World Automotive Industry – Future Expectations

World Automotive Industry – Future Expectations

Due to the competitiveness increased in the developed country markets, customers have become more demanding and this has completely changed the product segmentation together with the propotion between product presented to the market and customer profile. The prior belief that wealthy customers having a tendency of spending money would like to buy big automobiles has become out of date as nowadays they prefer to buy small automobiles. On sales basis, Europe is the biggest automobile market, but is in the second place in terms of production capacity after Asia-Pacific with a share of 26.7% (Asia-Pacific 42.7%). According to the analization of the worlwide common trends it can be said that, as of 2010 a global automotive industry could be formed depending on the production of common world modules. Automobiles produced by common modules will have differentiating elements with varied models reflecting the local preferences and road systems. Automobile mills will be established in key areas where the demand is too high so that needs of on time production, plain supply and market oriented product variety could be met. As globalization rises among the mills, the unification feature of supply chain increases as well. Production centers, relating to the same company, but located in different places, have sum up the prices of materials they produce or procure from local subsidiaries on a data base so that the material can be supplied where its price is advantageous most. In the future number of companies showing activity in the automotive industry is expected to be around 6. Many mills locating in different parts of the world will be shared between those 6 companies. Therefore, at first hand, activities of purchasing and R&D will be headed under the same roof. Hereinafter as developed markets will show improvement in new models and technologies, blooming markets should proceed in increasing their capacity and producing compatible vehicles for these markets. In 2005 the worldwide production is expected to increase about 20%. As of 1999 the worlwide production is at 39.5 million level. As the life-span for the produced products gets shorter, the speed of model revision should get faster. Especially, the importance and domination of the customer will increase in developed markets. As the subsidiary industry producers start turning into module and system producers for the globalizing basic industry they will become globalized. For this reason certain large scale suppliers will be in command of the industry as it is in basic industry. Labours about motor technologies, light and recyclable new materials which may concern the steel industry will pick up speed. Apart from the traditional automobile models, there will be developments in new models like multi purpose vehicles(MPV) and light commercial vehicle market. Activities for demoting barriers -like tariffs, quotas and importing licenses restricting the free flow of automotive products- to the minimum level will gain speed. Parallel to that the aim will be to open markets reasonably, markets like South Korea and Japan closed to products from other countries. Sales over the internet is expected to increase and later these sales will be met by local distributors. Globalizing companies, besides increasing their local production, brought concepts of rich variety of products and continious renewal. As a result of rising competitiveness in global markets these concepts will gradually spread over. In consequence of this competition the expected profit from the value chain namely, the value added through the processes from raw material to final product is decreasing. The value chain in automotive industry is composed of product description, product and component designing, R&D, production, marketing/sale and service stages. As the consistent rise in costs cannot be reflected to the consumer the balance between sales price/cost is broken and profit rates drop. In order to compensate the loss of profit, companies choose to merge. The synergy followed by these merges, products deriving benefit from cost advantages are started to be produced. As long as sales and marketing over the value chain will not profitable, R&D and services will preserve their importance and will be more important in the future. This synergy has also created the World Automobile concept. Globalizing basic industry companies do not have the aim to develop related industries in every new country they visit and that explains the reason why related industrialists are forced for globalization. Producing common materials to be used in vehicles produced by different markets and delivering these materials to different markets are included among the duties of subsidiary industrialists. On this account, the burden on their shoulders is expected to go increasing day by day.