In China, carmakers are pushing forward their capacity expansion projects
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In China, carmakers are pushing forward their capacity expansion projects
- Despite operating ratio declining for the past five years, carmakers are pushing forward their capacity expansion projects. In particular, Chinese carmakers are planning to increase capacity by 12.2 million units to 34.93 million by 2020, of which the top three, namely BAIC, Changan and SAIC, are planning to boost capacity by 2.59 million, 1.12 million and 1.1 million units respectively. Europeans are planning to raise capacity by 4.27 million units to 9.52 million units by 2020, of which VW's capacity expansion goal is 2.4 million units. As for Japanese carmakers capacity is intended to be increased 2.07 million units to 6.24 million units by 2020, of which combined capacity expansion volume of Nissan, Toyota and Honda is 1.3 million units.
- Meanwhile, there has been rising concern about overcapacity in recent years, prompting carmakers to take countermeasures. Dongfeng Motor has postponed new capacity expansion projects since 2013 and transferred production of Dongfeng Peugeot Citroen's Peugeot 2008 to Dongfeng Motor passenger car Company in an effort to improve operating ratio of the facility. Meanwhile, Changan Automobile transferred production of the new Benni to Changan Suzuki in 2015, and production of the Eado EV is planned to be manufactured by Changan PSA.
- In the medium to long term, overcapacity is expected to worsen, making it necessary to carry out further consolidation of the automotive industry. The first sign of this trend was the acquisition of Hafei Motor's Harbin plant by Ford in March 2015 with an aim to set up Changan Ford's first factory in northeast China.
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French market Forecast for 2016 (PC+LUV)
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French market Forecast for 2016 (PC+LUV)
- 2015 year seems - at last - to herald a marked recovery of French automotive market. Indeed, in the first nine months of the year, the volume of registrations (PC + LUV) has experienced an increase of 5.4% compared to the same period in 2014. Inovev expects a 5% increase over 2015.
- Economic growth is planned to rise gradually to 1.3% in 2016 and 1.6% in 2017, as a result of lower oil prices, less fiscal contraction and cumulative effects of sustained monetary stimulus. However, declining house prices and weak business confidence are continuing to weigh on investment, and unemployment will decline only slightly.
- Consequently, Inovev expects in 2016 a slighter increase (around 2%) of the automotive market than in 2015.
- Following French new models - to be launched in 2016 and which can stimulate the market during the year- are worthy to mention: Citroën C3, Citroën C3 Picasso, Peugeot 3008, Peugeot 5008, Renault Mégane, Renault Scénic and Renault Talisman (to be launched at the end of 2015).
The introduction of the new Nissan Micra which will be produced in France (Flins) could also boost sales of the brand, even if this model is planned only for the end of 2016.
The introduction of the new Nissan Micra which will be produced in France (Flins) could also boost sales of the brand, even if this model is planned only for the end of 2016.
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German market Forecast for 2016 (PC+LUV)
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German market Forecast for 2016 (PC+LUV)
- The German automotive market (PC + LUV) is expected to reach a volume of 3.4 million units in the full year 2015, against 3.2 million the previous year, which represents an increase of nearly 6 % compared with 2014. In the first nine months of 2015, the market experienced a 5.3% increase.
- This increase is higher than expected. It highlights that Germany benefits from a large reserve of orders and favourable economic conditions.
- According to OECD, economic growth is scheduled to strengthen in 2016. It is indeed deemed that a robust labour market, low interest rates and low oil prices will sustain private consumption. Weaker demand from emerging market economies will gradually be offset by stronger exports to other euro area economies.
- For 2016, Inovev expects a 2% increase of the German market, which represents a volume of nearly 3.5 million units (PC+ LUV).
- Following new German models, to be launched in 2016 and which can stimulate the market during the year, are worthy to mention: Mercedes E-Class, Ford Fiesta, Opel Astra (launched at the end 2015), Opel Meriva, Audi A4 (launched in 2015), Audi A5, VW CC, VW Polo and VW Tiguan. Most of these models will be launched before the end of this year.
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Utilisation rate of Chinese plants are expected to surpass 70 percent in 2015
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Utilisation rate of Chinese plants are expected to surpass 70 percent in 2015
- China's automobile production capacity stood at 36.81 million units at the end of 2014 and is projected to increase by over 20 million units until 2020 to 58.24 million units, according to data compiled and processed by our partner in China.
Of which, passenger cars accounted for 25.03 million units at the end of 2014 and are expected to expand over 15 million units to 40.46 million units by 2020. As for mini vehicles, which include utility vehicles and mini trucks, capacity volume rose to 4.69 million units by the end of 2014 and is calculated to go up by 2.35 million units to 7.03 million units by 2020. In contrast, medium/large utility vehicles, which include medium/heavy trucks and medium/large buses, showed only a modest rise.
Of which, passenger cars accounted for 25.03 million units at the end of 2014 and are expected to expand over 15 million units to 40.46 million units by 2020. As for mini vehicles, which include utility vehicles and mini trucks, capacity volume rose to 4.69 million units by the end of 2014 and is calculated to go up by 2.35 million units to 7.03 million units by 2020. In contrast, medium/large utility vehicles, which include medium/heavy trucks and medium/large buses, showed only a modest rise.
- As the Chinese automotive market has gone from rapid growth to marginal increase since 2011, operating ratio of automobile manufacturing plants dropped from 85 percent as of 2010 to 64 percent by 2014 as a result of runaway production capacity expansion despite meager increase in production volume.
- While Chinese factories stood at 65percent in 2014, they are expected to surpass 70 percent in 2015 thanks to robust SUV sales. The operating ratio of European carmakers is expected to drop from 97 percent in 2014 to around 90 percent in 2015 due to dull increase in VW's production volume in 2015. Looking at Japanese automakers, negative growth of Nissan and Toyota in 2015 is likely to push down year-round operating ratio. Amid general market slowdown, operating ratio is expected to further decline if carmakers go through with their planned capacity expansion projects.
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Assessment of North and South American plants over the first 6 months of 2015
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Assessment of North and South American plants over the first 6 months of 2015
- The assessment of car production (PC + LUV) in the Americas reveals a decrease of 2% in the first half of 2015 compared to the first half of 2014. This decrease is mainly due to the falling production rates of Brazil (-17%) and Argentina (-14%), which was not offset by higher North American production rates (USA, Mexico, Canada). Canada for that matter suffered from a decrease of 11% of its production volumes, mainly because of the fall in production of the Chrysler Town & Country and Dodge Caravan minivans.
- Among the top 20 by plants (Inovev counted 85 plants still operating in the region - excluding Colombia and Venezuela), a predominance of plants located in North America can be observed (mainly in the USA and Mexico) and a strong presence of GM (3 plants), Ford (3 plants) and FCA (3 plants) groups.
- Among the highest increases in production per plant, we note the strong performance of Shreveport, (+ 600% - 77 000 units) with the start of production of the Chevrolet Colorado and GMC Canyon; of Goiana (+ 600% - 13 000 units) thanks to the start of production of Jeep in Brazil; of Araquari (+ 600% - 5 800 units) thanks to the start of production of BMW in Brazil; of Celaya (+ 575% - 78 000 units) with the start of production of Honda in Mexico; of Salamanca (+ 450% - 102 000 units) with the start of production of Mazda in Mexico and Resende (+ 305% - 21 500 units) and the start of production of Nissan in Brazil.
- Among the strongest decreases, we can observe the poor performance of Betim (Fiat) reaching 225 000 units (-37,5%) and Sao Caetano (GM) 36 000 units (-52%), two large plants located in Brazil; of Campana (Honda ) reaching 2200 units (-50%) in Argentina and Windsor in Canada reaching 77 000 units (-66%), following the collapse of the production of the Chrysler Town & Country and Dodge Caravan minivans.
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