Contrary to popular perception, North America's auto market is buoyant, according to industry expert Dennis DesRosiers.
Some major participants are losing market share, but overall the sector continues to grow, DesRosiers told attendees at Plast-Ex 2007, held May 1-3 in Toronto.
Consumer demand for autos is not a problem in North America, he said. Per capita vehicle ownership is growing and healthy numbers of older cars are being scrapped, drawing replacement vehicles into the market. As well, automakers keep introducing new features that entice consumers to buy new cars.
``Nothing turns the market on like new products,'' he said.
DesRosiers admitted Detroit's Big Three are facing serious problems because they are losing market share to imports and vehicles made at transplant facilities.
``They have a two- to three-year window to turn around market-share losses,'' DesRosiers said. If they are not successful, any one of them could fail, although General Motors Corp. is less likely to go under than Ford Motor Co. or the Chrysler division of DaimlerChrysler Corp., said the Richmond Hill, Ontario-based owner of DesRosiers Automotive Reports.
North America's auto parts sector is adjusting to shifts in auto market share. One result is the loss of thousands of unionized jobs in the sector. Pain from those job losses is being trumpeted loudly by union leaders, making it seem as if the sector is worse off than it actually is, DesRosiers explained.
Many of the union jobs, however, are being offset by employment in nonunion factories supplying transplant assembly operations. Imports of auto parts only account for about 15 percent of the North American parts market, which is worth some US$318 billion per year. About 30 percent of the parts are made in North America by offshore-owned companies supplying Asian and European firms that are assembling cars in North America.
DesRosiers doesn't see auto imports from China as a threat for many years into the future. Rather, China represents big opportunities for suppliers to locate there. Vehicle production in China is growing tremendously, mainly to meet demand as consumers there strive for vehicle ownership.
Parts suppliers should respond to global trends by setting up operations in China and India, predicted to be the fastest-growing auto markets for several years, according to James Robertson, executive vice president with Magna International Inc.
Robertson said successful parts suppliers in any market need to offer original equipment manufacturers cost reductions, new features at no extra cost, better fuel economy and safety, and quality.
Those issues rely on innovation and manufacturing excellence.
Plastics usage could grow in exterior applications if suppliers develop better materials. Strength at a light weight and elimination of painting would be attractive to auto designers. By eliminating paint shops, plastics could support smaller assembly plants that are nimble enough to make short runs of specialty vehicles.