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Driving factors changing for auto industry
By Steve Coleman
It's not the same race that it was for automakers a few, short years ago.
Where General Motors once commanded the field from Detroit, a collection of about 10 companies with addresses ranging from Wolfsburg, Germany to Tokyo, Japan are now competing on equal footing for a smaller North American market share.
Vehicle manufacturers are turning, more and more, to emerging markets like China and India to make up the lost revenue. Emerging middle classes have money to spend and want some of the same luxuries westerners have enjoyed for years.
The playing field is levelling out at home, too. With the current level of integration for North American-made vehicles, what happens in the United States usually determines what occurs in Canada.
"There are five assemblers in Canada and all of them are heavily tied into what the US does," said Mathew Wilson, vice president, national policy, with Canadian Manufacturers & Exporters (CME). "Between 80 and 85 per cent of all vehicles produced in Canada are sold in the US.
"If you look back about five years ago, the US auto market had somewhere around 18 million vehicles sold. Last year, they sold somewhere around 12 million — and that was a good year."
Some 2012 forecasts suggest the US market may rebound, with an estimated 13.5 million new vehicles expected to hit the road over the next 12 months.
North of the border, meanwhile, analysts are expecting sales to build upon the 1.5-1.6 million units sold in the 2011. General Motors, Ford, Chrysler, Toyota and Honda all build vehicles out of Canadian factories.
To many industry experts, Canada's sales strength compared to the US is no surprise.
When the recession hit in 2008, bank loans dried up and the US vehicle market crashed by 40 per cent. In Canada, however, strong growth in the resource sector shored up business. Total sales only fell 10-15 per cent as industry continued to invest in business infrastructure.
Four years later, with the credit situation beginning to show signs of life, consumers looking for better deals are fundamentally propelling a shift in the way automakers view the products they sell. Last week's North American International Auto Show in Detroit showcased just how much things have changed, and where they might be going.
"Ten years ago, there were two gas-electric hybrids on display here," said Jim Lentz, President and COO of Toyota Motor Sales, during a news conference. "Look around you. In every corner of this, the world's premier auto show, hybrid technology — in its many-and-varied forms — has arrived. Our industry has not just embraced hybrids; hybrids have energized our industry, offering it a clear road to the future."
Critics called the first Toyota Prius everything from an amusing side-trip to a science project, Lentz said. Now, hybrids are starting to make up a larger share of the new car market.
But, while the exact technology may vary from manufacturer to manufacturer, all hybrid vehicles have one thing in common — batteries.
Where automakers used to work with the fuel that was available — in most cases, gasoline — they're taking a more vested interest in driving solutions alongside consumers, according to John Viera, director of sustainability for Ford Motor Company.
Whether it's home charging or finding new ways to put rechargeable battery components back on the market, car companies are all working together to develop the ground rules for the power and charging systems. Instead of sending drivers on trips to the gas station, he reiterated, vehicle makers want drivers to recharge their cars and trucks at their convenience.
Finding a way to recycle worn-out power cells is one area where the industry says it needs to devote more time and resources.
The lithium that powers the cells is most easily dug from the ground in Bolivia, China and Chile.
"None of that is bound to happen overnight," said CME's Wilson. "Cars and trucks are complex machines. But we're going in the right direction. Day by day, the technology is improving. Good things are on the horizon."
