Will the Electric Car Cause a Power Shift in the Automotive Industry?

There was a big imbalance created in the automotive industry, as the Western world’s automotive industry came under serious pressure due to some car manufacturers management and the economy. In the same period, the Eastern world started to manufacture a lot more cars, which were cheaper because the Eastern world’s labor costs are much cheaper than the rest of the world. The reason why they have cheaper labor is due to the massive labor forces they have available.

At the same time, the Eastern world tackled their quality problems by head hunting highly skilled automotive engineers from the Western world. This caused a massive brainpower wave between West and the East. This brainpower shift caused the amount of high quality cars that gets manufacturer in the East to increase massively.

The Eastern countries even merged with some of the world-renowned car manufacturers. Some of these world-renowned manufacturers decided to open their own plants in the East. This wave in the East came like a tsunami, which could not be stopped, this caused the competition to became fierce between East and West.

Predictions are that the East is going to overpower the West in the field of car manufacturing, due to their massive labor force. These labor forces combined with the highly skilled automotive engineers they have head hunted from the West cause them to be a force to be reckoned with.

This whole paradigm shift will cause that the East and Japan to join up and Japan is already a reckoned force in the motor industry. There are predictions that new electric cars will also come out of the East as Mr. Warren Buffet bought some shares in a big company by the name of “BYD” in China who plan to tackle the electric car industry, “BYD” stands for “Build Your Dream”.

All the major players in the automotive industry are busy developing electric cars, even in South Africa there is a company developing an electric car. This will cause a power shift on its own in the automotive industry, as electric cars will replace conventional cars very soon. Predictions are this will happen far quicker than most people realize. Let us not be skeptical about it and look forward to all these power shifts, which may come in the future and hope it will be good for the greater good.

Rocco van Rooyen is an Author on Automotive Solutions. As an Entrepreneur running his own automotive repair shop for the past twenty years and Author on the subject, he is at the forefront to provide solutions to all automotive related problems.

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Tracy Hildreth Expert Author | 73 Articles Joined: November 1, 2007 United Kingdom Opportunities to Set up or Expand Your Automotive Industry Related Business

In 1984 Nissan established a Factory in Sunderland, North East England. In the past eight years this factory has been Europe’s most efficient car plant. Since then Nissans overall investment in the region has been approximately £2.1bn ($4.1bn).

The North East of England also boasts a wide range of specialist industrial support. This includes the NEPA programme which looks at lean automotive manufacturing; The Regional Centre for Manufacturing Excellence; The Automotive Academy; and the Automotive Centre for Excellence.

These resources are made available to businesses that are looking to set up in the region. The regional development agency, One NorthEast, have a dedicated team who help businesses from all over Europe and around the world to look at the opportunities available to business looking to relocate and take advantages of what the North East has to offer.

Located in nearby Newcastle upon Tyne is Northumbria University. The design school contributes to the industrial design of automotive products.

The level of commitment by Nissan has propelled the North East of England as one of the top places in Europe to relocate automotive businesses [http://www.investnortheastengland.com/page/sectors/automotive.cfm] as well as the expansion opportunities available.

Nissans decision to move to the North east has prompted over 150 automotive companies to relocate or start up in the region and the industry now has a combined workforce of 18,000 skilled people. Companies in the car or car component industry can take advantage of the regions large and skilled workforce with great employment skills in the automotive industry.

In addition to the employable skills enjoyed in the region, the industry is also supported through the Institute of Automotive and Manufacturing Advance practice at the University of Sunderland which is recognised worldwide as a one of the leaders in its field. Its research includes materials and structural analysis, manufacturing systems and ergonomics. There is also Durham University’s Centre for Automotive Research; here they have expertise in vehicle aerodynamics and hybrid vehicles.

So the North East of England is a region that can support new and existing businesses that are looking for expansion opportunities or relocation opportunities in the Automotive industry [http://www.investnortheastengland.com/page/sectors/automotive.cfm]. With a highly skilled workforce and support and collaboration available for the regions local Universities the North East has established itself as one of Europe’s prime locations for the Automotive industry.

If you would like to know more about these business opportunities then the best place to get advice is through the Invest North East England team at One NorthEast.

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The Automotive Industry and Global Trade

In the United States, one city is typically synonymous with the automotive industry. It’s challenging to think of an American made car without thinking of Detroit, Michigan, and in recent years the financial trouble the automobile giant has endured. Though foreign manufacturers in Japan and Korea have gained strength and drivers in the US, it doesn’t necessarily mean US automakers are done. MSNBC reported in late 2011 that the Big 3 in Detroit – Chrysler, Ford, and GM – enjoyed a nearly 30 percent increase due to a demand in sports utility vehicles and trucks.

Quick Facts About the Automotive Industry

Since 2000, an average of 48 million passenger cars alone have been manufactured annually around the world.

According to Worldometers, China produces one of every four new cars, and more than half of all cars are produced in Asia and Oceania.

Of the approximated one billion passenger cars on the road around the world, close to 25 percent of them are registered in the United States. (Source: International Organization of Motor Vehicle Manufacturers)

According to Businessweek, the top selling car in the world is the Toyota Corolla, with sales of well over 35 million.

Major Exporters of Automobiles

While China is one of the world’s largest producers of passenger vehicles, the country is not necessarily ranked high among top global exporters. The International Trade Centre recently put out a report on top automotive exporters, with the following leading the pack:

Germany – The roots of the German automotive industry date back to the late nineteenth century and the various patents owned by Karl Benz. Where in that time the country produced barely a thousand cars a year, now over five million are manufactured. Popular German brands include Mercedes-Benz, Volkswagen, BMW, and Porsche.

Japan – Gasoline-powered vehicles have been built in Japan early as 1907. Despite natural disasters that threatened the nation’s economy, Japan has worked to maintain its place among top car producers and exporters. Toyota, one of the top selling brands of all time, is based in Japan, as are Nissan, Honda, Mazda, and Subaru.

The United States – The US auto industry took a hit in recent years due to the economy. Through a combination of asset liquidation and government funding, the major brands (Ford, Chrysler, and General Motors) have worked to stay afloat. Despite this issues, the US remains a top producer with over seven million cars made on average in the country.

Republic of Korea – Over the last decade, South Korea has established itself as an automotive power thanks to an association between Daewoo Motors and GM, and Hyundai’s presence in the US with a major assembly plant.

Canada – While the country has no major native brand, Canada is important to the automotive industry by virtue of the many plants established by foreign brands, including Ford, Toyota, Chrysler and Honda.

Major Importers of Automobiles

While many countries produce domestic brands, automobile imports remain strong in economies that seek certain qualities, such as fuel efficiency and safety features. Among the top importers of automobiles:

The United States – Of the top brands sold in the US in the last year, many names bring to mind manufacturers from other lands: the Toyota Camry and Corolla, the Nissan Altima, and the Honda Civic and Accord.

Germany – While German brands dominated domestic sales in 2011, there is enough of a demand for foreign models to make Germany an important importer. Ford, Skoda (based in the Czech Republic), and Hyundai are popular names.

United Kingdom – Luxury is often synonymous with the British automotive industry. Aston Martin, Bentley, and Rolls Royce are three makes manufactured here, though Ford, Volkswagen, and the French Peugeot are seen more often on the roads.

Italy – Italy is known for the Fiat and Ferrari, but foreign makes like the Ford Fiesta, the French Citroen C3, and the Volkswagen Golf are also in demand.

France – The French appear greatly committed to domestic brands, particularly Renault and Peugeot, but foreign models from Ford, Volkswagen and the Romanian Dacia are gaining ground in the last year.

The Aftermarket

Equally important to the automotive industry is the manufacture and sale of auto parts and accessories, commonly known as the aftermarket. Sub-industries relevant to automobile sales may include products like tires and paint, stereo and GPS, engines and chemicals needed for operation, leather and vinyl for seating and safety features. According to the Automotive Aftermarket Industry Association (AAIA), the aftermarket in the US alone totals over $250 billion.

Though faltering economies and natural disasters have given the international automotive industry a number of challenges, one can conclude sales are destined to remain strong so long as the need for personal transportation remains. How and where people will by their cars may change over time as considerations for eco-friendly features grow in demand, but so long as people continue to buy automobiles the global industry will continue to gain speed.

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Automotive Industry at a Glance

The World Automobile Industry is enjoying the period of relatively strong growth and profits, yet there are many regions which are under the threat of uncertainty. Carmakers look for better economies, market conditions which are ideal to have a successful stay in the industry. The automotive industry has a few big players who have marked their presence globally and General Motors, Ford, Toyota, Honda, Volkswagen, and DC are among them. It has also been suggested that automotive industry has accelerated more, after the Globalization period, due to easy accessibility & facilities among nations and mergers between giant automakers of the world.

Moreover, the advancements in industrialization led to a rise in the growth and production of the Japanese and German markets, in particular. But in 2009, the global car and automobile sales industry experienced a cogent decline which was during the global recession, as this industry is indirectly dependent on to economic shifts in employment and spending making, it vulnerable. While demand for new and used vehicles in mature markets (e.g. Japan, Western Europe and the United States) fell during the economic recession, the industry flourished in the developing economies of Brazil, Russia, India and China. Boost in global trade has enabled the growth in world commercial distribution systems, which has also inflated the global competition amongst the automobile manufacturers. Japanese automakers in particular, have initiated innovative production methods by adapting and modifying the U.S. manufacturing model, as well as utilizing the technology to elevate production and give better competition. The World Automotive industry is dynamic and capacious, accounting for approximately one in ten jobs in developed countries.

Developing countries often resort to their local automotive sector for economic growth opportunities, maybe because of the vast linkages that the auto industry of the country, has to other sectors. China is by far the largest market for sales followed by Japan, India, Indonesia, and Australia. Sales figures of 2005 to 2013 indicate that sales for vehicles in China doubled during this period, while Indonesia and India also benefited. However, there was slump in sales during this time in Australia, New Zealand, and Japan. Interestingly, this year competition in the truck segment has become more intense, with the three big U.S. automakers striving for supremacy in both performance and fuel economy. The Japanese aren’t giving up, either, with both Toyota and Nissan launching new pickups in 2015.

India is the seventh largest producer of automobiles globally with almost an average production of 17.5 million vehicles with the auto industry’s contribution amounting to 7% of the total GDP. It has been estimated that, by 2020 the country will witness the sale of more than 6 million vehicles annually. India is expected to be the fourth largest automotive market by volume in the world where, two-wheeler production has grown from 8.5 Million units annually to 15.9 Million units in the last seven years and tractor sales are expected to grow at CAGR of 8-9%, in next five years, making India a potential market for the International Brands. As 100% Foreign Direct Investment is allowed in this Sector, India is expected to have a speedy expansion, to, soon to become the largest automobile Industry. While India is second largest manufacturer of two- wheelers and largest of motorcycles, it is also estimated to become the 3rd largest automobile market in the world by 2016 and will account for more than 5% of global vehicle sales. As large number of products are available to consumers across various segments, providing a large variety of vehicles of all the types, manufacturers aim towards customer satisfaction and loyalty.

Following the FDI policy, entry of a number of foreign players with reduced overall product lifecycle and quicker product launches have become a regular occurrence in the automotive industry of the country. Indian auto market is seen as the potential market which can dominate the Global auto industry in coming years. Moreover, giant dealers and manufacturers are inclining towards the country because of ease of financial norms as well as an environment so conducive to support in their projects.

With Narendra Modi’s Make in India Campaign, the automotive industry is expected to witness quite a few changes, where 800 Cr have been allocated in the Budget to promote the Energy and Hybrid Vehicles manufacturing. This move is expected to cut down the prices making these electric and hybrid vehicles cheaper and more eco-friendly. It is also expected that this move will curb down the carbon dioxide emissions to 1.5% till 2020. This program will subsidize the purchase of new hybrid and electric cars, as well as other vehicle types. It specifies incentives of up to 29,000 rupees for scooters and motorcycles, and up to 138,000 rupees for cars. Three-wheeled vehicles, light commercial vehicles, and buses will also be eligible for incentives of varying amounts as well.

The used cars sector in India has emerged as one of the major industries due to its easy accessibility and lower rate of interests. But growth in used car sales are lower than new car sales as people still prefer to purchase new cars as opposed to buying used ones. A big reason of this could be the fact that there is a reduced supply of used cars, and high prices of these used cars are pushing the consumers to opt for the low priced new cars. But despite of lower growth compared to new cars segment, used car industry has been showing a fast and steady growth. According to the industry analysts, the sales of used cars are expected to boost up in the next few years.

Till last decade, consumers were involved in unorganised sector of Used Vehicles industry, there were no organised players to assist the consumers in buying of used vehicles, and about 60% of used vehicle sales were customer to customer where there is a trust factor. The remaining sales were managed by the local dealers. But then in 2001, Maruti came with the first company of selling used cars in 2001- Maruti True Value. Despite the automobile industry witnessed slow sales numbers in the last few quarters, the used or pre-owned car segment is growing fast, and is likely to accelerate in future. In fact in the last fiscal year, more used cars were transacted, 10% more than the new ones, according to the assessment by Maruti Suzuki India Ltd. and Honda Siel Car India Ltd. With the organised players stepping in, the used cars market has benefited from fair deals, warranties, better retail network, credibility, transparency, easy availability of finances. These have all made buying a used car easy. Organised used car showrooms provide the platform to the prospective consumers to choose cars from various brands and segments. Car makers have realized the potential of used car market and are making conscious decisions to operate in the pre-owned car sector also. Besides exhibiting multiple brands, the branded used car retailers, also offer one-stop shop for all inquiries and grievances. All the major Car dealers have now established their pre-owned car segment retail showrooms, Maruti True Value, Ford Assured, Hyundai Advantage and Toyota U Trust are some of the major used car dealers.

Constant decline in fuel prices and better financial policies in the past year are the factors that are being expected to be the reasons for the number of new buyers to be increased in the market, which declined in 2013-14. But during this period, one segment that benefited from this decline was the used vehicle market, with increased awareness, financial reforms and organized firms. Most of these used cars buyers are younger people who prefer buying Pre-owned cars which come at lower prices and they get a good bargain for the same. Indian used vehicle market which is still, almost quarter of new vehicle market is growing at a rapid pace. The Pre-owned car sector is expected to grow by 15-18% in coming years.

Also with the rising in number of organized players have boosted the amount of confidence people are putting in buying a pre-owned car. These players not only offer a good line up of used cars but also offer finance & extensive vehicle check facility for 100% customer satisfaction.

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