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Chinese manufacturers will be in top 10 by 2020

A Chinese vehicle manufacturer will enter the top 10 most successful manufacturers by 2020, according to new research from a growth consulting company.

The strategic overview from Frost & Sullivan is targeted at CEOs and directors and has been revealed in order to help businesses assess the changes they will need to make to stay competitive in the future.

In its business forecast, Toyota is seen to become the biggest automotive manufacturer, while China will meet Korean vehicle production capacity by 2013.

“The automotive industry is in the middle of a difficult period, facing low profitability and major challenges from environmental and social trends, consumer preferences and growth of emerging markets.

“The emergence of new markets, such as China, India and eastern Europe, has combined with developments in vehicle technology to influence vehicle manufacturers and suppliers alike. Competitiveness in the industry has increased phenomenally, making profitability and cost management key areas of concern for the whole industry,” said Frost & Sullivan.

Here are the findings in 10 digestible chunks:

  • In 1990, there were more than 20 vehicle manufacturers (VMs) and in 2006 there are approximately 15 major VMs. By 2020, there will be less than 10 global OEMs.
  • China will propel from its current number 4 position to 2nd biggest market in the world. A Chinese VM will be in the top 10 by 2020.
  • In 2000, top 20 suppliers contributed to 20 – 30% of revenues. In 2015, top 20 will contribute to over 50% of revenues.
  • By 2012, suppliers will be responsible for 60% of the industry’s R&D work compared to 40% now.
  • Merger and acquisitions /joint venture activity will grow further, especially at supplier level. Modularisation will drive industry across mergers. European supplier industry to witness increased M7A activity in coming year.
  • New entrants will emerge with new competencies like we have seen recently with Microsoft, who will use technology advantages to carve competitive positions.
  • C-segment vehicles to contribute to around 30% of global production by 2015
  • Enlarged EU to have share of over 30% of global production by 2012.
  • Electronics content in cars to triple from 10% in the 70s to about 40% by 2015
  • Socio-economic and legislation changes will drive new models and features especially in the European Union.

    "Key changes in industry and market structure will have a strong impact on the dynamics of the automotive industry. This, coupled with the advent of new technologies and the changing customer and social environment, will alter the competitive landscape of the automotive industry in 2015," said practice director Sarwant Singh and senior research analyst Vigneshwaran Chandran of Frost & Sullivan’s automotive & transportation.

  • The 360 Degree CEO Perspective of the Global Automotive Industry is available on request from michael.banks@frost.com at Frost & Sullivan.
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