Auto Manufacturing Industry Trends

More Cars, Less Trucks

Consumer demand has shifted toward more cars and fewer light trucks, including SUVs. Rising fuel costs contributed to a rise in car sales as a percentage of total sales from about 43 percent in 2004 to 47 percent in 2006. SUV sales are being replaced by crossover utility vehicles (CUVs), utility vehicles built on car platforms rather than truck. While less rugged, CUVs are generally smaller, more fuel efficient, and handle more like a car.

Fleet Sales

Fleet sales to car rental companies, businesses, and government agencies comprise as much as 30 percent of total unit sales for the largest US auto manufacturers. Due to the low margins on fleet sales, some producers have announced intentions to reduce dependence on them or to improve their profit margins. If higher profit margins are realized, the public is likely to see higher rental car prices, and government agencies will need to budget more for fleet vehicles.

Alternate Fuels

Ethanol, electric power, hydrogen fuel cells, and clean diesel are among alternate fuel opportunities for autos. While some hybrid vehicles are in commercial production and ethanol is available on a restricted basis, extensive R&D activity is underway on each of these alternatives. Consumer demand for hybrid fuel vehicles has been high, exceeding manufacturing capacity and leading to more hybrid models.

“Total Cost Reduction” Programs

Manufacturers are working with suppliers to do more than just cut prices. By collaborating on total cost reduction programs, suppliers and manufacturers discover new designs, materials, and processes that improve quality and performance while reducing the total delivered cost of parts. DuPont, working with the industry, introduced a headlamp bezel trim part that reduced total part cost 40 percent. This new part is now on 8 million vehicles worldwide.

More “Green” Vehicles

Manufacturers are producing more environmentally friendly models because of legislation and consumer demand. Reductions in emissions and noise, combined with greater fuel economy, contribute to a greener environment. California has invoked legislation that includes a mandate to manufacturers for 25,000 zero-emission vehicles (ZEV) in 2012 to 2014. Typically, these cars are smaller units with less profit than larger vehicles.

Improved Vehicle Safety

Manufacturers are building more safety features into products. The National Highway Transportation Safety Board (NHTSB) says that all vehicles offered in model year 2012 must be equipped with Electronic Stability Control (ESC). This feature uses computer technology to apply the brakes automatically as a vehicle starts to slide on wet pavement or during a sudden swerve. About 200 models currently offer ESC, but it's not a mandatory safety feature. NHTSB forecasts that ESC control will save from 5,000 to 9,000 lives a year and will cost manufacturers about $111 per vehicle.

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