The attractiveness of the automotive logistics sector has recovered over the past decade. No longer a low profit, low growth sector, it offers big potential; in particular for larger, more globalised logistics service providers.
Despite the difficult macro-economic environment, many large car markets are growing fast, but also changing their market structure. The best example is China. It is now the largest single market and the largest producer of passenger vehicles in the world. Yet, it is the big global manufacturers that increasingly dominate its market.
The most recent forecasts from Information Handling Services (IHS) Automotive predict that Chinese passenger car sales will grow by 11% in 2013, which would represent a recovery from 2011’s low single digit increases and even 2012’s 7% increase, but would not represent a return to the incredible growth seen through much of the last decade.
However, the Chinese market is changing, with the big global brands tightening their grip on sales. The leading vehicle manufacturer by far is Volkswagen, the company sold 2.6m passenger cars in 2012 out of a market of 13m. Second place was held by Hyundai-Kia with sales of 1.3m, with GM just behind. Other strong players were Nissan and Toyota.
The clear implication of these figures is that the global vehicle manufacturers, led by VW, are prevailing in the Chinese market, with the smaller Chinese vehicle manufacturers unable to keep-up.
This must have consequences for a logistics market which, up until now, has been difficult for even the largest logistics service providers to operate in. All production in China takes place within joint ventures between local automotive companies and big global vehicle manufacturers. The power of the Chinese joint-venture partners is likely to decline as their own brands lose market share, whilst the global vehicle manufacturers will increasingly need world-class production and supply chain operations within China.
At present, local Chinese logistics service providers have been able to use their relationships with the Chinese partners within automotive joint-ventures in order to dominate the provision of logistics. Should this grip weaken, either through the desire for more competition or the need for better services, the opportunity for the large logistics service providers would be huge.
Furthermore, China is just one potential market. Other markets such as the US continue to grow rapidly, both in terms of sales and production, whilst the likes of Russia, Brazil and even northern European economies such as the UK and Sweden continue to show signs of life. Certainly, not all are healthy, southern Europe is in a terrible state, whilst German sales fell last year. However, these areas of bad news are a detail in an industry that has resumed its ability to drive the logistics sector forwards.
Global Automotive Logistics 2013
Ti’s latest report, Global Automotive Logistics 2013, price £1,095, provides analysis of all the major trends, key players and opportunities available in the automotive logistics sector. The report also provides a comprehensive examination of both production and sales markets for vehicle manufacturers, component suppliers and logistics providers. The report is available to download online via the link provided. Alternatively contact Mike Nordmann, Business Development Director, for more information at: [email protected].
