Auto players are entering the New Year with some trepidation, following a turbulent 2000.
Last year was something of a disappointment for the automotive industry. Car registrations broke records up to Q3, but the industry was hit by massive shocks such as plant closures, the tire debacle and industry-wide profit warnings.
2001 will be a make-or-break year for many players. 2000 started well, but the impact of falling share prices from March 2000 onwards left many manufacturers feeling the pinch. This reverberated across the whole auto value chain. Competition hit margins and in some cases led to closure of plants.
Overcapacity will continue to be a major issue in the industry. As recession looms in the US and threatens to hit Europe’s shores, all manufacturers need to be on alert. The closure of Vauxhall’s plant in Luton is anticipated to be the first of many capacity rationalizations. Although few closures will be on this scale, the cumulative impact on the automotive industry will be significant. Only the popular models will enjoy the happy times.
Perhaps surprisingly, however, the B2B environment could be the key to success. The auto industry has one real option to increase profitability in the short-term – by reducing costs. B2B eCommerce is the ideal way of doing this. 2000 was a year of transition towards B2B transactions as the building blocks were established. 2001 will further open up the fields of play.
Using B2B eCommerce, auto players (like players in other industries) can gain greater access to markets and therefore become less susceptible to threats, as well as cut costs significantly. The speed and effectiveness with which automotive players adopt this mechanism will determine the winners and the losers in the future.
