The Trick is to Manufacture in Europe and Sell Abroad
Summary of the 28th Automotive Industry Meeting
"The trick is to manufacture in Europe and sell abroad, especially in China. If you’re not in China you’re not in business," Carl-Peter Forster, board member of Volvo Cars, Geely and INI Plc, said at the 28th Automotive Industry Meeting, held jointly with KPMG on the Barcelona campus. The meeting discussed the future of a business that is experiencing profound changes.
One of the most marked trends is the globalization of the industry, which has led to "extremely unequal" growth between emerging markets (China, India), which have huge potential, and mature markets (Europe, the U.S.), which have low potential growth, according to Francisco José Riberas, president and CEO of Gestamp. According to IESE Prof. Pedro Nueno, Chinese and Indian manufacturers are also globalizing and will soon start manufacturing in Europe and the U.S., probably before 2020.
Freeman H. Shen, board member of Volvo Cars, Geely Holding Group, cited the case of the purchase of Volvo by a Chinese group as a clear illustration of how Chinese corporations are not only concentrating their efforts but are gaining force and developing better strategies in Europe.
The emerging countries are not the only main players. As Nueno explained, the African market is experiencing "spectacular growth" and there are "many more areas to explore." Riberas also highlighted the Middle East, Andean countries such as Colombia and Peru, and countries in the ASEAN zone, such as Indonesia, Malaysia, the Philippines, Singapore and Thailand.
There was also much debate about electric and hybrid cars and self-drive cars. Electric cars will play a key role in cities but, according to Nueno, sales over the next 10 years will be low. Even so, it is essential to develop these technologies because "in the end it’s the consumer who decides." One of the main obstacles is a lack of infrastructure. On the other hand, he recommended focusing on super-efficient conventional combustion engines.
New technologies were another focus. "The business logic changes from hardware to software domination," said Dirk Schlesinger, Global Lead Manufacturing Industries, Cisco Internet Business Solutions Group. As a result, businesses such as Google will enter the field. He said we will soon have car-to-car communication and cars acting as sensors, as well as self-drive cars. He also emphasized the drive to use lighter materials and components. New regulations will mainly be directed towards reducing emissions.
Christian Steiner, head of corporate mobility services, BMW Group, said connectivity is one of the most important trends in a changing industry, as are carsharing, intelligent parking solutions, e-mobility and location-based services.
Finally, Prof. Marc Sachon, Chairman of the Meeting, presented the study IESE Auto 2013.