The Chinese automotive industry has received a lot of buildup over the past several years related to the strength of the economy, and the potential of the market, according to John Humphrey, senior vice president of global automotive at J.D. Power and Associates. In a presentation at the recent J.D. Power and Associates 2013 International Automotive Roundtable in Orlando, FL, Humphrey discussed the outlook for China.
China’s Economic Strengths May Outpace Risks
Industry forecasters* are expecting vehicle sales in China to reach 21 million units in 2013, up 10% from the 19.1 million vehicles sold in 2012. China was able to withstand the recession of 2008-2009, and actually grew quite aggressively during that period due to government incentives and stimulus. On the whole, China was far more effective in dealing with the recession than was the U.S. market, and that has pushed the industry ahead.
Going forward, the potential for China remains substantial. In the past, China’s success has been export-driven. In the future, there will be economic growth inland to the Tier 2, Tier 3 and Tier 4 cities, and there will be a shift towards increased domestic consumption that will bode well for light-vehicle purchases. In terms of risk, environmental concerns remain a great one, especially air and water quality. On top of this, vehicle gridlock in many of the Tier 1 and Tier 2 and Tier 3 cities has been a problem for some time, and is not easily solved in a short period. Continue reading ›
After a successful 2012, the outlook in 2013 for the automotive markets in the United States and China remains optimistic, according to John Humphrey, senior vice president of global automotive at J.D. Power and Associates. He gave projections for the global auto industry during a presentation at the recent J.D. Power 2013 International Automotive Roundtable in Orlando, FL. Some 500 auto industry members—including dealers, marketers and executives from automakers—attended the one-day conference that was co-sponsored with the NADA. Some highlights from the presentation:
Auto Sales Shift to Emerging Markets
In 2013, the global automotive industry faces a somewhat mixed economic bag; the average GDP of mature markets will grow at about 1.4%, while the world’s largest emerging markets will grow by 5.5%, on average.*
Clearly, the United States and China are the bright spots to watch in 2013 and thereafter, in terms of sales and production potential. That said, there are pockets of overcapacity in the global industry that need to be addressed. In 2012, total global capacity for light vehicles reached 116 million units, against total global sales of 81 million units. This roughly translates to a utilization rate of 70%—well below the 80% threshold that most automakers need to reach to achieve financial breakeven. While utilization rates can vary widely by market—and impact the health of individual industries—the overall rate for the global industry can positively or negatively affect automakers with global operations.
Looking toward the end of the decade, the global automotive industry is plainly being driven by the largest emerging markets. In 2012, Asian markets accounted for 41% of the 81 million light vehicles sold globally—primarily China and India. By 2019, Asian markets will account for 49% of the 115 million vehicles forecast to be sold globally.
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After a 5% gain in global light-vehicle sales to 81 million units in 2012, the world outlook for 2013 from our strategic partner LMC Automotive is for slower expansion, with global sales rising by 3% to 83 million units this year. While some large markets performed solidly in 2012—notably the United States and China—the key macroeconomic risks that prevailed during 2012 look likely to persist well into 2013 with negative implications, and an unbalanced risk profile, for Europe. Regional variations will continue this year, according to Pete Kelley, managing director of LMC Automotive.
Some forecast highlights are featured from a recent issue of China Automotive Monthly—Market Trends:
More Favorable Economic Outlook to Boost China Sales in 2013
China light -vehicle sales (including imports) rose by 6.2% to 19.1 million units in 2012 from 2011, which was higher than the annual growth rate of 4.4% in 2011 vs. 2010. This advance was largely due to the phase‐out of the pay‐back effect from booming car sales in 2009-2010, and in particular the surge of the light commercial vehicle sector. Continue reading ›
The global light-vehicle market remained stable in the final month of 2012 and overall deliveries rose about 5.5% on a selling-day-adjusted basis. For the 2012 calendar year, world vehicle sales reached nearly 81 million units, up from 76.7 million in 2011, which represents a 5.2% improvement.
Particularly noteworthy advances were observed in the U.S. auto market, Japan and in China, while weak sales continued to play out in Western European countries. That region has been dealing with a major financial crisis, severely impacting as many as eight of 17 nations in the euro bloc.
Lower vehicle sales in Europe, which accounts for nearly as many unit sales as the U.S. market, foreshadow a likely slowdown in global expansion to between 2% and 3% in 2013 from 2012—even with China’s growth and gains in emerging markets, according to analysis from J.D. Power’s strategic partner LMC Automotive. Continue reading ›
The rapid emergence of India as a major automotive powerhouse coupled with the ambitions of China’s automakers to go global are the principal drivers behind the planned entry of China’s big automakers Beiqi Foton and Great Wall Motor.
Foton aims to become a key global player over the next decade, according to its 2020 Strategy statement. Under the truck maker’s “5+3+1” strategy, India is a key region in its growth plan along with Brazil, Mexico, Russia and Indonesia.
This is why Foton signed a Memorandum of Understanding (MoU) with the Maharashtra government in India last April to establish a manufacturing unit at an investment cost of $307 million over 5 years. It is currently in the process of setting up its plant in Chakan (near Pune) to build light-, medium- and heavy-duty commercial vehicles. Continue reading ›
Dr. Mei Songlin
Many of the key vehicle problems and problem symptoms identified in our 2012 China Vehicle Dependability Study (VDS), which is based on evaluations of new-vehicle owner experience in China after the first 25 to 36 months of ownership, are consistent with the top problems found in the 2012 China Initial Quality Study (IQS), which measures problems customers experience during the first two to six months of ownership. Continue reading ›
Models from three Japanese manufacturers receive seven awards in the 11 award segments, according to the J.D. Power Asia Pacific 2012 China Vehicle Dependability StudySM (VDS). Three of the Japanese models are Toyota brand models. Three Chinese domestic brand models also are among the most dependable models in their respective segments. Among European brands, . . . Continue Reading Japanese Models Receive Seven Segment Awards; Chinese Models Garner Three Awards in 2012 China Vehicle Dependability Study
Dr. Mei Songlin
For a second consecutive year, Chinese nameplates continue to close the gap with international brands in the long-term durability of their models, according to our recent 2012 China Vehicle Dependability Study (VDS). It’s also noteworthy that China’s domestic brands have made advances this year in both initial quality and in offering models that appeal to their new-vehicle owners.
Now in its third year, the 2013 VDS Study measures problems experienced during the past six months by original buyers of vehicles after they have owned their new models for 25 to 36 months. More than 14,100 new-vehicle owners from 37 cities across China were asked to evaluate their new vehicle in terms of 202 different problem symptoms in eight categories.*
This year, the gap in vehicle dependability between the country’s domestic brands and international brands has been reduced to 80 problems per 100 vehicles (PP100), down from 139 PP100 in 2011. Among China’s domestic brands, vehicle dependability in 2012 improves to an average of 250 PP100, vs. 327 PP100 in 2011. International brands also improve their dependability scores, averaging 170 PP100 in 2012, which is 18 fewer PP100 than in 2011. Continue reading ›
J.D. Power Asia expert Tim Dunne provides a perspective for members of the auto industry, especially automakers in Japan, on the U.S. market and offers a glimpse at issues and concerns and changes that are likely to impact the world’s manufacturers in the future. Excerpts from an article published recently in Japan’s Automotive Daily Nikkan Jidosha Shimbun are featured in this post.
As 2012 draws to a close, light-vehicle sales in the United States are expected to finish the year strongly. Vehicle manufacturers estimate total sales will top 14.4 million units for the year, which translates to a healthy 14% increase vs. 2011’s total of 12.7 million units. The 14.4 million-unit total would be the highest annual sales in the United States since the industry reached 16.1 million units in 2007, and represents nearly a 40% increase over 2008, when industry sales tumbled to an anemic 10.4 million units at the lowest point of the recent “Great Recession” (December 2007–June 2009, according to the National Bureau of Economic Research).
For many Japanese brands operating in the United States, 2012’s final results will be even better than the industry average. Sales of Toyota Group vehicles (Toyota, Lexus and Scion brands) are currently up a combined 29%, and are on track to reach 2.05 million vehicles for the year; Honda Group sales (Honda and Acura brands) are currently up 24%, and are expected to top 1.4 million units for the year; Subaru sales are up 29%, and are expected to top 330,000 units for the year. Continue reading ›
Shanghai General Motors receives awards for models that most delight their owners in four of 10 award-eligible segments among the 12 segments included in our 2012 China Automotive Performance, Execution and Layout (APEAL) Study. SGM-Chevrolet and Buick each earn two model awards.
Two models from Beijing Hyundai earn awards, while Dongfeng Yuedai Kia also . . . Continue Reading Shanghai General Motors Earns Most Model Awards in China APEAL Study