• International trade rules emerge as major new industry concern
  • Survey respondents upbeat on their company's prospects
  • More supplier consolidation and M&A expected in 2017
  • Connectivity tech tops hot tech list
  • China and India top list for car market growth prospects in 2017
  • Bosch tops supplier rankings on 2017 performance prospects
  • BMW tops OEM Group rankings on 2017 performance prospects
just-autos survey points to an industry that is positive and evolving, though subject to some uncertainties

just-auto's survey points to an industry that is positive and evolving, though subject to some uncertainties

Although the global auto industry is taking a positive view of prospects for 2017, trade worries have emerged as a significant new concern in this year's annual just-auto annual confidence survey.

Remarks by survey respondents suggest the source of rising trade concerns is mainly two-fold: (1) Uncertainties regarding international trade policies that will be implemented by the incoming Trump administration in the US and possible responses from other countries; and (2) ongoing uncertainty over future trade arrangements between the UK and EU after the UK's 2019 exit from the trade bloc.

However, respondents gave an upbeat assessment of their own company's prospects.

The survey - conducted at the end of 2016 - asks just-auto's global audience for their views on company prospects, industry challenges and market prospects in the year ahead.

When asked about business prospects for their company in 2017, some 72.6% said they viewed the outlook positively in terms of prospects for new orders and business (25.1% were 'very positive' with 47.5% 'quite positive').

When asked about the risks for the year ahead, risk of recession and also the risk associated with uncertainties related to international trade rules were cited - by a considerable margin (way ahead of raw material prices, oil prices or industrial relations) as by far the two biggest industry concerns, with the trade worries slightly edging recession as the biggest risk for the year ahead.

Uncertainties in relation to costs of international trade are particularly significant in an industry such as automotive with its large - in volume and value terms - international flows of parts and vehicles. Those uncertainties can be expected to impact investment decisions ahead of any changes to tariffs or non-tariff trade costs.

In his campaign for office, US president Donald Trump suggested that the US should apply 35% tariffs to car imports from low-cost Mexico, that new import tariffs should apply to Chinese goods and criticised international free trade deals that he believes have disadvantaged the US.

Survey participants were asked how concerned they are about the possibility of a changed US government position on international trade agreements (such as NAFTA) or other protectionist measures that have been proposed by the US president-elect. The responses were in the form of a rating on scale of 1-10 (1=not concerned and 10=extremely worried). The mean from the results was 5.9. There is perhaps a degree of reassurance that the average was no higher than that.

More supplier consolidation

Survey respondents also expect that the auto industry will see further corporate restructuring. Some 90% expect to see even more supplier industry consolidation in 2017, with the majority expecting most of that activity to be further down the supply chain, rather than mega deals.

The German-based suppliers - Bosch, Continental - topped the rankings of suppliers in response to the question asking respondents to tick those that they believe will be the most successful in 2017. Magna also received a notably strong good score, as did ZF TRW, the new company that is now emerging from one of the supplier sectors mega-deals.

Which supplier companies do you think will be most successful in 2017?
Bosch74.8%
Continental50.9%
Magna International47.2%
ZF TRW44.0%
Denso35.8%
BorgWarner30.2%
BASF28.9%
Delphi25.8%
Valeo21.4%
Visteon21.4%
Lear Corp.20.8%
Faurecia20.1%
ThyssenKrupp18.2%
Mahle17.6%
Hyundai Mobis16.4%
Sumitomo Electric Industries16.4%
Yazaki13.2%
Gestamp11.9%
Aisin Seiki10.1%
Adient4.4%

Emerging technologies and innovation

When asked what area of automotive innovation do you think will be of greatest importance to the consumer in 2017, connected vehicle technologies, greater fuel efficiency and drive assistance systems (DAS) were ticked most frequently - connected vehicle technologies on top.

The timeline for autonomous drive is an uncertain one and further complicated by what we mean by the term itself. We asked: When do you think vehicles with a 'high degree of autonomous operation' will be available in significant numbers on the market? A large number of respondents were grouped around 2025 with a significant number opting for 2030.

When do you think vehicles with a high degree of autonomous operation will be available in significant numbers on the market?

Answer optionsResponse (%)
Before 20205.1%
Around 202016.5%
Nearer 202547.7%
Around 203023.3%
After 20307.4%

Prospects for major car markets

Survey respondents were asked about prospects for a number of national car markets in 2017, in terms of bands of decline or growth. Demand prospects look strongest in emerging markets such as China, India (especially upbeat with 14% anticipating growth of over 10%) and the ASEAN region. The prognosis for the US is relatively flat or low growth/contraction, hardly surprising given the widespread assessment that it was close to peak in 2016. The view on major European markets looks fairly subdued in terms of growth, but with Germany's car market standing out as having upside potential this year (10% of respondents expecting growth of 5-10% growth on top of 31% expecting market growth of up to 5%).

On the evidence of our survey, any market rebound in Russia will be a weak one.

What do you think will happen to these major car markets in 2017?

MarketDown by over 10%Down 5-10%Flat to down 5%Broadly flatFlat to +5%Up 5-10%Up over 10%Sum
US3819273373100
Japan1919481760100
Germany13173731101100
UK6930212662100
France2633342050100
Italy21630301291100
Spain31129262272100
China12711323512100
India22311383014100
Russia71220292174100
Brazil52024281373100
ASEAN region24112341163100
Australia2414561941100
South Africa2713422682100

OEM winners and losers

We asked survey participants for views on how OEM groups will 'perform' in 2017: better than average, average, or worse than average. It's a very simple poll (we're not getting in to defining performance metrics or what 'perform' means) and we're able to convert the results into an index to get a take on the relativities. It's always interesting to see how 'crowd sourcing' works in an exercise like this - but I would stress its simplicity. These are very rough perceptions, but the aggregated data says something. BMW is on top and AvtoVAZ is at the bottom of the list. Maybe that's not too surprising. The Chinese OEMs don't rate too well. Also notable is the relatively high rating for Tata Motors (well, there is the JLR boost there) and Volkswagen's slip (in previous years it has been near the top).  Ford and Hyundai-Kia are also riding high. And Toyota at number two? Hey, it's Toyota and that is a company that, like leader BMW, that rates well as a consistently strong performer - whether judged on volumes, profitability, innovative behaviours or simply a demonstrative tendency to adapt to ever-changing market conditions.

How well do you think each of these major groups will fare in 2017?

AnswersIndex values
BMW1.000
TOYOTA0.957
FORD0.939
HYUNDAI-KIA0.934
DAIMLER0.925
GM0.911
HONDA0.870
NISSAN0.853
TATA MOTORS0.772
VOLKSWAGEN0.735
MAZDA0.732
RENAULT0.697
GEELY0.695
PSA PEUGEOT CITROEN0.689
SAIC0.622
FCA0.591
BYD0.571
CHERY0.568
MITSUBISHI0.562
GREAT WALL0.545
DONGFENG0.545
FAW0.507
AVTOVAZ0.378