With more than two decades of experience in automotive forecasting, strategic analysis, and manufacturing finance, Michael Robinet has been quoted by worldwide print, radio, and TV media on a variety of industry topics. In his March 18, 2014 presentation titled "Global Light Vehicle Production: Shifts, Undercurrents and Global Integration," Robinet told the 200 attendees at the AIAG Supply Chain Summit that the world market is strong, but most of the growth is coming from China.
"Without China, the sales growth is much slower," he said. "However, most major economies are expected to improve in 2014."
Robinet said that while the world's average real GDP growth in 2014 is expected to be 3.3 percent, China will top 8 percent between now and 2015, with India and Brazil coming in second and third at about 6 percent and 4.1 percent, respectively. The U.S. will fall below the world average, Robinet said, reaching 3 percent in 2015.
Robinet said there were 83 million units in global light vehicle sales in 2014, an increase of 4 percent. He expects 86 million unit sales in 2014 and predicts that the world will reach 100 million in unit sales by 2018.
"When it comes to light vehicle global growth, fixed cost coverage is critical," he said. "OEMs are focusing on covering fixed facility costs through enhanced flexibility and a three-shift structure."
Robinet said that the industry will undergo massive structural change through 2025. "Starting in 2013, vehicle design cycles have less than two cycles to comply with the 2025 NHTSA fuel economy and emission standards, an increase of more than 45 percent from 2016 levels," he said.
"A compliance gap will emerge during the next decade," Robinet predicted, "which means that vehicles starting production after 2020 will need to be on a glide path to comply with the 2025 regulations."
A few other noteworthy predictions by Robinet:
- Pressure for weight reduction will focus on body and structure first, as aluminum, advanced high-strength steels, and lighter forgings begin to penetrate.
- The second focal point will be chassis and suspension, with a material shift toward new steel-forming processes, aluminum, and new drive designs.
- In powertrain technology trends, gas direct injection and gas boosted are ramping up quickly, with the initial rollout led by American and German manufacturers.
- Stop/start technology is growing, helped along by CAFE off-cycle credits.
- Hybrids will gain traction in the North American market, but not until later in the decade.
The North American market's light vehicle production strength runs counter to global weakness because excess capacity has been shuttered. There is a cautious demand outlook in this region.
However, it is Mexico that holds the most potential for growth.
"Through the end of the decade, Mexican production growth will be one of the fastest, rivaling even Brazil, Russia, and India," Robinet predicted. "In fact, in the North American region, more than 50 percent of the output will be south of Ohio by the end of this year." The three main production clusters in North America will be the Midwest, the Southeast, and mid-Mexico, he added.
Noting that northern Mexico volume is stable through 2020, Robinet told the group that Mid-Mexico volume will more than double through 2020. "Mid-Mexico is the new automotive frontier," he said.
Carla Kalogeridis is AIAG e-news editor. Article originally posted in the July 2014 edition of Supply Chain Initiatives.
Image credit: Wikimedia Commons
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