The Indian automotive industry is going through one of the most challenging phases in its history. With the country’s economy hitting a down curve, the automotive industry is facing its own share of roadblocks owing to numerous reasons. With India tipped as one of the most important automotive markets from a global perspective, let’s take a look at how key segments in the global auto industry fared in 2012.
Passenger cars & light commercial vehicles
For the first time, more than 80 million passenger cars and light commercial vehicles were produced globally in 2012. Compared to roughly 76 million units produced in 2011, this represents an increase of six per cent. Apart from Japan, the most significant growth drivers of vehicle production were North America and Asia. North America accounted for 16 per cent growth. With 15.3 million vehicles less than six tons produced, the pre-crisis level was achieved once again.
With almost 20 per cent, the classic passenger car segment posted a disproportionately high increase compared to the light trucks segment that rose by less than 10 per cent.
The further vehicle production growth hotspots were in Asia. After a slowdown in 2011, China posted an increase once again. Following a weak start to the year, the growth rate stabilized at seven per cent towards the end of 2012.
After a 13 per cent increase in 2011, the 10 per cent growth meant that India once again achieved double-digit production growth in 2012. Consequently, the country remains one of the global growth markets and offers enormous potential.
The other Asian markets were also able to post positive double-digit development in 2012, particularly Thailand. Here production expanded by over 50 per cent. This was essentially due to Japanese manufacturers relocating work to Thai transplants.
The European market showed subdued development as a result of the economic slump and the consequences of the debt crisis. Some manufacturers profited from increasing exports to Asia and North America. However, domestic demand was so weak, especially in the southern markets, that vehicle production shrank by eight per cent in 2012.
Vehicle manufacturers with high market shares in Southern Europe that were not part of the significant increase in export demand for premium vehicles from foreign markets were forced to drastically cut down production. Eastern Europe was able to disconnect from this negative development and achieved production growth of four per cent. The South American market recorded a decline of two per cent in 2012.
Heavy commercial vehicles
In recent years, development in the commercial vehicle industry was extremely cyclical. During the worldwide economic crisis of 2009, production slumped by 26 per cent to 2.2 million heavy commercial vehicles greater than six tons. In 2010, already the pre-crisis level had been exceeded, thanks to growth of 43 per cent to 3.1 million units. This surge in growth was followed by an year of moderate development of seven per cent to 3.4 million commercial vehicles in 2011.
In 2012, the three large markets of Europe, South America and China faced a decline. The markets in Europe were eroded over the course of the year. The countries most severely affected by the decline included Italy with almost 30 per cent, Spain with 20 per cent, and France and Germany, as well as Europe as a whole, with approximately eight per cent. The South American market had to cope with emission guidelines being tightened in Brazil.
The Euro 5 standard was introduced in 2012. This led to significant pre-emptive effects towards the end of 2011 due to the vehicle price increase. Coupled with the weak economic situation, this led to a slump in commercial vehicle production of more than 30 per cent in 2012.
China suffered from the overheated growth experienced during 2009 and 2010 amounting to almost 70 per cent. After initial corrective movement of 12 per cent in 2011, production of heavy commercial vehicles declined by 19 per cent in 2012. Nevertheless, during the year China remained the most important market worldwide. With approximately 1.1 million commercial vehicles, 35 per cent of global volume came from China.
There was excellent news from North America. Here, the dynamic growth phase continued in 2012. Production increased by 14 per cent, following a 48 per cent rise in 2011. While record values were reported, particularly in the first half of 2012, a noticeable slowdown was experienced in the final months of the year. Growth was also achieved in Japan. Following the year of the earthquake, production expanded by 13 per cent to almost three lakh commercial vehicles. Consequently, global production of heavy commercial vehicles in 2012 was nine per cent less than in the prior year.
Off-road machinery
The effects of the 2009 crisis were felt just as strongly in the construction machinery industry as in the commercial vehicle industry. Global construction machinery production fell by almost 40 per cent. Thanks to growth surges of 53 per cent and 18 per cent in the years after the crisis, the absolute pre-crisis level was achieved once again with 520,000 construction machines.
The year 2012 was characterized by a downward correction in China, the world’s largest market for construction machinery (almost half of global construction machinery produced in 2011 came from China). The decline of almost 30 per cent in this market during 2012 caused a fall in global production of 13 per cent. Production also had to be cut by three per cent in Western Europe due to the weak economic environment. The situation was similar in South America, although construction machinery production managed to at least remain at the prior year level.
The only positive news for the volume markets came from North America. Following the spurt in growth of 37 per cent in 2011, construction machinery production increased by seven per cent in 2012.
After the nine per cent decline during 2009, global agricultural machinery production recovered in 2010, thanks to 14 per cent growth. This was then followed by a further similar upward trend in 2011. Consequently, production increased to almost nine lakh tractors in the greater than 30 kW power class.
In 2012, the global development of the agricultural machinery industry was characterized by a sideways movement. The significant markets hovered around the zero line. Although the Western Europe market stagnated, North America experienced a minor growth of three per cent. With declines of two per cent respectively, development of tractor production in China and South America tended to be somewhat weaker. The other markets posted no significant changes compared to the previous year.