BRIC nations overtake North America in auto production

March 28th, 2008 - 12:08 pm ICT by admin  

By Gurmukh Singh
Toronto, March 28 (IANS) North America will lose the top slot in auto production to the BRIC (Brazil, Russia, India and China) nations this year, says Canada’s Scotiabank in a report. BRIC nations would produce 20 million vehicles in 2008 as against 17.4 million by both America and Canada, Scotiabank’s auto industry specialist Carlos Gomes said in a study released Thursday.

The surpassing of North America by BRIC nations in auto production, Gomes said, had great implications for the Canadian auto industry as the North American market consumed 95 percent of Canadian-built auto parts.

“When production goes to India or China, we get hit. The future growth will be in BRIC nations,” Gomes told IANS. He said the North American production has come down by two million units from the peak of 19.6 million units in 2002.

“The fall-off reflects plant closures by the traditional North American automakers.”

On the other hand, Gomes said, assembly capacity in emerging nations has gone up by 15 percent per year over the past five years. He said this happened as Ford and General Motors have built almost 90 percent of their new plants since 2002 in emerging markets that offer greater growth potential as well as a lower-cost structure.

“We estimate that vehicle assembly capacity in emerging nations now totals more than 30 million units, roughly 36 per cent of the global total and more than double the installed capacity in Canada and the United States,” Gomes said.

But the rising production in emerging nations, he warned, was a troubling development for the Canadian auto parts sector as it remains exclusively focussed on the domestic and US markets.

“These two markets absorb more than 95 percent of all Canadian auto parts shipments, but are increasingly becoming a smaller piece of the global auto industry,” he said.

Gomes added that China would capture about 20 percent of all new global assembly capacity over the next five years.

However, both India and Russia would also garner an increased share, with assembly capacity in each country expected to surge by about 70 percent over the next five years.

“India produced 600,000 units in 2000, and now the turnout was 1.2 million in 2007. With sales soaring because of a huge middle class and major players like Nissan, Ford and GM setting up plants there, India will emerge as a big player on the world auto market,” he said.

About the Tatas’ acquisition of British luxury brands of Jaguar and Land Rover and their Nano car, he said: “They have credibility and they will make India a major production centre for supplies around the world.”

Global vehicle purchases continue to climb to record highs, as strengthening emerging markets more than offsets weak sales in the US, he said.

Global car sales rose three percent year-on-year in February, led by surges of more than 30 percent in Brazil and 20 percent in China. These two countries have sold more than 1.2 million cars in the opening months of 2008.

Gomes said Canada assembled 2.58 million vehicles in 2007, down from a peak of 3.1 million in 1999.

“Faced with slumping sales in the US, automakers have slashed their second-quarter production plans for Canada and the United States to an annualised 12.7 million units, one of the lowest levels since the economic downturn of the early 1990s,” said Gomes.

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