Global Industry Outlook 2011 - Automotive

By M. Isi Eromosele

2011 will be a demanding, yet thrilling year for the global automotive industry. With restructuring plans in place or well under way among global auto companies, many auto makers are ready to become more competitive. In the United States, the auto market remains very competitive for all automakers. As part of the after effect of the recent global recession, the U.S. auto market will experience slow recovery growth for the next three to five years. As such, it is imperative that auto makers turn their sight to the growing global emerging markets for new market growth as well as increased revenue. The industry has experienced terrific growth in emerging markets in Asia, Latin America and Africa. The tremendous potential in these emerging markets will mitigate what is expected to be flat-to-slow growth in the developed economies of the U.S. and the European Union.

Within 2011, the auto industry will see continued restructuring as both manufacturers and their suppliers reassess their respective market positions and look to shed non-core products and peripheral assets. It is expected that industry leaders will look to make strategic acquisitions to enhance their competitive global and regional market positions as well as bolster their product lines. Private equity ownership may continue to play a major role in the industry’s alteration. Look for carefully selected U.S. investment by both major and niche market car producers, looking to increase their manufacturing capabilities.

Other trends that could shape the global auto industry in 2011 include:

Global car manufacturers will look to make strategic alliances, which would primarily be centered on technology and innovation. There will be an increase in alliances and partnerships, rather than outright acquisitions. For example, Spyker, the Dutch niche auto manufacturer that bought the Saab auto brand in 2010 is looking to strike a deal with the much larger BMW that will see it benefit from BMW’s vaunted engine technology. Spyker is looking to more than double Saab car production to 140,000 units a year. Collaboration between manufacturers as well as with suppliers will become more common as the dynamism in the industry increases.

In a highly competitive auto industry, it is very challenging to maintain consumer loyalty. Today, consumers have more choices of automobiles in various classes and price ranges. Automakers cannot afford customer dissatisfaction at any level, given the negative publicity that would generate in an age of rapid information dissemination through the Internet and social media. As automakers keenly compete for market share in 2011, it is imperative that they reexamine their marketing methods, with particular emphasis on how they would maintain customer loyalty.

Tight credit market, resulting from the recent global financial crisis, will continue to have a negative effect on the overall sales of autos around the world. Unless the current atmosphere improves, there will be slightly lower consumer demand for new vehicles.

Fisker Automotive still hasn’t delivered a car to a customer, but someone out there thinks a lot of the nascent plug-in hybrid maker’s future. The Irvine, CA., company has just completed a $150 million private fundraising round - bringing to $489 million the total amount of private investment capital it has raised since its inception. Tesla continues the increasing production of its Tesla electric car. Niche car manufacturers will continue to serve the needs of highly segmented markets.

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M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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