It has been another busy year for us on just-auto. We have covered the global automotive industry news, brought you interviews with key people, analysis and comment of what matters. Editor Dave Leggett reviews some of the main events, the highs and lows, the stand-outs and offers just a hint of what might be in store for 2014.
I am, as they say, no spring chicken. Or, expressed in more positive terms, I bring plenty of automotive industry experience to the table. As we tick off another year, there’s always that feeling of, how are we doing, really? Is the world/industry in a good place? How does where we are now compare with where we were ten, twenty, thirty years ago? I wouldn’t want to be glib and there are never easy answers to such questions, but I’ll offer a gut feel on the big picture before looking (further below) in more detail at the markets, companies, products, technologies and people that caught my eye in 2013.
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Let me be bold: the year 2013 was a relatively good year. Global vehicle demand and output was up again, to a new record. Many companies made decent profits. If they can do that in 2013’s mixed markets (Europe the biggest drag for many), imagine how things could look in three or four years’ time when demand in the poor performing places is building again…
I am also more optimistic than ever about the products coming out of this industry.
Firstly though, the global economy: could be better, could be worse. We are still recovering from the most serious global recession since the 1930s; a financial mess of immense magnitude spilled into the real economy, just as we saw in the 1930s. The politicians and technocrats are still dealing with it. It’s an uneven recovery but a recovery nonetheless since the dark days of banks collapsing, emergency bailouts and the auto industry in North America and Europe grinding to a near halt in late 2008/early 2009. Is the global economy stable and fixed, all that toxic debt, the reckless behaviour of some investment banks, the unsustainable credit booms, all that nasty stuff…really all behind us? Some of it, certainly, yes. Quantitative easing by the Fed in the US has been very successful in helping the US economy (though that is far from fully ‘fixed’). The European Central Bank has calmed the sovereign debt cauldron that threatened to boil over in bond markets. But significant fallout remains, most notably in Europe where financial instability and economic downturn weighed in on top of structural weaknesses and imbalances that were exposed in the grand plan for economic and monetary integration in Europe. It’s effectively been parked for now, but some serious political decisions lay ahead for the diverse economies that comprise the EU. A return to faster economic growth would help.
Companies in the automotive industry have had to work hard to cope with the large volume swings that we have seen in major markets in recent years. Even companies heavily reliant on Europe have show an admirable ability to rebalance their activities globally in order to survive. Manufacturing footprints have been adjusted with notable nimbleness, OEMs and suppliers. In this the industry has been helped by the fact that the so-called ’emerging markets’ (some well and truly emerged by now) have continued to grow. We are all, perhaps, a little bit indebted to the authorities in China for making sure that domestic demand there has stayed strong. The world’s largest car market stands out, of course. But growth has been pretty good elsewhere, too, in places like Indonesia, South Africa (notwithstanding hiccups noted below) and Turkey. Myanmar is now a place generating interest. If Brazil, India and Russia have cooled for now, you can still bet on them for the long-term as per capita car ownership grows. Sub-Saharan Africa? I’m being asked more and more about that. Watch that space, for sure, but don’t expect too much too soon.
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By GlobalDataTechnological progress is another area where the automotive industry is excelling and major Tier 1 suppliers deserve some credit here. There is a sense that we are on the cusp of a technological wave that could fundamentally change the driving experience for all. Advanced Driver Assistance Systems (ADAS) are being increasingly rolled out and are cascading down the market segments. Traffic jam assist, adaptive cruise control, park assist, collision avoidance, lane departure warning, blind spot detection to name some, and then there’s the whole connectivity thing, not to mention the move towards Intelligent Transport Systems (ITS) with constant V2V and V2X communications aiding traffic flow and fleet efficiency (for lower CO2 as well as mpg). Expect future (and especially urban) mobility to stay at the top of the agenda. Oh, and the concept of the driverless ‘autonomous vehicle’ will continue to spark much debate.
It’s not just the whiz-bang stuff though. Automobiles are becoming cheaper to make. More body variants and niche models can be spun off an engineering architecture than ever before. Just ask Audi. Internal Combustion Engines are becoming increasingly efficient and Tesla’s Model S shows that electric cars that really are desirable as well as practical are reality.
Concerns over the environmental impact of this industry will remain, but the automotive industry is doing much to clean up its act and makes its products safer and still in tune with what consumers – and aspirant prospective consumers – want. If you find yourself caught in an epic traffic jam in Jakarta, just remember that the car remains at the very heart of what people with rising incomes across the world want. As soon as they can afford it, people want to drive cars and they want the lifestyle that comes with car ownership. And who can say that when they have a car, there is not another car that they dream of owning. I know I can’t. And that’s another point that is provoking more discussion, ownership. Expect the way that we consume vehicles to continue to change, at the margin at least. Car sharing will continue to become more significant, especially in urban areas and especially among younger people. Young urbanites in the West have been moving away from traditional models of car ownership. It won’t change dramatically overnight, but expect to see new business models exploiting particular market needs.
As we go into 2014 with stock markets hitting new records, interest rates continuing at historical lows, Europe’s car market where it was twenty years ago and China’s heading above 20m a year, this period is very different from ten or twenty years ago. Global recessions seem to come around every ten years or so, but the causes and remedies differ each time. The financial crisis that caused this one was felt much harder in Western Europe and North America than in East Asia. Fortunately, the global auto industry pie continued to grow, courtesy of China. The automotive industry has duly flexed to changing market conditions and there is much to be optimistic about, even if a return to the carefree credit conditions of the mid-noughties is definitely not on the cards. A gradual recovery remains in prospect for the developed world. Europe’s economy is inching to stability, but it will be a long haul. Maybe that’s not an altogether bad thing (we don’t want a repeat of 2008) so long as breaking point in the economies of southern Europe can be avoided.
There is indeed a lot that is good and positive about the automotive industry. Are there economic worries – and some political ones (CO2 emission targets, free trade agreements) – in the background? Yes, but whenever was that not the case? The automotive industry manages to keep calm and carry on. Motor vehicles are the lifeblood of the economy, in terms of the transportation of goods and people as well as for their economic significance and the manufacturing employment they generate. That’s a constant that shows no sign of changing.
Okay, let’s take a quick look back at the year that was 2013. I’ll try and keep this short…
The global car market kept on growing
The global automotive pie just keeps on growing. Estimates vary, but it looks like this year’s total light vehicle market will be in the region of 84m units and 4% or so up on the previous year. The main drivers are still strong China (up 10% this year at over 21m units) and another year of solid recovery in the United States, which is going to finish the year not too far off 16m units.
ANALYSIS: World light vehicle market set for new record in 2013
Tier 1 suppliers had a good year
It was a good year for major Tier 1 suppliers, in general, but especially those well-placed with in-demand technologies. The US-based Tier 1s continued to benefit from higher production schedules in North America, but the big German suppliers also had another good year. Even the likes of Faurecia, inevitably under pressure on European operations, managed to major on their activity outside of Europe.
GERMANY: ZF performance outstrips industry average
US: Visteon unveils third quarter net income up US$28m to US$43m
GERMANY: Continental posts nine-month net income up 8.5% to EUR1.6bn
The BRICs cooled, but Brazil attracted more investment
While China was hot in 2013, other BRICs were anything but. India’s economy and vehicle market was hit by adverse international capital flows that torpedoed its currency. It became a difficult market in 2013, many OEMs having to raise car prices at a time when demand was far from robust.
Brazil and Russia were also weak markets in 2013. All the BRICs have good long-term demand prospects though and Brazil, in particular, attracted more investment. Jaguar Land Rover announced a plant and BMW also said it would make three models there.
BRAZIL: Tata Jaguar Land Rover announces plant for Brazil
BRAZIL: BMW to make 3 Series, X3 and Mini Countryman in Brazil
Western Europe’s car market tanked
It was another tough year in Europe’s car market, which contracted again by around 3%. The year-on-year position turned positive in the second half. If that trend continues, we could be looking at a 2014 market up 2-3% on 2013, actually comparable with 2012. The macroeconomic background remains pretty unfavourable with low GDP growth in the eurozone, unemployment still high, austerity budgets in place…even if the ‘eurozone collapse and break-up’ scenarios of a few years ago seem to have faded into the background due to effective actions taken by the ECB in bond markets and Brussels politics has entered a quiet phase (structural issues still looming for the long-term, but politicians more interested in quick fixes and avoiding crisis for now). There are however still risks that the political situation could precipitate crisis, especially in southern Europe states which are bearing the brunt of the economic crisis and remain subject to sovereign bailouts. There is still plenty of debt around, banks not lending ‘normally’, consumers and households generally wary.
BELGIUM: EU car sales up for third consecutive month
The UK defied European gravity
The UK car market and industry continued to defy gravity in 2013, turning in respectable growth at a time when other national markets in Europe struggled. The UK’s economy fared relatively well, but a lot of the explanation for a strong market could be put down to windfall household income gains (mis-sold Payment Protection Insurance – PPI), interest rates near zero (not much point in saving) and the actions of manufacturers to create attractive personal contract purchase (PCP) packages with low monthly repayments.
UK: Peugeot UK MD upbeat on market prospects
INTERVIEW: Mark Ovenden, Ford of Britain Chairman and MD
UK: Car output approaches 1.5m this year
UK: Car industry set to flourish in 2014, says KPMG
Italy, however did not
Problems in Europe were typified by the travails of the Italian car market and industry. Italy’s car market can fall from 2.2m units in a ‘normal’ year to 1.3m. There was a lot of fizz in some car markets before the 2009 crash; Spain’s car market was up to 1.5m at its peak and is now nearer 700,000 units a year. Spain’s economy was pumped up by a construction boom that is well and truly over and someone in Spain recently told me that Spain’s car market ‘may never get back to past peaks’. Regarding Italy, we ran an interesting colour piece from someone who has recently gone there to live.
COMMENT: Italy – the present is another country
Carlos Ghosn neatly summarised how he views the situation in Europe when I sat down with him in February. He was bang on with his assessment of Europe’s market in 2013.
INTERVIEW: Carlos Ghosn, CEO Renault
Industrial action disrupted South Africa
2013 will always be noted as the year South Africa lost its first post-Apartheid leader, the incomparable Nelson Mandela. The country faces many challenges for the future, not least in the running of its economy and industry. The autos sector has been a bright spot, but 2013 was a rather rocky year with industrial action causing havoc.
Industrial strife in South Africa
Interest picked up in Myanmar, yes, Myanmar I say!
There was more evidence of OEMs leaving no stone unturned in the quest for future growth markets as interest in Myanmar zipped along in 2013. Myanmar (Burma) is one of those places that was off the radar while a brutal military regime effectively kept it closed. It’s now opening up. North Korea next? After what we’ve seen lately, that looks like a very difficult place to read. Don’t hold your breath.
MYANMAR: Nissan and Tan Chong to assemble in Myanmar
INTERVIEW: Nissan CEO Carlos Ghosn on Myanmar
2013 was a good year for Detroit
Okay, it wasn’t exactly a good year for the municipality of Detroit itself (it went bust), but the Detroit 3 of Ford, General Motors and Chrysler had another good year based on favourable market geography (US and China growth, especially). General Motors could finally rid itself of the Government Motors tag and it was largely business as usual for One Ford.
Chrysler was even helping struggling partner Fiat with its bottom line. Fiat and Chrysler CEO Sergio Marchionne made it clear that he wanted Fiat to buy the UAW-controlled VEBA healthcare trust’s remaining stake in Chrysler and consolidate the Fiat-Chrysler alliance. The UAW, though, wasn’t playing ball as the two sides argued over the valuation of the stake. To Marchionne’s chagrin, the VEBA exercised an option to trigger an IPO. Bluff and counter bluff seemed to be the order of the day in the final weeks of 2013. Expect this issue to rear its head early in 2014.
US: ‘Government Motors’ saved 1.2m jobs claims study
US: Ford expects a record 2013, “solid” 2014 despite profit slip
ITALY: Fiat rules out Chrysler IPO this year
Problems in Europe were acute for some
When it comes to announcing financial losses, headline numbers don’t get much worse than what PSA Peugeot Citroen announced for 2012. A loss of EUR5bn is a lot of money whichever way you look at it. A capital injection from Chinese partner Dongfeng and the French government was much talked about, though nothing was agreed. Meanwhile, the alliance between PSA and General Motors appeared to stall.
US: GM sells entire stake in PSA Peugeot Citroen
General Motors also decided to effectively withdraw the Chevrolet brand from Europe. Creating Chevrolet as a global value brand from the ashes of bankrupt Daewoo was a good idea and it will carry on doing well in places such as Russia. However, Europe’s collapsed market could not justify Opel and Chevrolet. Opel is now free to occupy Chevrolet’s space and go downmarket…oh, that’s not supposed to be how it will work?…hmm.
FRANCE: PSA reports €5bn loss for 2012 on write-downs and Europe woes
General Motors rethinks Chevrolet in Europe
Weaker yen boosts Japanese OEMs: bottom lines bloomed
‘Abenomics’ has come to the rescue of the Japanese economy which is growing again. A big change has come with a major weakening of the yen. After many years of an overvalued currency, Japanese companies felt the benefit of a weak currency as they earned more from repatriated revenues on extensive overseas operations. Higher volumes in North America helped, too, as Japanese OEM bottom lines bloomed in 2013. And – after a rough period late 2012 – things got a little better in China, also.
JAPAN: Toyota boosts H1 profits as unit sales slide
JAPAN: MMC profits outlook lifted by weaker yen
Qoros broke cover
The Chinese-based premium brand created by a JV that includes Chery came onto the radar, showing its launch car at Geneva. The strategy employed is certainly an interesting one. Only a fool would dismiss Qoros. Watch out for dodgy puns using that Qoros name though.
Nissan said it would make Micra in Europe
This was a surprise. On the other hand, Renault has some of the lowest capacity utilisation rates going at its French manufacturing sites. This is a way to massage some of that…
FRANCE: Renault to build next generation Nissan Micra
Go Datsun
Nissan’s low-cost brand, reprised Datsun, was launched in India. First model is called ‘Go’. Great name for a car.
Electric car start-ups struggled in 2013
Many in the industry believe that the electrified car is well and truly coming, in all permutations (plug-in hybrids, range extenders, as well as pure battery electric – and eventually fuel-cell powered). It’s hard to argue with that. But right now, battery performance limitations are among the factors making life very difficult in the marketplace for EVs. Tesla may have notched up its first profit in 2013, but it has been around a while now. If Tesla looks relatively healthy (though it, too, faces challenges with its Model S), the same cannot be said for Fisker and Coda, both of whom went into bankruptcy in 2013.
US: Coda bankruptcy filing raises uncomfortable questions
US: Tesla posts first ever quarterly profit
US: Detroit Electric plans pushed back
US: Fisker sale could be fast-tracked – report
Good year for the European premium brands
2013 was a great year for the European premiums. I could have said German premiums (BMW, Mercedes-Benz, Audi) but it seems sensible to include Jaguar Land Rover. Tata’s JLR has been on a charge. All the premiums have been helped by stronger sales in North America and China in particular. However, sales have been pretty buoyant elsewhere in the world, too.
GERMANY: Audi gives Q1 SUV green light
GERMANY: BMW Group eyes record sales year
Anti-corruption campaign in China
There was much talk of the effects of an anti-corruption drive in China and how that could be impacting demand for high-end luxury goods. The new generation in charge in Beijing were said to take a dim view of some of the consumption excesses of recent years. Soundings suggested that the impact on the automotive sector has been mixed and not as serious as initially feared.
CHINA: Anti-corruption campaign hitting premium brands – analyst
UK: Tata Jaguar Land Rover CEO hails company transformation to ‘global business’
BMW sets out sustainability vision with the i3
BMW’s i3 electric vehicle was launched in 2013. It makes a big and laudable statement about sustainability and future mobility in big cities. By all accounts it’s also very well executed (I haven’t had the opportunity to drive it yet). It also says something about the corporate strength of BMW.
UK/US/CHINA: BMW unveils production model i3; ‘profitable from Day 1’
UK: BMW says i3 electric car has 10,000 strong order bank
Electrification helps the ICE
I liked this unusual take on EVs from Carlos Ghosn. It goes like this. They make the car more acceptable at a global level (reducing pressures at pinch points like congested cities) and also help to reduce overall demand for oil. In fact, they can actually help car companies sell more ICE-powered cars.
PORTUGAL: Electrification helps the internal combustion engine – Renault’s Ghosn
It’s a long game for Renault…
FRANCE: Renault ready to play the long game over EV sales
Arcane row of the year: r1234yf
The air-con refrigerant row that rumbled through 2013 was a curious one. There was claim and counter claim from the proponents of a new refrigerant that was supposedly kinder on CO2 grounds, but opposed by others on safety grounds. And trade was impacted. Bizarre.
Takata airbags recall
Recalls weren’t in the news as much in 2013 as they were in some previous years. Well, either that or it’s a case of there being so many nowadays that they aren’t as newsworthy. There is certainly a sense that manufacturers are perhaps more likely to do a full recall than was once the case. We did, however, see a big recall from Takata on airbags that proved costly for the firm.
JAPAN: Takata to book extraordinary loss on airbag recall
Autonomous when?
There was more talk in 2013 of autonomous vehicles. Carlos Ghosn said that Nissan would have autonomous cars on the market by 2020. That statement set others off making similar claims. Volvo, meanwhile, said that it is planning a field trial of vehicles with a high degree of autonomous control. The discussion developed so that ‘high degree’ of driverless control became an important nuance in an industry conversation that is sure to continue in 2014.
US: Nissan targets autonomous drive to market by 2020
SWEDEN: Volvo Car announces pilot project for autonomous cars on public roads
COMMENT: How is the car evolving?
Future mobility?
Another industry conversation set to get bigger is that concerning future mobility. Living with the car in the megacities of the future is going to be a challenge. This subject embraces environmental sustainability, vehicle/personal connectivity and advanced driver assistance systems (that lead to autonomous vehicles) so it will stay at the top of long-term strategy agendas for forward-looking companies.
ANALYSIS: New urban mobility trends ‘accelerating’
UK: Future of car retailing is ‘bricks and clicks’
Some sad milestones…
Aulnay…
FRANCE: ‘Emotional’ day as last car leaves PSA’s Aulnay factory
The last VW Kombi (AKA Camper van) rolled off the line in Brazil. But not before a final flourish…
BRAZIL: Long-running VW gets a commemorative edition
Notable people moves (or ‘not moves’)
Mary Barra’s appointment to the top job at General Motors was a biggie. It came when Dan Akerson decided to go for personal reasons (best wishes to him). Mary Barra is the first woman to be appointed to the top job at General Motors. Ten points if you can name another at an OEM…
US: General Motors names Mary Barra as first female global automaker CEO
At cross-town rival Ford, the speculation in the media has been that CEO Alan Mulally could be on the move to Microsoft. Investors have been spooked and the story hasn’t gone away.
US: Ford board to press Mulally on departure decision
The management move of 2013 was probably the curious case of Carlos Tavares. He worked as COO at Renault under Carlos Ghosn. Widely reported remarks in the summer suggested that he was a bit frustrated at Renault and fancied a top job elsewhere. Unsurprisingly, in no time at all he was out of the Renault exit door. Theories abounded. Where would he wash up next? The answer in a matter of just a few months: top job at PSA. The year seemed to turn out okay for him…as a certain entertainer with a ukelele would once have said: turned out nice again!
That’s a flavour of a year that was, as ever, full and very busy for us. Thanks for reading.
Best wishes,
Dave Leggett
Editor, just-auto
