After five years of unprecedented light vehicle production growth in North America – volumes almost doubled to more than 17 million units annually – automakers will face slower growth rates through the balance of the decade.
Advances in technology, tougher legislation, shorter product cycles and increased launches will create a challenging, yet opportunistic environment in the years ahead for original equipment manufacturers (OEM) and suppliers, according to IHS Automotive.
Michael Robinet, managing director-advisory services, for IHS Automotive addressed some of the industry’s key challenges today during the annual Center for Automotive Research Management Briefing Seminars in Traverse City.
“In today’s environment, suppliers must be proactive in their approach to the market or risk falling behind,” he said. “Success will come to those that have the ability to be flexible in their product design processes, understand OEM needs, optimize their research and development activities, and efficiently implement new technology.”
The industry is currently dealing with a quicker product cadence that is significantly shorter between changeover and vehicle redesigns, according to Robinet. Globally, the average light vehicle will be completely redesigned every five years by 2020. The implementation of global architectures has driven all regions closer from a product timing perspective with the greatest change in developing markets of China, India and Brazil.
In addition, vehicle manufacturers are altering the role of the mid-cycle freshening occurring every 2-3 years. Today, these events are an opportunity to make significant design and content changes; previously the domain of a major cycle change. As an example, a mid-cycle refresh no longer includes just front and rear fascia and minor content changes, said Robinet. In many cases, it now encompasses a completely new interior, modified body panels, integration of the latest active safety technology, powertrain upgrades, infotainment and software updates.
Auto suppliers are challenged with shorter product cycles, he added, with even more pressure to perform flawless launches and demonstrate required production speed as quickly as possible. By 2018, there will be more than 160 new product/plant launches around the world – more than double the pace from 2010. The industry is increasingly focused on launch performance (capacity and speed) meaning there is less room for error.
Though the pace of growth in the industry is slowing a bit, IHS Automotive forecasts that more than 88 million vehicles will be built globally this year, more than one percent higher than 2014.
