Blog: Dave LeggettSouth American capacity utilisation

Dave Leggett | 9 January 2004

I received Autofacts' quarterly forecast update today - it presents some of the forecaster's numbers out to 2011. Nothing too unexpected in terms of the light vehicle demand and assembly numbers but one thing stood out. They estimate that light vehicle assembly capacity utilisation in South America in 2003 was just 45%! (The world is estimated 74% - 57 million light vehicles assembled against 77.1 million capacity.) The 45% figure for South America represents 1.9 million units assembled against 4.3 million units capacity. Astonishing. I didn't think it could be that low.

And by 2011 South America improves its capacity utilisation rate to only 62% - a projected 2.8 million units assembled against 4.5 million units' capacity. Are automakers prepared to carry that degree of overcapacity in South America over such a period or will there be capacity withdrawal - either by exit from the market or some form of manufacturer level consolidation? As the global auto demand and production centre of gravity shifts eastwards, I would put my shirt on some sort of give in South America. Maybe manufacturer cooperation along the lines of the old AutoLatina model (an old Ford and VW joint venture) will be resurrected. 


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