The main catalyst for the increased global manufacturing capacity is the rapid rise in demand from emerging markets. 68.5 percent of survey participants feel that China will build up the most capacity by 2016, almost doubling its current level. The rest of Asia (excluding China and Japan) is expected to be the next fastest growing region.
Overcapacity not only an issue in the mature markets
41.5 percent of the respondents still consider the US to be the most overbuilt automotive market. Yet thanks to its rationalization efforts over recent years, this country is already doing better than many realize. Furthermore, respondents feel the automotive markets of Germany and Japan both have overcapacity between 11-20 percent.
As global manufacturing capacity continues its inexorable rise, it’s not just established markets that have to manage their capacity utilization. BRIC manufacturers face the same challenges as their peers in the TRIAD markets. In fact, over half of the respondents believe China’s automotive market will be the most overbuilt BRIC market in 2016.
Source: LMC Automotive
Solutions to overcapacity
The global automotive market is estimated to be overbuilt by 20-30 percent by 2016. Most executives seem to be aware of this issue, viewing direct cutbacks in production capacity as the best way to realign supply with demand, with further industry consolidation or collaboration as the next most effective approach.