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Carmakers maturing, but can they go global?
By Michael Robinet (China Daily)
Updated: 2009-04-20 13:13 Demands from the ever-discerning global consumer coupled with stiffening safety, fuel economy and emissions regulations from various governments create additional hurdles for success in tomorrow's market. Rising Corporate Average Fuel Economy (CAFE) standards in the US, preparation for Euro VI emissions standards midway through the next decade and the implementation of new emission standards in other jurisdictions place new importance on powertrain technology and efficiency. No longer can vehicle manufacturers build outdated products for several years without a substantial update. Globalization Several factors are propelling the shift to high-volume global platforms. A platform is the structural basis that can support several body styles and nameplates. A single platform can form the basis of a sedan, coupe, crossover utility, a tall wagon and even a convertible. The ability for a company such as Toyota to share component sets and build formats between the Camry sedan and the RAV4 CUV is invaluable. Better known as global platforms and component sets, virtually every successful manufacturer utilizes global platforms to react to consumer shifts, maximize fixed production capacity and lower the cost per vehicle. The secret to the success of the Japanese manufacturers and Volkswagen is imbedded in the ability to build several different types of vehicles from few platforms globally. Several vehicle manufacturers are learning the lesson underscored by Chrysler in North America: do not focus on one region and spread yourself too thin between too many segments. A major driver behind the Chinese government's recent proclamation to reduce the number of vehicle manufacturers is the goal to build strong globally competitive vehicle makers that someday will be able to effectively extend their reach beyond China. This must extend beyond exports - localization of production to key markets is part of a successful strategy. Lessons from the past
Tomorrow's vehicle manufacturers and parts makers can benefit from the years of case studies on automotive expansion strategies, some successful, some not. Back in the early 1970s, Japanese vehicle manufacturers focused on expanding beyond their own market with a couple of key vehicles, choosing to lower costs and enhance quality as each model was revised, known as the kaizen approach to continuous improvement. In the 1980s, these same makers knew that real success stemmed from manufacturing locally in key export markets, moving closer to the consumer and eliminating currency as a variable in the cost of a vehicle. Through that decade, new Japanese factories popped up in the US, Canada and the United Kingdom. These same manufacturers simplified the process by bringing their suppliers with them and building products already being built back in Japan - the secret was to build upon lessons learned at the new factories. Hyundai/Kia also learned from Toyota, Honda, Nissan and others' experiences. The company learned to emulate the successful strategies and be careful not to duplicate those that the Japanese regretted. Chinese automakers destined to be successful in China and beyond have the benefit of Japanese hindsight but must make their own mark on the global industry as they expand. Best expansion routes Undoubtedly, two or three China-based vehicle manufacturers will be successful on the global scene by the middle of the next decade. Their success will hinge on their ability to adapt to a changing market, not expand their vehicle portfolio beyond their efficient capability and integrate appropriate technologies required for success against extremely competitive players. Success is neither simple nor assured. They will face many hurdles as global players strengthen their competitive game and raise the stakes. Chinese makers have a sizeable internal market, the right industry relationships and the benefit of hindsight to make their mark on the world's vehicle market. Michael Robinet is vice president of Global Vehicle Forecasts for US automotive consultancy CSM Worldwide Corp
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