Blog: Mixed recovery in the auto biz
Dave Leggett | 10 April 2012
The auto business, and indeed business generally, hasn't looked too bad lately. Sure, there are ongoing worries over the oil price and price inflation. That has the potential to nudge global interest rates up and cause nervous investors to worry, with all the usual adverse consequences for fragile confidence and the global economy. And the sizeable financial problems in Europe have not gone away – though the lid appears to be on that one for now.
However, stock markets around the world have been rallying so far this year, investors apparently optimistic on prospects for corporate earnings. Interest rates remain very low. Many firms are making money. Emerging markets are still peppy.
In the world of autos, the US market continues to surprise and show better than expected recovery. This recovery may be off a low base compared with where the market used to be, but this 'new normal' appears to be one that many firms can turn a profit on. And some are raising their forecasts for the US light vehicle market this year amid some signs that the US economy is a little perkier than anticipated alongside stronger than expected pent-up demand for new vehicles.
And things are still looking fairly upbeat in China, especially for the premium brands.
The main negative sentiment surrounds Europe and that's nothing new. Depressed demand is coming in pretty much in line with forecasts. Even so, the underlying European economic crisis bound up in unsustainable levels of sovereign debt, austerity budgets and so on, has been out of the headlines lately. It may yet return (I read at the weekend that some banks are still sailing uncomfortably close to the edge), but there is a feeling that we may be over the worst of the risk period, some degree of stability in place.
For Europe-based OEMs and suppliers, there are considerable opportunities out there. It's about being positioned to maximise on those around the world while also addressing a tough European business environment through strategies that limit exposure and/or improve competitiveness in what may be a low-margin region for some time to come. Easy to say, I know.
I'm starting to get a small idea of the scale of things here in China, but really, I'm only scratching the surface of this vast country....
Given the startling complexity of obtaining a journalist visa for China - the code 'J2' is now indelibly stamped on my mind - it was with some surprise how swiftly I managed to sail through airport im...