SIZE OF THE AUTOMOTIVE INDUSTRY
The automotive industry occupies a leading position in the global economy, accounting for 9.5% of world merchandise trade and 12.9% of world export of manufacturers. This industry manufactures self-powered vehicles, including passenger cars, motorcycles, buses, trucks, farm equipment, other commercial vehicles, automotive components and parts.
The United States of America is the major revenue source for the global automotive industry with a market share of $432.1 billion, occupying for 37.2 percent of the world’s marketplace. In the year 2006, America sold around 16.5 million vehicles. The automobile industry’s revenue was $85,620,000,000 in the year 2006. There were 200 countries that conducted foreign trade with the U.S. in 2006, exactly the same as year 2005. The leading countries that did trade with US in 2006 were: Canada, $49,844,026,000 (28.67%); Japan, $45,906,127,000 (26.40%); Germany, $25,749,794,000 (14.81%); Mexico, $17,745,627,000 (10.21%); and Korea, $9,525,028,000 (5.48%).
MAJOR MANUFACTURING REGIONS
Northeastern United States and Southern Great Lakes Region, Northwestern Europe, Western Russia and the Ukraine, and Japan are the major manufacturing regions of automotive in the world.
In North America, the prominent automotive manufacturing regions are New England, New York and the Mid-Atlantic, Central New York, Pittsburgh/Cleveland, Western Great Lakes, St. Lawrence Valley, Ohio and Eastern Indiana, Kanawha and middle Ohio Valley, St. Louis, the Southeastern region, Gulf Coast, Central Florida, and the West Coast.
The European Union has the largest automotive production regions in the World. The key automobile manufacturing regions are United Kingdom, Rhine-Ruhr River Valley, Upper Rhine - Alsace - Lorraine region, and the Po Valley in Italy.
In the Western Russian and Ukraine Region, the leading industrial regions are Moscow, the Ukraine region, the Volga region, the Urals regions, and the Kuznetsh Basin Region.
MAJOR SEGMENTS OF AUTOMOTIVE INDUSTRY
The global automotive industry is highly diverse, comprising of various sectors such as automotive parts and accessories, utility vehicles, commercial vehicles, two wheelers, and four wheelers.
Automotive Parts and Accessories industry comprises of establishments engaged in manufacturing of automotive stampings; carburetors, pistons, piston rings, valves; chassis; rubber tires and braking systems; ignition systems; lighting equipment; seating, flooring and related materials; gasoline and fuel systems; storage batteries; and engine and transmission parts and accessories. This sector comprises of two major sub sectors namely original equipment suppliers and aftermarket parts manufacturers. The original equipment suppliers produce parts for automakers and aftermarket parts manufacturers produces replacement parts for vehicles. China, Italy and Taiwan are the largest automotive accessories and parts manufacturing countries.
Four Wheelers industry is one of the largest segments of global automotive industry that produces different type of four wheelers namely cars, passenger cars, jeeps, vans etc. The key manufacturers of four wheelers in the world are General Motors, Toyota, Ford, Volkswagen AG, Daimler Chrysler AG, Nissan Motor Company Ltd., Honda, and PSA Peugeot. There was a report published in 2006 by RNCOS, which states that China has attracted more and more overseas players to venture their capital in this booming sector.
Two wheelers industry comprises of four broad segments i.e. scooters, motorcycles, mopeds and bicycles. Japan, India and China are the largest producers of two wheelers in the world. The total production of two wheelers in Japan in 2005-06 was 10,799,659 while India produced 7600801.
Commercial Vehicles industry comprises of units engaged in manufacturing and selling of commercial motor vehicles. The commercial vehicles include light commercial vehicles, rigid vehicles, articulated trucks, buses and non-freight carrying truck. United States, Japan and China are the largest manufacturers of commercial vehicles in the world. The global market share for commercial vehicles in 2005 was £4.34bn, which is expected to rise in the coming years.
Utility Vehicles industry consists of units engaged in manufacturing and selling of Sports Utility Vehicle and the Multi Utility Vehicles. The key utility vehicles manufacturing regions of the world are North America, Europe, China and India.
KEY INDUSTRY DRIVERS
The highlighting features of global automotive industry are:
- Offers support to other industries such as iron, steel, rubber, glass, plastic, petroleum, textiles, oil & gas, paints & coatings, transportation industries.
- Rising foreign investments have led to the rapid growth in terms of automobile production and exports. Overseas companies are making huge investments and are installing extensive production capacities in developing countries.
- Continuous investment in research & development has resulted in increased productivity and better quality automobiles, automotive accessories and parts.
- Increase in standards of living and purchasing power parity have resulted in the increase demand of automobiles especially four-wheelers in developing nations, mostly in South Asian region.
- This sector provides employment to major chunk of human population in the world i.e. 25 million. This industry not only provides millions of jobs to the people, but also produces billions of dollars in terms of worldwide revenues.
- Adequate infrastructural facilities in form of power supply, machinery, capital, ready availability of raw materials and labor help in the tremendous growth of this industry.
FUTURE OUTLOOK
The automotive industry is witnessing tremendous and unprecedented changes these days. This industry is slowly and gradually shifting towards Asian countries, mainly because of saturation of automobile industry in the western world. The principal driving markets for Asian automotive industry are China, India and ASEAN nations. Low cost vehicles namely scooters, motorcycles, mopeds and bicycles have led to the massive growth of some of the fastest developing economies like China and India. The future of automotive industry in the Asian countries such as Thailand, Philippines, Indonesia, and Malaysia is bright and promising because of the ASEAN free trade area under which the export tariffs are very less.
On a global scale, the assets of the top ten automotive corporations accounts for 28% of the assets of the world’s top 50 companies, 29% of their employment and 30% of their total sales. In the year 2006, the United States of America sold around 16 million of new automobiles, Western Europe sold around 15 million, while China and India sold 4 million and one million respectively. Latin America, Middle East, Eastern Europe, China, Malaysia and other South-Asian nations are now emerging as the dominant markets of the automotive industry. Most of the major automotive players are shifting their production facilities in these emerging markets with the main purpose of gaining better access and reduction in their production costs. There is an estimation that the automotive markets in South America and Asia will witness a boom in the near future. The various factors such as cheap financing and prices discounts, rising income levels and infrastructure developments will assist in the growth and development of automotive sector in the majority of Asian nations.
Due to rising pressures on cost and quality, computer aided designing and computer-aided manufacturing tools are increasingly adopted by the automotive companies so as to save months of time in designing and improving the quality of automobiles. The other technologies being used by automotive industry are rapid prototyping, virtual reality, on-board systems, global positioning systems, and display maps. Most of the automotive manufacturers are now resorting to environment friendly fuel vehicles like Electric, fuel cell, and hybrid cars.
The future seems encouraging for this industry in terms of the expected surge in global demand and upsurge in investments. Several trends such as over-capacity in developed markets, globalization, technology advances, regulation and environmental consideration, and market fragmentation and product proliferation will result in the rapid growth of this sector.
