China Small Vehicle Market: Demand forecast to increase

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China Small Vehicle Market: Demand forecast to increase

- In recent years, the Chinese passenger vehicle market is greatly supported by the C and SUV segments. The combined share of the C and SUV segments in 2013’s PC market stood at 55,4%, indicating that these segments are attractive.

- However, as the Chinese society shifts from large to nuclear families, people tend to select small vehicles which better fit their needs. As the 1990s generation becomes the main consumer of vehicles, demand for small vehicles is expected to further increase. Small vehicle usage is also an effective way to meet fuel efficiency rules. Since fuel consumption must be lowered to 5L/100km by 2020, small vehicles with good  fuel efficiency are indispensable. In addition the Chinese government is promoting the export of foreign-made vehicles from China. As Southeast  Asian nations, India and other countries step up air pollution measures, demand for small vehicles is expected to increase which in turn will boost export from China. Unlike SUV and D segment models, it will be difficult to make small vehicles profitable in the short term; however, since there are only a few automakers on the market, capturing large share is a possibility.

- All these factors form an advantageous market environment for Japanese and EU brands, which have R&D history in the small vehicle segment. However foreign automakers are lagging behind in product releases in the A and B segments. 


14-15-1  

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Nissan has an annual capacity of 1.6 million vehicles in the NAFTA region

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Nissan has an annual capacity of 1.6 million vehicles in the NAFTA region

- Nissan is one of the three Japanese manufacturers the best established in North America, alongside Toyota and Honda. Between 2005 and 2013, its production volume increased by 20% in this region, from 750 000 to 1 500 000 vehicles. Nissan currently has in North America a production capacity of 1.6 million vehicles per year spread out in four factories:
- Cuernavaca - Mexico: 400 000 units per year (segment B / C: Micra, Tsuru, Sentra - pick-up segment: Frontier)
- Smyrna - USA: 500 000 units per year (the SUVs Xterra, Rogue, Pathfinder - segment D / segment E: Altima, Maxima)
- Canton - USA: 400 000 units per year (SUV segment / MPV: Titan Quest - segment D / segment E: Altima, Maxima)
- Aguascalientes - Mexico: 300 000 units per year (Versa, Tiida - C segment )

- All Nissan plants in this area are currently operating at 92% capacity.

- The manufacturer decided last year that new capacities would be added in 2014 to the Mexican Aguascalientes plant (+ 200 000 units per year). In addition, a plant dedicated to the Infiniti (Nissan's luxury subsidiary) producing 100 000 units will be built in the U.S. opening in 2017. Thus, Nissan will have a capacity of 1.9 million vehicles per year by 2017 in the NAFTA area, i.e. a figure very close to that of Toyota and Honda.


14-14-9  

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Toyota has an annual capacity of 2 million vehicles in the NAFTA region

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Toyota has an annual capacity of 2 million vehicles in the NAFTA region

- The Japanese carmaker Toyota is the best established manufacturer in North America. Between 2005 and 2013, its production volume increased by nearly 15% in this region, from 1 100 000 to 1 850 000 vehicles.


- Toyota currently has a production capacity of 2 million vehicles per year in North America, spread out in seven factories:

- Georgetown - USA (opened in 1986): 500 000 units per year (mainly Camry and Avalon -segment D / E).

- Cambridge - Canada (1995): 300 000 units per year (Corolla and Matrix - C segment, Lexus RX - SUV segment).

- Princeton - USA (1999): 400 000 units per year (Tundra, Sienna, Sequoia, Highlander - SUV segment / MPV segment).

- Tijuana - Mexico (2002): 100 000 units per year (Tacoma - pick-up segment).

- San Antonio - USA (2003): 200 000 units per year (Tacoma - pick-up segment).

- Woodstock - Canada (2008): 200 000 units per year (RAV4 - compact SUV segment).

- Mississippi - USA (2012): 200 000 units per year (Corolla - segment C) replacing the Fremont plant closed in 2009.


- All Toyota plants in this area are currently operating at 97% of their capacity. The Georgetown plant is used at over 100% of its capacity, which prompted Toyota to produce 100 000 additional Camry models in the Subaru plant of Lafayette (USA). However, this situation will not last as Subaru will cease to market the Toyota model at the end of 2016. By then, Toyota will have to find new capacities through its existing plants (in Tijuana?), new partners or may have to construct a new plant.


14-14-8  

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Honda has an annual capacity of 2 million vehicles in the NAFTA region

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Honda has an annual capacity of 2 million vehicles in the NAFTA region

- Honda is one of the three Japanese manufacturers the most well established in North America, alongside Toyota and Nissan. Between 2005 and 2013, the production volume of Honda rose by nearly 30% despite the financial crisis and the aftermath of the tsunami. Honda now has in this region a production capacity of 2 million vehicles per year, spread out in six factories:
- Marysville - USA (opened in 1982): 500 000 units per year (mainly Accord - segment D)
- Alliston - Canada (1986): 400 000 units per year (Civic and CRV - segment C)
- East Liberty - USA (1989): 400 000 units per year (Civic and CRV)
- El Salto - Mexico (1995): 100 000 units per year (CRV)
- Lincoln - USA (2001): 400 000 units per year (Odyssey and Pilot - segment D)
- Celaya - Mexico (2014): 200 000 units per year (Jazz - segment B)

- All these plants operate at 89% of their capacity. The remaining capacity should cover Honda's production needs until at least 2016. Indeed, the NAFTA region is expected to experience slower growth than in previous years. In addition, the market share of Honda is expected to stabilize because of increased competition from Korean manufacturers. Finally, local production can not be substituted by imports, the latter already being at a low level. 


14-14-7  

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The Dodge Sprinter will be replaced by the Fiat Ducato

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The Dodge Sprinter will be replaced by the Fiat Ducato

- Dodge (Fiat-Chrysler group) has always had in its range a series of vans (Ram Van and Ram Wagon) that were competing with the Ford Econoline (E Series), Chevrolet Express and GMC Savana.

- After the taking control of the Chrysler Group by the Daimler-Benz group in 1998, it decided to replace the old Dodge Ram Van and Ram Wagon by the Mercedes Sprinter. This replacement took place in 2004.

- The Mercedes Sprinter was then produced by Chrysler in the United States and sold under the Dodge badge. Its production ceased in 2009, while the Daimler-Benz group had just opted out of the Chrysler Group two years earlier and the American carmaker was placed under bankruptcy.

- The Chrysler Group was then acquired by the Fiat Group (2010), who decided to replace the Dodge Sprinter with its own Fiat Ducato under the Dodge brand.

- The replacement took place in January 2014. The model is now called the Dodge Ram Promaster. It is produced in the Chrysler plant of Toluca, Mexico. The manufacturer expects 25 000 annual sales, the Dodge Sprinter had never exceeded 23 000 annual sales. Chrysler manufactures and markets a van initially produced for Europe in North America , like Ford has done with its Transit which replaces the old Econoline a 100% American model. The U.S. van market is increasingly becoming similar to its EU counterpart. 


14-14-6  

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