away from low-price vehicles and really big cars, things could turn out well. A lot of people want “functional performance," which is something that Saab and Volvo CC are good at. But of course it´s going to be tough. Passenger cars are in vogue and trucks are an investment.

What will happen with Semcon over the next decade?
We will be continuing our expansion outside of Sweden — Brazil, India, Russia and China. We´ll have our biggest portion of operations in the automotive sector, but other areas with large technical content will also be growing. Wind-powered energy, for example.
In the area of automotive engineering, operations will be expanding as automotive manufacturers outsource more and more to external development. Doors, chassis, custom vehicles or facelifts. It´s all being outsourced so that the automotive manufacturer can focus on core business operations — the development of new cars, brand name and customer relations. Developmental requirements will be extensive and this presents great opportunities for Semcon. We are already seeing how things are beginning to take off after a tough 2009.

Text & Picture: Hans Nyman, Automotive Sweden