Thursday, October 09, 2014

Global production should grow 4% in 2014 and 2015

Global automotive production should grow about 4 percent this year and in 2015, with increased sales in China and the USA, but with fall in Europe and in the emerging as Brazil and Russia. The projection of the Euler Hermes, the greater world credit insurance group, is accompanied with an interest in the markets by indications that the automotive industry can have on the economy of each country.
It is expected that production exceeds 100 million vehicles until 2017. The production began to migrate to emerging with large population and good growth, as illustrated by the expansion between 2007 and 2013: high of 149% in China, 72% in India, 26% in Brazil, and decline in industrialized countries with 49% contraction in Italy and 42% in France.
While European automakers continue to suffer with very weak profitability in China happens otherwise, i.e. excessive profitability. China, the world biggest market today, should reach 20 million units sold this year, accounting for 27% of global sales.
About 62% of automakers in China are European or American. For Volkswagen, the country represents 30% of sales and almost 50% of earnings. The question is how long it will be possible to maintain such high prices in the Chinese market. Audi, Jaguar and Land Rover have begun to revise their pricing strategies in China, in reaction to the investigation initiated by the Government.
The u.s. market represents 23% of the overall sales of cars, with 16.5 million units. He continues to be very profitable, dominated by big pickups and SUVs.
Examining the potential of the markets, the Euler Hermes notes that the United States and the United Kingdom of reindustrialisation has been confirmed by the return of automotive production, even if partially.
Europe represents more than 17% of worldwide sales, with 12.9 million units. Despite the recovery that began this year, sales in 2015 should continue 15% below the volume before the crisis started in 2007. Europe is one of the most complicated markets by excess capacity, which leads to a very low or negative profitability.
Despite the closure of factories by Ford, Opel and PSA, the excess capacity in Europe is almost 6 million units. The Germany, France and Spain struggle to save the sector, for its political symbolism. The conclusion is that the European automotive industry still has a long way to go in its industrial revolution.
The eldorado expected emerging us automakers has been affected by the slowdown in major markets. For 2014, the projection of Euler Hermes is 10% drop in the registry of new cars in Brazil, with resumption of 3% in 2015. Sales may reach 2.5 million units this year, amid the fall in profitability of automakers.
In Argentina, is expected a contraction of 30% in the automotive market. The collapse comes in the wake of the devaluation of the currency, the 18% tax increase and also of the difficulties of the country in exporting cars to its largest market, Brazil.
In Russia, the market remains chaotic and reaches investments locally. The projection is 14% drop in sales this year and a slight recovery in 2015, with 2.5 million units. The India gradually starts to come out of darkness and sales reach 1.8 million cars this year, for a population of 1.8 billion people. The high is of 2.5% in the year.
For Euler Hermes, the big winners in 2015 will be manufacturers of components, which reallocated factories to cheaper locations, and have operating margin of 7.5% on average.
Valor Economico
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