Too Much More on the Way
Already overflowing global production capacity will not stop manufacturers from adding another 18 million units annually by the end of the decade, or enough to supply about 90% of the demand in the North American market. With 2002's capacity already estimated to be more than 30 million units above actual demand, the big question is: Where will it all go? Automotive manufacturers will have annual capacity
![WardsAuto logo WardsAuto logo](https://eu-images.contentstack.com/v3/assets/blt7121b6ec5c11097b/blt45f10b537a75bb26/65d72d47647c28040affd46b/Generic_image_WA.png?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
Already overflowing global production capacity will not stop manufacturers from adding another 18 million units annually by the end of the decade, or enough to supply about 90% of the demand in the North American market.
With 2002's capacity already estimated to be more than 30 million units above actual demand, the big question is: Where will it all go?
Automotive manufacturers will have annual capacity to produce 105.6 million vehicles in 2010, up from 87.3 million in 2002, according to projections from Miru Worldwide Ltd., a forecasting and consultancy group based in France that tracks manufacturers' future assembly plant plans.
Miru's data shows that despite worldwide overcapacity today, all major regions will have the ability to build more vehicles in 2010.
Growth will be strongest in the Asia/Pacific region, where auto makers are scrambling to make sure they get a piece of the expected boom in demand — especially in China.
North America and Western Europe, considered to be the most mature markets in the industry, are slated for significant increases. But their importance as automotive manufacturing hubs could diminish, as their share of global capacity declines. North America will account for 20% of global capacity in 2010, down from 22.1% in 2002. Western Europe will fall to 25.2% from 27.6%.
Nevertheless, Miru's data shows North America on tap to pump up capacity by 1.8 million units by 2010. Western Europe is seen adding a whopping 2.5 million units in new capacity.
In addition to being a mature market, North America is a magnet for imports, but exports only a small percentage of its production. Thus, output is closely tied to local demand, moreso than in most other regions. Demand will have to rise significantly to absorb another 1.8 million units.
A hefty portion of North America's added capacity is for new products, not a result of foreign-based manufacturers transferring vehicle assembly to North America.
Western Europe, because it exports more of its production, might more easily absorb its volume increase than North America, but much of the 2.4 million units of capacity being added in Eastern Europe will be targeted for the Western European market.
Almost half the growth in global capacity (45%) will come from Asia/Pacific.
China will gain the most by adding 5 million units from 2002 to 2010. Ironically, Japan, the top regional producer and at one time seemingly unstoppable, is projected to lose 500,000 units of capacity by 2010, as OEMs continue to move export production overseas.
As early as 2005, based on Miru's capacity projections, China could surpass South Korea as the No.2 producer in the region. China's capacity should total 8.7 million units in 2010, still well below Japan's forecast of 14.7 million, Miru says.
Several other Asia/Pacific countries will be seeing more car and truck factories. India will be adding 1.2 million units of capacity through 2010, Thailand will be doubling production capacity to 2 million units, and South Korea will add another 500,000 to its already relatively high count of 4.8 million.
By 2010, the Asia/Pacific region will be capable of building 39.6 million vehicles and will own 37.5% of global production capacity, up from 35.8% in 2002.
The Asia/Pacific share would be higher if not for substantial growth in Eastern Europe and South America. Though their overall volume will remain comparatively low, production capacity in Africa and the Middle East combined is set to rise by 1.6 million units.
In Eastern Europe, except for an 800,000-plus gain in Russia, much of its increase will be spread out among several countries, with the next biggest volume gains coming from Hungary, Poland, Slovakia and the Czech Republic.
South America, which has become an unstable region for investment despite its potential, will see capacity rise by one-third to 7.3 million vehicles in 2010. But about 85% of that growth will be centered in Brazil, and that country already is trying to secure more export business just to catch up with its current capacity.
Read more about:
2003About the Author
You May Also Like