Automotive Industry Growth, Product Cadence Highlight Opportunities through 2025, According to IHS Automotive



The accelerated velocity of the global automotive industry is expected to continue in the near term and portfolio expansion into new body styles is driving higher volume per platform as well, according to IHS Automotive, a leading global source of critical information and insight to the global automotive industry.

As a result, the speed of change requires the supply base – as they plan for the road ahead– to be nimble, adaptive to change and strategic about logistics decisions such as facility locations, transportation methods and costs. Technology implementation decisions are also taking place based on legislative agendas driving decisions, and suppliers determining which OEMs to engage with while keeping pace with fast-changing technology developments.

“Suppliers are navigating these changes based on decisions made more swiftly than ever before,” said Michael Robinet, managing director, IHS Automotive, during a presentation before an audience of automotive executives today at the 2014 Management Briefing Seminars.

Global Platform Strategy Paying Off, Technology Opportunities Prevail

The global platform phenomenon is legitimate and the largest OEMs are implementing strategies to expand their business – both geographically and within their portfolio, according to Robinet.

Through 2025, OEMs and suppliers alike — at all levels of the supply chain — will be working to align global platforms with global capacity, manufacturing and technology implementation and manage new logistics challenges efficiently to match the needs of the industry.

OEMs are no longer launching vehicles by region; they’re often launching the same vehicle at several facilities around the world – within a tightening timeframe. In addition, the integration of global platforms into North America, China and South America increases the cycle velocity.

In addition, OEMs and suppliers also are working to implement increasingly complex vehicle and process technology for advanced safety, lighter weight materials, emissions reduction and fuel economy targets in tandem with a global convergence of emissions standards that will further enable the efficiency of global platforms.

The North American market is returning to stability, with record sales reports continuing among most automakers. Together with increased consumer confidence, a return to a more normal economic environment and some great OEM products in the overall lineup, it’s an exciting time again for the automotive industry — in North America and globally, Robinet said. IHS Automotive expects 21 new program launches in 2015, scaling to a near-record 37 in 2018, based on current plans. Suppliers are now preparing for this from a skills and capacity perspective and may see some challenges.

Shift Creates New Center of Industry in North America

An interesting development that’s been transpiring since 2000 is the influx of automotive production and capacity in the Midwest and southeast U.S., as well as Mexico – which creates some challenges for suppliers and their logistics processes. A number of OEMs have recently expanded or announced plans for new facilities in the southeast, as well as Mexico. This is prompting suppliers to re-think their strategy and identify opportunities to create the most value for OEMs, while keeping costs in check and supply disruptions to a minimum.

“Our analysis indicates that the center of North American automotive manufacturing has shifted about 14 miles to the south each year since 2000, and we expect that to continue through 2026,” Robinet said. (see attached IHS Automotive diagram for detail).

This geographical shift creates significant opportunities for suppliers to address the challenges laid out for logistics and manufacturing, given OEM preference and requirements to locate within a few hours’ (and sometimes one hour) driving distance from their final assembly facilities. Suppliers and OEMs are evaluating their logistics channels to help address the shift, at the same time they are working to maintain an uptick in production levels across most platforms.

”A swiftly changing industry, combined with a need for reduced logistics costs, is also driving the establishment of new and expanded supplier production facilities in strategic locations,” Robinet said.

Global Growth and Outlook through 2021

The strong recovery of the industry brings a new energy to the global market. According to current IHS Automotive forecasts, new light vehicle production in 2014 is on track to reach 17 million units in North America, and 87.7 million units globally. By 2021, production is expected to reach 106.3 million globally and 18.5 million in North America, respectively.


About IHS Automotive (www.ihs.com/automotive)

IHS Automotive, part of IHS Inc. (NYSE: IHS), offers clients the most comprehensive content and deepest expertise and insight on the automotive industry available anywhere in the world today. With last year’s addition of Polk, IHS Automotive now provides expertise and predictive insight across the entire automotive value chain from product inception—across design and production—to the sales and marketing efforts used to maximize potential in the marketplace. No other source provides a more complete picture of the global automotive industry. IHS is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs more than 8,000 people in 31 countries around the world.

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