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A Global Picture On What the Big Boys Reckon

There has to be a number of things on the mind of a car manufacturing high flying exec.  But one of the forefront thoughts a top “car buff” would have to be pondering over is what effects the booming Indian and Chinese economies will have on their car industry closer to home.  Leading motor industry managers and experts have recently spent time together at Barcelona’s IESE discussing and mulling over this big topic.  But also a talking point was the consideration of the future of the car.  Surely electric cars are the way of the future. 

A prime speaking candidate from the European motor industry, Bernd Gottschalk, worked over the Indian and Chinese growth on traditional car-making nations. On the one hand, strong demand from India, China and other emerging nations has been regarded as relief for established manufacturers at a time when orders from Europe and North America have very much become non-existent.  What these manufacturers must be dreading is that these nations will be emerging as strong future competitors as well.  Dr Gottschalk did, however, emphasise that Europe still holds formidable strengths in strong branding and a capacity for innovation.  For the time being, these two strengths would be hard to match.  (But I’m not so sure.  Just look at the latest Kia, Hyundai and Great Wall vehicles!)

Another fellow, this time from Germany – and the former head of the VDA, Ivan Hodac – showed his heart-felt emotions when he shared on how he saw the European industry having an increasingly disadvantaged position through “unbalanced” trade agreements between the EU and emerging countries.  He also described the recent blending with South Korea, in particular, as disastrous.  I wonder why! 

India was represented by Abhijit Gajendragadkar, Vice President of TATA Motors.  TATA now owns Jaguar and Land Rover in the UK, and this man spoke on his company’s success in addressing specific Indian market demands with vehicles such as the inexpensive Nano car and the ACE.  These vehicles are simple small delivery vehicles – useful for the Indian domestic transportation logistics system.   

From China, Henry Li, General Manager of the export trade division of BYD, noted China as a fast-growing manufacturer of electric vehicles.  Mr Li said that BYD produced just 20,000 cars in 2005, but made 448,000 in 2009!  Scary extras included his perception of this rate of growth completely eclipsing any experience felt by European manufacturers.  In fact, he noted that the level of volume of output would very soon overtake established brands from Skoda, Seat or Volvo.  Mr Li said that the Chinese market would top 17 million cars for the year, 2010.  Industry estimates of 24 million sales by 2015 might well be a little on the conservative side.

A huge bonus for Spain saw them producing 2.2 million cars last year, despite the global economic recession.  Spain was second only to Germany among the car-making nations of Europe. Spain’s fortunes came about when post-Franco Spain became more closely integrated with the rest of the European economy.  The big manufacturers such as Ford and GM looked for low-cost manufacturing locations, and decided to establish plants in Spain.

Electric vehicles were also a topic of big interest at the gathering.  Nissan is the manufacturer of the Leaf, the first Electric Vehicle to emerge from a full-scale development effort by one of the major car manufacturers.  Nissan is designing these with big production volumes in mind.  And I don’t blame them, as I think the manufacturers who are in first will benefit first.

As far as marketing went, researchers have found that customers will often research their car choices in detail via the Internet.  This was an interesting addition to the meeting’s discussion points, and it was greeted with full acceptance – being a topic which was a little lighter to handle.