Automotive Forecasts
February 9 2005
The automotive industry in the US is under threat from low cost competition, according to its CEOs in a survey by PwC - but 'offshoring' also represents a huge opportunity for the sector. A separate survey by J.D. Power says the market for hybrid vehicles will top out at around 3% by 2011, with price sensitivity a major factor.
CEO Views of Threats and Opportunities
Almost three quarters (73%) of automotive CEOs see low-cost competition as the chief threat facing them in the next 12 months, according to the Eighth Annual PricewaterhouseCoopers Global CEO Survey - more than for any other sector.
The results were released at the World Economic Forum at Davos last month. Other major concerns for automotive CEOs were the detrimental impact of losing key talent, and oil pricing, while inflation emerges as one of the least important.
Despite these worries, the industry has seen recent expansion - in the last year, 66% have accelerated expansion plans, 63% have increased research and development and 50% have opened new plants or offices. Stephen D'Arcy, PricewaterhouseCoopers Global Automotive Leader, says that 'the best automotive companies are putting methods in place to capitalize on the enormous opportunity presented by low cost and rapidly growing economies'. China is by far the most popular location for development, with India second. 49% are already 'offshoring' non-core business functions.
Governance, risk management and compliance (GRC) were the focus of this year's survey and the automotive sector is the most positive about the effects this has on their industry, with 89% agreeing it is a value driver and source of competitive advantage for automotive, and 86% saying their organisation is managing GRC effectively - nearly 10% higher than other manufacturing sectors.
A copy of the full report, based on interviews with over 1,300 CEOs globally, is available at
www.pwc.com/globalceosurvey
Hybrid Potential
Also in the news for the automotive sector, J.D. Power and Associates predicts that despite rapid growth in hybrid-electric vehicle sales over the next few years, hybrid market share will top out at 3% of the US automotive market by 2010.
The J.D. Power-LMC Automotive Forecasting Services Hybrid-Electric Vehicle OutlookSM says that nearly 88,000 hybrid-electric vehicles were sold in the United States in 2004, comprising 0.52 percent of the total light-vehicle market, and forecasts a rise to 1.19%, representing 200,000 units, this year.
The number of hybrid-electric models available in the US market is currently 8, projected to 11 in 2005, 17 in 2006 and 38 - 17 cars and 21 light trucks - by 2011. In the latter year, sales should reach 535,000 units, or 3% of US sales.
Anthony Pratt, Senior Manager of Global Powertrain Forecasting at J.D. Power-LMC, says the expected plateau is 'related primarily to the price premium of $3,000 to $4,000 that consumers must pay for a hybrid vehicle, compared with a comparable non-hybrid option, and to competing technologies such as more fuel-efficient gasoline and diesel options that will be available after 2006'.
Toyota's current 60% share of the US hybrid market is expected to fall to around 40% by 2011, but it will remain the biggest player, according to the report, which predicts a 20% share for Honda (currently 31%) and a rise to 15% for Chevrolet.
J.D. Power and Associates is online at
www.jdpower.com
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.
