A new report into the future of the global car industry predicts sales will drop 11% between 2000 and 2002.

The study, A sharp decline to come: The outlook for the global vehicle industry to 2005 to 2010, produced by industry consultant autopolis, suggests that with 'falling sales, car makers losing money and more than 95 main assembly plants too many, the world's auto sector is at a turning point'.

The news offers mixed fortunes to the European fleet industry. On the one hand over-capacity will result in continuing new car price pressure but ensuing used car oversupply could further damage residual values.

The report said: 'Faced with an inevitable slowdown, most of the world's car makers have been getting it all wrong. Instead of making money in the good time, they have squandered their future.'

The report accuses manufacturers of 'churning out an even greater number of new models', adding that there was a record number of new cars launched at this year's Frankfurt motor show, 'shortening product development cycles and trying to subsidise losses on car sales with higher parts and servicing prices'.

Autopolis claims that this has 'resulted in an industry with chronically low returns, masses of duplication and too many factories'.

'It's the economies of the madhouse,' said autopolis economist Graeme Maxton.

The company suggests that faced with these problems the world's car manufacturing industry 'will now have to make the changes it has been resisting'. It will have to cut jobs and rationalise production, said autopolis.

'A major justification for all the mergers in the last few years was cost savings — yet few have been made,' Maxton said.

The report added that as sales drop further and losses start to mount, the world's top vehicle manufacturers will have to make substantial cutbacks - and make them fast.

'What happens in the next six months will determine the structure of the industry for perhaps a decade.' Maxton said. 'Some manufacturers are going to have to act with a lot more urgency if they are to avoid turning a predictable slowdown into a self-inflicted catastrophe.'

 

  • A sharp decline to come: The outlook for the global vehicle industry to 2005 to 2010, priced at €175, is available from www.autopolis.com. (October 2001)