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December 14, 2014

Asia Pacific Recap: Key Events that Shaped the Region in 2014

Euromonitor analysts discuss the key events impacting foreign investment, population, tourism, tax rates, social media, politics, consumer confidence and other factors impacting consumer spending trends in Asia Pacific countries moving into 2015. Watch the video for complete insights.

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November 15, 2014

Charging Ahead: China to Become the Largest EV Market in the World

Neil-KingAnalyst Insight by Neil King - Automotive Analyst

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In my recent piece, China’s EV Push Could Reap Rewards in Europe, I alluded to the “growing campaign in China to promote electric vehicles.” I thought I’d elaborate on the numerous government initiatives in effect and also on consumer attitudes, ultimately explaining why China is on track to become the largest EV market in the world, possibly already in 2015.

Government Initiatives

One of the Chinese government’s initiatives to combat rising pollution is the introduction of brand-average fuel economy targets of 6.9l per 100km from 2015 and 5l per 100km from 2020. According to a comment piece by Yang Jian in Automotive News China, manufacturers that assemble vehicles in China “can easily reach their target of 6.9 liters next year by diversifying their product mix with more small vehicles, electric cars and plug-in hybrids.” In addition to these fuel economy targets, there are also central government and city-specific subsidies in place which can amount to discounts of up to CNY100,000 CNY (approximately US$16,000). Another boost to the fortunes of electric vehicles will come from the restrictions imposed on the number of cars that can be registered in certain cities (currently six cities to be precise but many more are expected to follow suit), from which electric vehicles are exempt. Finally, the latest initiative is that “China, the world's biggest carbon emitter, is mandating that at least 30 per cent of new government vehicles be powered by alternative energy sources by 2016 in the government's latest move to combat pollution” according to a Bloomberg article on October 24. To put this into perspective, government vehicles are commonly reported as accounting for 20% of vehicle sales in China.

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October 31, 2014

China’s Electric Vehicle Push Could Reap Rewards in Europe

Neil-KingAnalyst Insight by Neil King - Automotive Analyst

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The anticipated flood of Chinese cars on European shores has simply not materialised. Even in the UK, where SAIC (Shanghai Automotive Industry Corporation) produces cars bearing the infamous MG badge, the brand captures less than 0.1% of the UK passenger car market and no other Chinese contenders appear in data released by the national trade association, the SMMT. It is rather intriguing that Chinese OEMs have not followed the strategy of Japanese and Korean brands, which entered Europe successfully by offering cars that undercut competitors on price and/or featured higher specifications as standard equipment. As for why this is the case, there are several reasons.

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October 6, 2014

Autos in Brazil: Down But Most Definitely Not Out

Neil-KingAnalyst Insight by Neil King - Automotive Analyst

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Light vehicle sales in Brazil rose every year from 2004 to 2011 but faced with weak economic growth and flagging car sales, the government lowered the tax on industrial products (IPI) on May 24, 2012 in order to stimulate demand for new cars. The reduction was originally planned to run until August 31 but was extended and the end result was that sales of light vehicles increased by 6.1% in 2012 even though GDP growth for the year was a lacklustre 1%. This lowered IPI rate was further extended and was actually in effect for the whole of 2013 but with demand already pulled forward into 2012 and GDP growth at an improved but still modest 2.5%, the measure was insufficient to prevent light vehicle sales in Brazil falling by 1.5% year-on-year. This was the first annual decline the market had endured since 2003 and the outlook for 2014 was not looking any better.

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August 31, 2014

Examining the Top Ten most Motorised Cities

Kasparas AdomaitisWith Kasparas Adomaitis, Senior City Analyst

In general, average income is the single most important factor that determines consumer preferences to spend on transport or to buy private vehicles. However, lower income cities such as Kuala Lumpur, Vilnius and Athens are among the top ten cities with the highest ratio of passenger car ownership in the world.

Chart

In these cities, passenger cars are a necessity due to inadequate transportation infastructure. Unfortunatley, poor quality vehicles tend to flood these cities, leading to air pollution and traffic.

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August 20, 2014

Trends Impacting the European Automotive Market

 

Since the onset of the financial crisis Europe lost around 10 million units of car sales, which translates to massive pent up growth. In 2014 alone, car sales will grow by about five percent, reaching peak levels in the 2020s. There are two concerns for European car manufacturers in the near future however – the onset of rental and car sharing systems and a general disinterest among younger consumers of buying new cars.

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Hear Neil King speak at the 3rd ICIS European Butadiene & Derivatives Conference

August 2, 2014

Opel Ogles Value Vehicles

Neil-KingAnalyst Insight by Neil King - Automotive Analyst

View Neil King's profile on LinkedIn

Following the announcement by General Motors (GM) in December 2013 that it is withdrawing the Chevrolet brand from Europe, I commented back in December that this creates space for an affordable GM brand in Europe. This possibility is further supported by the fact that GM is seeking to move the Opel/Vauxhall brands upmarket with models such as the Cascada convertible, which seeks to target open versions of premium cars such as the Audi A5 and BMW 3-Series (or 4-Series as it is now known with the launch of the latest iteration). It is therefore with much interest that I read about Opel’s plans for budget vehicles but still wonder about GM’s brand strategy in Europe.

Defining value vehicles is rather subjective but the brands that I consider to qualify have seen their sales in West Europe soar by 68% between 2004 and 2013 and even by 35% since the car market peaked in 2007. To put this into perspective, demand for mainstream cars was 24% lower in 2013 than in 2007 and even the premium brands registered 14% fewer cars. With the European demise of Chevrolet expected by the end of 2015, this does leave an opportunity for GM to offer new vehicles to compete in the value segment.

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July 27, 2014

Euromonitor to Speak at 3rd ICIS European Butadiene & Derivatives Conference

ICIS_Logo_100HDate: 10th - 11th September 2014

Location: Westin Grand, Berlin

The Conference:
The 3rd ICIS European Butadiene & Derivatives Conference takes place in Westin Grand, Berlin this year on 10th and 11th September 2014. The 2013 edition attracted over 90 industry professionals from more than 64 companies representing 17 countries giving attendees the opportunity to network and learn simultaneously. This year, the conference will examine overcoming feedstock shortages, volatile market dynamics and reduced demand in an increasing global industry. Confirmed speakers include Versalis, Pirelli Tyre, Synthos, Euromonitor, Rubber Economy, Genomatica, Nexant, plus many more.

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July 22, 2014

National Automotive Industry Development Plan (NAIDP) Drives Car Sales to Record Levels in Nigeria

Neil-KingAnalyst Insight by Neil King - Automotive Analyst

View Neil King's profile on LinkedIn

In October 2013, the Federal Government of Nigeria announced its National Automotive Industry Development Plan (NAIDP). In order to stimulate investment in local vehicle production and thereby bolster Nigeria’s economy instead of revenues heading abroad, a core component of the plan is an increase in import duties for passenger cars from 20% to 70% (35% duty and 35% levy) and to 35% for commercial vehicles. However, the duty applied to vehicles which are assembled locally is set at 10% for SKD (semi-knockdown) Part 2 kits, 5% for SKD Part 1 kits and 0% for CKD (complete knock-down) kits. Also, manufacturers that assemble vehicles locally can import up to twice as many FBU (fully built units) as they do kits at the reduced import duty rate of 35% for passenger cars and 20% for commercial vehicles.

The plan was fully implemented on July 1 and, not surprisingly, new car sales soared as consumers took advantage of the lower duty rates while they still could. The Executive Director of the Nigerian Automobile Manufacturers Association (NAMA), Mr Arthur Madueke, was quoted on July 8 on This Day Live that “between January and December 2013, about 52,000 new vehicles were imported, while by May this year, 37,000 cars have been imported.” With CBU imported vehicles paying the old rate of duty until the end of June, sales are likely to have boomed in the month and a 30% growth rate for the first half of 2014 is therefore not out of the question.

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July 6, 2014

EU-Japan Free Trade Deal: Influx of Japanese Imports Could Lead to Strategic Alliances

Justinas_LiuimaAnalyst Insight by Justinas Liuima - Industrial Analyst

The European Commission has expressed a will to continue negotiations with Japan with regard to a free trade agreement (FTA). However, the deal is facing strong opposition from European car producers due to fears of a price war, driven by an influx of Japanese imports. If a free trade agreement is reached, European producers could seek strategic alliances with their Japanese counterparts. 

Fear of Japanese Imports Leads to FTA Opposition

Despite the expressed political support from the European Commission, the European Automobile Manufacturer’s Association (ACEA) is opposed to a free trade agreement. The EU has consistently faced a trade deficit with Japan in terms of motor vehicles, with the value of imports reaching €9.1 billion in 2013 compared to exports worth €7.8 billion.

ACEA fears that an FTA would hinder business in its home market, particularly for volume producers in Italy and France. FTA would provide better positions for Japanese producers to leverage overcapacity and flood the European market with cheaper imports. This could spark a price war in the EU, which would be disastrous for car makers in France and Italy, which are already struggling with overcapacity and low profit margins.

Continue reading "EU-Japan Free Trade Deal: Influx of Japanese Imports Could Lead to Strategic Alliances" »

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Recent Posts

Asia Pacific Recap: Key Events that Shaped the Region in 2014

Charging Ahead: China to Become the Largest EV Market in the World

China’s Electric Vehicle Push Could Reap Rewards in Europe

Autos in Brazil: Down But Most Definitely Not Out

Examining the Top Ten most Motorised Cities

Trends Impacting the European Automotive Market

Opel Ogles Value Vehicles

Euromonitor to Speak at 3rd ICIS European Butadiene & Derivatives Conference

National Automotive Industry Development Plan (NAIDP) Drives Car Sales to Record Levels in Nigeria

EU-Japan Free Trade Deal: Influx of Japanese Imports Could Lead to Strategic Alliances