North America, western Europe and Japan are home to 18 of the top 20 vehicle manufacturers in the world and account for nearly 90% of the global production. All three of these regions are mature automotive markets with low expected unit growth rates and capacity in excess of regional demand. Vehicle manufacturers, therefore, have turned their sights towards growth opportunities in emerging markets in Latin America, north and south Asia, China, India, eastern Europe and Russia. As the world?s automakers race towards globalisation, emission reduction and fuel efficiency programmes started troubling them.
The PricewaterhouseCoopers 11th annual global CEO survey??Compete & Collaborate??revealed heightened concern among the automotive CEOs about the potential threat to growth prospects as a result of increased requirement of carbon emission standards, fossil fuel and fuel efficient technologies.
The 2007 legislation (Environmental Protection Agency) in the US requiring corporate average fuel economy (CAF?) to be 35 mpg by 2020 and a current Bush Administration proposal to boost fuel efficiency of automobiles to 31.5 miles per gallon by 2015 are raising hackles.
European Commissions emission reduction norms require automotive manufacturers to cut car emissions from the current level of 160 g/km of CO2 to 130 g/km by 2012. The new regulation, which is awaiting approval by member states of the European Union, requires CO2 emissions to be in proportion to the car weight.
This has sparked the demand for lightweight fuel efficient materials that can be used for producing cars without compromising on cost, performance, safety and recyclability. A number of lightweight high strength materials including aluminum, magnesium, titanium, advanced high-strength steels, fibre-reinforced composites and metal matrix composites are being considered for producing lightweight cars. The US Department of Energy has found that for every 10% of weight reduced in a car, the fuel economy increases by 7%.
The entire North America landscape is currently in the midst of engine downsizing trend and technologies like direct injection, super/turbo charging and transmission enhancements will soon become commonplace.
Researchers are also competing to meet a challenge from the US Department of Energy to improve fuel economy by 10% by converting wasted exhaust heat into energy. The US automotive industry is at an advanced stage of fostering production of lithium ion batteries and related component systems. All this will soon lead to production of fuel efficient, lightweight and eco friendly vehicles.
Specifically, Mazda Motor Corporation has plans to enhance the fuel efficiency of its vehicles by 30% through 2015. The process also includes weight reduction of new vehicles by 100 kilograms. Volkswagen has taken up the mission of reducing the weight of all its models ranging from Bentley to Skoda and developing high performance energy storage units for powerful hybrid vehicles that combines the best of combustion engines and electric motors. GM is in the process of manufacturing thermoelectric generators that use exhaust heat. Ford is working to develop climate control systems based on thermoelectric technlogy. Engineers in GM and Ford are using new adhesive technologies and thin steel to reduce automotive weight.
In view of the rising fuel prices and environmental concerns, consumers are showing preference towards fuel-efficient and lightweight vehicles. People worldwide are replacing SUVs and pickups with smaller crossovers and fuel-efficient cars.
In the US, used car dealers are refusing to buy SUVs as they are unable to find any takers. Small cars are emerging as the largest segment in the US auto market. Thus, in the future, lightweight, fuel-efficient and environmentally friendly vehicles are expected to rule the market. But many of the auto manufacturers feel that the proposed regulation comes at a rate much greater than anticipated and is extremely aggressive as the industry does not have adequate resources or lead time to make appropriate changes in the product designs.
?The author is India leader for auto practice, PricewaterhouseCoopers. These are his personal views