@Risk

It looks as though the tide is turning for the automotive industry.

A new study released last week by A.T. Kearney paints a rosy picture for the future, forecasting:

• 13.2 million new autos will be sold in the US this year and

• an upward trend toward pre-recession levels of about 16 million units by 2013.

According to the study, over the past four years, total new and used pent-up demand has accumulated to 32 million units, of which more than nine million will materialize in the new vehicle market over the next five to seven years. The remaining 23 million units will sell in the used-car market.
But, as A.T. Kearney is quick to point out, there are a handful of significant variables that could, potentially, change these projections. This list includes:

• overall economic growth

• credit availability (The recession created 15 million “new sub-prime consumers,” of which approximately 530,000 customers would be locked out of the new vehicle market without help from auto lenders.)

• consumer prices

• consumer confidence

• parts shortages in the aftermath of the earthquake and tsunami in Japan

What can OEMs and suppliers do to prepare for the anticipated upswing in sales –even as they accept the possibility of market volatility? A.T. Kearney suggests that OEMs and suppliers: (more…)

A new study predicts that over the next 15 years, the global automotive industry will undergo the greatest transformation in its history.

In particular, the Automotive Landscape 2025 study, conducted by Roland Berger Strategy Consultants, forecasts six significant automotive trends: (more…)

Friday’s devastating earthquake and tsunami will have broad economic implications.

For instance, The Detroit News is reporting that Japan’s leading automakers are suspending production at their domestic plants on Monday as they assess the condition of their factories and parts suppliers.

Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co.have suffered damage at more than a dozen plants and facilities.

Toyota says that it is now conducting a detailed survey of each plant to determine the extent of any damage. The company is also assessing the situation at our suppliers, dealers and the impact on North American import vehicles.

Updates from Nissan are available here.

We’re likely to see shutdowns in the high tech and semiconductor manufacturing industry –and others –as well. (more…)

Over the past year, Toyota has agreed to pay $48.8 million –or the equivalent of about $30 per Toyota vehicle sold in the US in 2010 –in fines related to multiple product recalls.

The two latest penalties, announced earlier this month, amount to $32.425 million –$16.375 million in one case and $16.050 million in the other –in response to the US Department of Transportation’s assertion that Toyota failed to comply with the requirements of the National Traffic and Motor Vehicle Safety Act for reporting safety defects to the National Highway Traffic Safety Administration (NHTSA).
(more…)

The recession hit auto suppliers hard, and even though some are now reporting significant fourth quarter gains, others are not out of the woods yet.

After all, some auto manufacturers are still restructuring. Volvo Cars, for instance, is reviewing its supplier base, looking for places where it can reduce costs and simplify manufacturing processes.  Ultimately, the company may cut as many as one-third of its suppliers, Volvo’s purchasing chief told Bloomberg last week.

Volvo hasn’t shown a profit since 2005. But, its new owner –the Zhejiang Geely Holding  Group Co. from China –what’s to turn things around, and improving supply chain efficiencies and alignment has become a top priority.  All told, the company has about 450 suppliers, and of these, the 20 largest supply about 70 percent of Volvo’s parts. This short list includes seatbelt and air-bag maker Autoliv Inc., seat manufacturer Johnson Controls Inc., and Robert Bosch GmbH.

Bloomberg reports that Volvo may trim its suppliers down to 300. (more…)