The Slow Road to Recovery. Megatrends at 26th Automotive Industry Meeting

22/11/2011

The 26th Meeting of the Automotive Industry got under way today on IESE's Barcelona campus under the heading "Megatrends in the Automotive Industry." The two-day conference, organized by professors Pedro Nueno and Marc Sachon, brought together industry experts from Europe, the United States and China to discuss the future of the industry.

Themes ranged from the outlook for the European and U.S. industries, through electric cars, financing, retail and the Internet and changing patterns of mobility. Ivan Hodac, the secretary-general of ACEA, an association of 17 European manufacturers, addressed the theme of the "European comeback" which he said four years ago had been predicted to begin in 2012 but is still a few years off.

"The comeback is not complete. We are still down almost 70 percent on 2007, the last year of positive figures," Hodac said. "Not everyone is doing badly. The premium brands are doing well but the volume manufacturers are not. Meanwhile, Brussels continues to legislate as if nothing has happened and it's business as usual." The free trade agreements encourage imports but not exports, he said, making it is easier to import into Europe than to export out of it. "Global markets present us with opportunities, but they are also a threat," he added.

There was slightly better news from the United States, where retail sales are expected to recover gradually over the next few years. As an indication of the size of the market, Phillip D. Brady, president of the National Automobile Dealers Association, told the audience that retail car sales represent 14 percent of the total retail sales in the U.S., adding that a few years ago this was 20 percent. Sales are running at about 5 million fewer than in 2000, although up on 2009, and are anticipated to rise to close to 17 million in 2015. Cross-over utility vehicles represent nearly 25 percent of sales, he said.

The "Detroit three" – General Motors, Chrysler and Ford – continue to dominate but Toyota, Hyundai, VW and Kia have growing share of the U.S. market. Reflecting the disappointingly poor sales of electric vehicles, sales of hybrids are also down from 350,000 in 2007 to 200,000 this year, and overall make up a tiny part of the market.

Brady was followed by Yongping Chen, the business director of BYD Europe BV, who talked about the Chinese market. Although BYD was founded as recently as 1995 and has only been making cars since 2003, it has 180,000 employees and was ranked No. 8 among the 50 most innovative companies. It has seen an astonishing annual average growth of 70 percent and had €4.6 billion in revenue in 2010.

BYD – which stands for Build Your Dreams – specializes in electric and hybrid vehicles and sold 520,000 cars in 2010. Chen said the Chinese market has not been so vulnerable to the world financial crisis. Sales continue to rise steeply and are expected to grow by 8 percent by 2015. He said that in 1999 private car ownership in China stood at 5 million, while last year it had risen to 65 million. However, ownership density is much lower than in Europe or the United States. The conference continues tomorrow.