Blog Auto Review

Panelists agreed that there is excess capacity. Tim Manganello started off by saying that for a healthy automotive sector, (OEMs) are going to have to figure out how to restructure and close plants. Theres far too much capacity chasing far too few customers, said Rodney ONeal. Any one OE cant do well without the others doing well, and added that Europe is currently a negative environment, with growth at only 3-4%. Yet, that still is growth in a cyclical industry.

The importance of quality products and technologies was stressed by all; a manufacturer can massively restructure, but in the end, the market response is key. Browning weighed in on the importance of strong products; well managed brands is what the industry is all about. Managing brands is not a sales and marketing exercise The heartbeat of a company is the heartbeat of an engineering company. Manganello pointed out that the companies represented on the panel are all successful because of this leading technology.

A lot was said in response to the question of where they all see the most interesting opportunities for growth. In terms of products, the short answer was technology: connectivity and safety. Geographically? Asia more specifically, China. If you want to be successful today, you have to be in China. Its not an emerging market, it is emerged, stated Rodney ONeal. The tech has to be different and exciting, and an OEMs global presence must include China. Browning had a slightly broader view: The U.S. market has recovered to some degree, but going on to say this its fairly inconsistent, choppy, and not risk-free. While China, India and Brazil are growth regions, the U.S. is still a substantial part of the financial jigsaw. John Plant advised that the question is answered by the actions of the companies; there are new plants in China, India, and Mexico. About China, Manganello said the Chinese want to own technology, but their companies arent ready for prime time which is why they are so interested in distressed companies such as Saab; they can buy the name and the tech.

When the subject turned to the future of electric vehicles and alternative fuel technologies, however, some on the panel were not quite so jovial. Its accepted by the OEMs that regulations are necessary and improving fuel economy coupled with lowering emissions is a growth area largely because of these regulations. Browning diplomatically said that its been slow in terms of customer acceptance. ONeal didnt mince words and said that the marketplace has spoken and its capital carnage. Consumers are not wanting to buy a car thats a lot more expensive, said Jäger. EVs will improve over time, but it will be a gradual improvement.

To summarize there will be hard decisions to be made in Europe regarding manufacturing, and to a lesser extent, in North America, but there will be growth for savvy, well-oiled, global companies with quality products.