Global Auto Industry Remains Strong and in Rude HealthPosted On: 25-05-2017 By: Katherine Eveland
It seems like a good opportunity to take stock of the automotive sector. How can Tesla, which produced less than 80,000 cars in 2016 have a market capitalization roughly equal to those of GM and Ford?
Memories seem to have faded on the financial bailout and subsequent liquidation of automakers Chrysler and GM (Presidential Task Force on the Auto Industry). Global automotive production dropped by a depressing 12% year-on-year from 70.7 million (world car and commercial vehicle production) units in the year 2008 to 61.7 million in 2009.
Yet data shows that the automotive industry in 2017 is still strong and in rude health. The industry produced more than 94 million units in 2016, up by 4.5% year-on-year. China is now one of the leading car manufacturing hubs in the world, as production reached 28 million units. The USA, Japan, Germany, South Korea, Mexico, Spain and Brazil were leading manufacturing and assembly plant locations in 2016. The weakness in the Russia/CIS and Brazilian economies fed through to a sharp decline in auto production in those economies. The leading passenger car manufacturers include Toyota, VW, Hyundai, General Motors (GM), Ford and Nissan. These are now truly global companies, with assembly plants on virtually every continent.
China produced 2 million units and India just 800,000 units in 1999. There are now more than 28 million units produced each year in China, and this has meant the whole global automotive sector, with its complex supply chain, and Just-in time management has shifted to key locations across China. The main electrical/electronic component of a car is all the wires and cables bunched and connected into a wiring harness. This spreads through the car, in the engine, the dash board and passenger compartment. Companies such as Delphi, Yazaki, LEONI, Sumitomo Wiring Systems, Yura and Lear are the leading suppliers of wiring harness into the manufacturers.
The complete electrical and electronic install in a car can now represent as much as 25% of total production costs. However, the wiring harness itself, even at the high end, in a European or USA-based Sport Utility will cost less than US$1000 per unit. A mid-sized mid-range car might have a wiring harness costing around US$300 to US$400 per unit. Much of this production costs is labor, and explains why so many wiring harness operations are based in lower-cost economies.
The wiring harness itself consists of a range of cables, from single core, multi-core cables (shielded and unshielded), through battery cables, flat flexible cables (FFC), specialty cables for ABS systems and increasingly complex cables used in hybrid power systems in electric vehicles. The cables are mainly constructed to ISO (Europe), JASO (Japan) and SAE (United States) standards. There are specific car maker standards, with a general trend towards harmonization as the industry globalizes such as the Joint Company Standards (LV), that cover copper and aluminum cores (LV). The primary wire has been constructed from PVC since the 1970s, but as space constraints and bottlenecks have increased and more cable is required in the engine compartment, so there has been a trend towards the use of thin or ultra-thin wall jacketing or materials that can be used at higher temperatures. Compact cables are being increasingly used, that require higher copper alloys for further mechanical strength.
The latest German top range car now has more than 1000 individual cables, and a total length of more than 3000 m. But the amount of cables, types, copper (or copper alloy) versus aluminum, complexity and total lengths vary by manufacturer and car model. This can be tracked back up the supply chain to the supplier of the wiring harness, then again to the original producer of the automotive cable. This is Integer Research’s latest task, for our upcoming report on the Market for Automotive Wire, due out in Q4 2017. We are currently tracking the market in detail, and are more than happy to share our provisional findings with you.
Written by Philip Radbourne, Director of Wire & Cable at Integer Research.
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