European Car and Light Commercial Vehicle Production Outlook September 2012
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European Car and Light Commercial Vehicle Production Outlook September 2012 SMMT, the 'S' symbol and the ‘Driving the motor industry’ brandline are trademarks of SMMT Ltd Contents Introduction and analysis overviews: Individual vehicle manufacturer reviews: About this report 3 BMW 58 Key Highlights 4 Daimler 65 Economic Background 9 Fiat (incl. Chrysler) 71 Automotive Market Overview 15 Ford 78 Overcapacity & Restructuring 20 GM 83 Demand Side Perspective 26 Honda 89 UK VM Summary 29 Hyundai-Kia 91 Production Outlook Overview 33 PSA 94 Country Rankings 47 Renault-Nissan-Dacia 100 Alternative Scenarios 50 Suzuki 109 Disclaimer 56 Tata – Jaguar Land Rover 110 Toyota 114 Volkswagen (incl. Porsche) 117 Aston Martin 127 Geely Volvo 128 Mitsubishi 131 SAIC MG 131 Saab-Spyker 131 Other Chinese – Chery and Great Wall 132 EUROPEAN CAR AND LCV PRODUCTION OUTLOOK REPORT September 2012 | Page 2 About this report This is the fifth 2012 Production Outlook report from AutoAnalysis. This last report for this year will appear in November. The views and projections contained in this report are those of the author, Ian Henry of AutoAnalysis. They do not represent an official SMMT view. The projections regarding new model timings, changes in production locations and the associated production volumes shown here have been compiled on the basis of information from a variety of sources. In most cases, the vehicle companies do not provide official information on which models will be made at which plants, nor do they provide detailed information on future volumes and timings. They have been prepared on the basis of judgments made by AutoAnalysis, taking into account the information, opinion and inside from a range of industry, press and analyst sources available at the time of compiling this report. Ian Henry of AutoAnalysis will gladly address SMMT members’ specific questions on this report. Readers’ comments and questions on this report will be greatly appreciated. Please e-mail: [email protected]. EUROPEAN CAR AND LCV PRODUCTION OUTLOOK REPORT September 2012 | Page 3 the case. The Greek economy is relatively small and its problems may be Key Highlights regarded as “manageable”; of greater concern is not so much what would happen in Greece and if it has to leave the Euro, but rather the situation in Economic recovery still a long way off … Spain, or even Italy. Spanish unemployment is around 25% now and in some age groups it is as high as 50%, hardly a recipe for social harmony. Economic Following the 2008-9 economic and financial collapse, the global economy indicators in Spain are very poor indeed. began to recover in 2010 and continued to do so through the early part of 2011, albeit in a very uncertain manner in many parts of the world. However, since Some financial analysts still speak of the fundamentally unviable nature of the then it has stuttered and in Europe especially, the picture is now uncertain at Euro and many continue to regard it as simply a matter of time before the Euro best, with recession having returned in some countries (the UK included) and project collapses entirely. severe financial problems across the Eurozone in particular. The UK government’s expectations for economic recovery in the short term According to recent official figures, as reported in the Financial Times on appear to be somewhat optimistic and any growth in 2012 will be less than 1%; August 25, in Q2/2012 the UK saw a fall of 0.5% in GDP which – following the according to Capital Economics, the UK’s GDP is already 1.1% below the fall in Q1 – means that the UK is technically back in recession. The revised level it had reached at the start of the recent dip; and more significantly it is figures for the quarter were actually slightly better than the provisional figures 4.3% below the peak it was at before the 2008 collapse. In this light, it remarkable how the automotive industry has continued to invest here (of -0.7%)released a month earlier. and plan for the long term. The evident competitiveness of the Nissan plant Across the developed world, low interest rates are now the accepted norm and and the global attraction of JLR’s UK designed and built vehicles have given are expected to remain the norm for several years ahead. Conventional the UK’s automotive manufacturing sector a great deal of hope for the future. economic theory had been that a low interest rate environment would act as an encouragement to invest; however, the UK and Europe’s low interest rate The strong export orientation of UK vehicle manufacturing insulates the UK environment and the UK’s recent quantitative easing have not yet resulted in automotive industry from specifically domestic economic problems, although it renewed dynamism in the economy. The European Central Bank is thinking of is far from protected from global economic ups and downs, especially those in cutting interest rates still further, but what happens when they get to zero has Europe. One added positive aspect to the UK’s automotive manufacturing not been explained. Moreover, although the base rates are at all time lows, sector is how many of the cars produced here are only made here in the UK, the real rates of interest being paid by consumers and businesses alike are ie the UK is the global supply point for many models. Although this does not much higher than the base rate, so the validity or practical impact of cutting guarantee success, it certainly helps and does not expose UK manufacturing to the risk of relocation which affects several plants in continental Europe.. rates any further must be questioned. Across Continental Europe, Germany excepted, severe problems remain Previously, in the light of the recent round of investment in UK car unresolved. Even Germany, for all its financial strength, is feeling the pressure manufacturing capacity, we asked whether, given the economic uncertainty in of being Europe’s saviour of last resort. Political pressures within Germany are Europe as a whole, whether the automotive industry was bucking the trend in defiance of economic reality? Have other industries have accepted the building against further support for weak economies, especially Greece. economic solution too meekly or are they the realistic ones? Fortunately, the manifold and deep-rooted economic problems in Greece have not been fully resolved, but the much feared contagion effect of the Greek Put another way, can the automotive sector lead the economy out of its slough economy has not yet spread elsewhere, or any spread has certainly not been of despond and into recovery mode? The recent news that PSA and GM have as extensive or widespread as some commentators feared might have been accepted the need to restructure and cut out excess manufacturing capacity in EUROPEAN CAR AND LCV PRODUCTION OUTLOOK REPORT September 2012 | Page 4 the next few years suggests that the industry is beginning to face up to reality. in 2013 and nearly 92.5mn units in 2014. We had expected these global totals These VMs’ structural problems are being addressed, and other volume VMs, would be likely to be revised downwards (even slightly) because of the recent especially Ford, Fiat and Renault are now beginning to do the same. Ford is European slowdown, but this has not happened, largely due to the continued certainly looking seriously at the make-up of its European operations and growth in China, India and Russia, and these markets’ significant potential for changes to its manufacturing footprint seem inevitable. further production growth – this highlights the need for suppliers to increase their focus on emerging markets, both from an engineering and By contrast, there are several VMs, especially the Koreans, the VW group, the development point of view, but also ultimately in terms of production German premium brands, JLR and indeed some of the Japanese, for whom locations. the current economic uncertainty is less problematic than the traditional European volume brands. There are always going to be winners and losers – German and UK premium brands and Hyundai-Kia pushed what the current situation suggests is that the losers are going to be the European production to 19.2mn in 2011 traditional volume brands whose recent and likely future restructuring may only serve to delay their demise. High demand for German vehicles and – in H1/2011 at least – the success of the French VMs in mid-sized MPVs and LCVs, boosted European production In the last recession, there was extensive government support for the industry, in 2011. For the VMs and models covered in this report, European production especially in France and Germany; now, we think such government help for for 2011 was just under 19.3mn units. H2 saw better than expected production the industry is unlikely to be available – European governments are all volumes from the German VMs, and JLR and Mini here in the UK. financially stretched to put it mildly, so what the French government can actually do in the light of PSA’s announcements that it will close Aulnay and Including Russia, Europe will be down very slightly this year, at just under institute cutbacks elsewhere is open to debate. Its formal response to the PSA 19.2mn units according to our base forecast. However, taking Russia out of closure and cutback plans are due in September, having been delayed from the equation, Europe will fall from c18.4mn to 17.9mn units – and as we July. We wait with interest to see what they contain. explain later in this report, there are a number of reasonable scenarios in which this fall could be even greater and longer lasting.