Emerging markets in the East will decide the winners and losers in the automotive industry, according to Dr Ralf Speth, CEO of Jaguar Land Rover.
Dr Speth stated that manufacturers must expand their global footprint into markets such as China and India to guard against failure. However, the head of Jaguar Land Rover (JLR) pointed out that this should not be at the expense of UK operations and the UK Government must do more to support manufacturing to ensure this.
Speaking at the Institution of Engineering and Technology’s recent Viscount Nuffield / Mensforth Lecture at the University of Warwick, Dr Speth suggested that the automotive industry could be revived in the UK, alongside overseas expansion, but it requires real and practical support from the UK government which goes beyond the cuts to corporation tax announced in the most recent budget.
Dr Speth went on to point out that after successive Governments had spent 25 years largely neglecting the manufacturing sector, there was now a growing recognition for the need to rebalance the economy away from reliance on finance in London and the services sector.
With the recent resurgence in interest of manufacturing from policy makers, Dr Speth added that it is vital that the government, with industry support, has to create the right environment for investment, innovation and bridging the research and development gap between universities and business.
Dr Speth also discussed the importance of the effective management of consolidation and rationalisation to ensure that the current over-capacity of 20m-25m units within the industry is reduced. He added that this could see the elimination of marginal industry players over the coming years and those that are left will not be able to rely on Europe alone, with its higher infrastructure costs and labour cost imbalance.
He concluded that we are currently at the threshold of a paradigm shift not seen before in the automotive industry. According to Dr Speth, the role of the car is already being questioned by environmentalists and the youth in megacities, and manufacturers need support from the government, combined with expansion into emerging markets to ensure their futures.
He added that it is a risky environment that we are currently in, but for those companies that see the dangers and prepare adequately for them, it’s a world of huge opportunity.