Error parsing XSLT file: \xslt\FacebookOpenGraph.xslt Mike Waters' Blog: 6 October 2009 - Only the strongest will survive
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Mike Waters' Blog: 6 October 2009 - Only the strongest will survive

Date: 06 October 2009

Mike Waters is head of market analysis at Arval

The Frankfurt motor show provided the upbeat messages and positive facade that you would expect, with new models, new technologies and concept cars giving us a firm insight into what the next wave of vehicles on our roads will look like.

Although behind all of the excitement and interest it is no secret that the automotive industry is licking its wounds following an incredibly tough year.

2009 has seen the automotive sector hit particularly hard by the economic downturn demonstrated by widespread redundancies, a reduction in manufacturing capacities and entire plants on prolonged shutdowns. What's more, 2010 could be just as tough in the UK, despite the extension of the scrappage scheme, recently announced at the Labour party conference.

I was slightly sceptical when the scheme was introduced but the figures show that it has given the industry the boost that was so needed. Taking the scheme away at end of this year would have been a tough blow and so it will come as a relief to the manufacturers that it has been prolonged for another 100,000 vehicles.

Canadian car parts manufacturer Magna has announced that it may cut as many as 10,500 jobs at Opel and Vauxhall in Europe, but this doesn't come as any surprise given the tough trading conditions that we have seen in recent times.

For the manufacturers, hitting sales targets remains difficult, but the formula for success hasn't changed: they must provide the vehicles that people want at a price they are willing to pay. There is a feeling that there has been overproduction of vehicles for too long and that the pain the industry is going through now is in fact a necessary evil that will make it stronger in the long term.

For those strong enough to adapt to the conditions it's also an exciting time full of opportunity. In terms of R&D and new models pretty much all of the manufacturers are focusing on green development. The result is that internal combustion engines are making huge leaps in efficiency and becoming cheaper to run all the time.

We are also seeing an influx of hybrid technology and the development of fully electric vehicles. What this means for the consumer is that there will be more choice and for the manufacturers, the opportunity to use innovation as a means of riding out the crisis.



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