Light vehicle production growth in North America is expected to slow for the remainder of the decade as advances in technology, stiff legislation, tighter product cycles and increased launch activity will challenge the industry, according to new research from IHS.
In the past five years, light vehicle production growth in North America has experienced impressive growth with volumes doubling to more than 17 million units. However in the years ahead, automotive OEMs and automotive suppliers will need to be flexible in their product design processes, optimize their research and development activities and efficiently implement new technology or they risk falling behind as the result of slower growth, says Michael Robinet, managing director for automotive advisory services at IHS.
One issue that the automotive industry is facing is, a move to a quicker product cadence that spans a shorter timeframe between changeover and vehicle redesigns, he says. The average light vehicle will be completely redesigned every five years by 2020. As redesigns are coming faster, architectures are being driven in all regions closer from a product timing perspective especially in emerging regions such as China, India and Brazil.
As a result, automotive OEMs and suppliers are having to adapt to a world where faster cycles is the new reality of the automotive industry and gaining or losing business is at a swifter pace, IHS says. By 2018, IHS forecasts that there will be more than 160 new product/plant launches around the world—doubling the pace from 2010.
“The industry’s global scope has never been more important,” he says. “It is now a necessity to have strong regional production and design capabilities which can include integration of partners which bring new breadth.”
Robinet says there must be a careful balance between meeting growing customer demand, government safety requirements and keeping vehicle costs under control as this quicker product cadence impacts the industry. He calls this automotive balance “this decade’s most important industry challenge.”
While the light vehicle growth is slowing, IHS forecasts that more than 88 million vehicles will be built this year, up 1% from 2014.
He says there are still tremendous opportunities for growth in every stage of the supply chain if automotive suppliers can “adapt quickly to change and work to implement the swift requirements necessary for future success.” He adds that those “that succeed will be well-positioned for future growth.”
Questions or comments on this story? Contact firstname.lastname@example.org