20 SCS:AUTOMOTIVE LOGISTICS
Green agenda
in Motown
Substantial
markets have
emerged in
developing
countries where
none would have
been suspected
a decade or so
ago, though
almost all the
manufacturing
capacity to
satisfy this
demand will
be in these
countries.
Environmental concerns and rising fuel
prices mean that the automotive industry
is facing fundamental changes. CHRIS
LEWIS reports on the impact these changes
are likely to have on the supply chain.
The world car industry is facing almost the most
fundamental change since the first mass-produced
Model T rolled off the production line. Manufacturers
are facing huge uncertainty. What sort of cars will consumers
be demanding in five or three years time – or even in 2009?
Are today’s models what they really want – or can afford to
run, given soaring petrol prices? Will new technology like
hybrids make today’s latest technology obsolete tomorrow?
And will the really strong demand growth be in developing
world markets like China or India?
It’s hardly surprising that many manufacturers are wary
about building up excess stocks – and they are likely to
want their supply chains to be even more flexible and
responsive in the future.
Ralf Kalmbach, head of automotive at strategy
consultants Roland Berger says that not only is there
saturation and over-capacity in core markets but the
industry is coming under ever greater pressure to
produce cleaner – but at the same time cheaper –
cars, perhaps incorporating entirely novel
technology such as electric traction.
The industry’s structure, at least in developed
markets, has given it a lot of problems and, with
OEMs in increasing financial turmoil, pressure is
building all the way through the supplier pyramid.
But at the same time there are opportunities, if only
OEMs can realise them. Substantial markets have emerged
in developing countries where none would have been
suspected a decade or so ago, though almost all the
manufacturing capacity to satisfy this demand will be in
these countries. The fact that the motor car as we know it will
have to be virtually reinvented is another opportunity – at
least for these manufacturers willing to accept the challenge.
Miles Craig, general manager, manufacturing applications
for Toyota Europe, says that with new markets for cars
emerging in places like China or India, Toyota’s policy is to
manufacture cars within the market where the cars are sold –
China, India, Brazil, Russia, South Africa and Europe all have
SEPTEMBER 2008 SUPPLY CHAIN STANDARD
www.supplychainstandard.com
manufacturing or assembly plants.
He adds: “In terms of parts supply, conditions are
becoming more complex; localisation of parts supply
around the assembly plant supports the local
economy and contributes to society, but is also
beneficial from a supply chain point of view.
However, it is impossible to localise
everything, which is why we need
global sourcing.” One example
of this for instance is the
Corolla, built in South Africa
but with parts from
South Africa,
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