A report published by the UK’s Society of Motor Manufacturers and Traders suggests that vehicle production in Europe will grow this year, led by higher production in Germany and an expected surge in production in Russia.
The March ‘SMMT European Production Outlook’ report says that 2010 saw total European light vehicle production volume grow by over 2m units compared to 2009 to 18.2m units. However, the report also says that ‘in view of the general economic uncertainty, we now expect slower production growth this year, to 18.8m units’.
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Report author Ian Henry of AutoAnalysis says that Germany will remain the key country underpinning European vehicle production.
“Production in Germany is expected to climb above 5.8m units in 2011 and will move on towards and should be above 6m units in 2013,” he says. “The prestige brands are performing very well, globally,” he adds. “Order intakes have been high through 2010 and there has been considerable momentum into this year with still buoyant export demand and Germany’s strong economy also continuing to improve confidence and lift the German car market higher than many people had expected.”
However, he also points out that Russia is set to become a big source of volume growth because of the announced investments there made by international OEMs.
“A lot depends on exactly how the Russian market recovery pans out,” he concedes. “But there are some aggressive plans to increase investment and output in Russia.”
Henry envisages light vehicle production in Russia by non-domestics (ie excluding the likes of AvtoVAZ but including Western and Asian makes producing vehicles in Russia) rising from 340,000 units in 2010 to 660,000 units this year.
“The expansion really gets going in 2012 when capacity expansions bear fruit,” he says. In 2012, output by the ‘non-domestics’ grows to 1.1m units and, Henry says, will be approaching 2m units by 2014.
In addition, he also says that 2011 will be the year when the Chinese vehicle companies’ collective presence in Europe ‘will really begin to be noticed’. Chery in Turkey, SAIC in the UK (on a rather more modest basis) and Great Wall in Bulgaria will be the first of many Chinese vehicle companies to take on the Europeans in their own backyard, Henry maintains.
By the end of the decade he expects around half a million Chinese vehicles will be made annually in Europe. He sees some upside risk to that forecast. “That figure could well be quite a bit higher if things go well for them in terms of their market entry strategies and subsequent execution,” he adds.
