North American Automotive Mold Importing 31% Falling Compared To The Previous Year

North American Automotive Mold Importing 31% Falling Compared To The previous Year

In the first three quarters of 2020, the North American automotive industry and its mold suppliers have experienced a difficult journey, and the future prospects are not optimistic. This is the main message from last week's press conference at Harbour Results, a company that provides business and operational consulting to the manufacturing industry.

HRI's in-depth research on the mold industry of automakers shows that in 2020, North American automakers' mold spending will be US$6.5 billion less than the initial forecast in 2019, and 31% lower than the 2019 spending of around US$9.2 billion. The key factor driving the reduction of mold spending is that in 2020, the number of vehicles purchasing molds from North America will decrease, to a total of 49 vehicles. 

Laurie Harbour, President and CEO of HRI, said: "We know that this year will be a challenge for the automotive mold industry, but we can never predict the impact of the global epidemic on the health of the automotive manufacturing industry."

The manufacturing environment in 2019 is sluggish, and HRI had predicted that this trend will continue into 2020. "Trading volume has started to weaken, and store conditions are not good," Harbour explained. "2020 is a turning point for the automotive industry. The main pressure will affect future mold demand. The first is COVID-19 and the global economic downturn for OEMs. And the financial pressure caused by suppliers. This will affect the profitability of automakers."

Harbour added that a large number of vehicles to be launched in North America in the future will be mainly electric vehicles, which will cost a lot to market. "These factors are significantly affecting the healthy development of the North American tool and die industry. Although expenditures are expected to improve, there is still a lot of instability and uncertainty."

U.S. auto sales are lagging and inventory will not be replaced until the first quarter of 2021, so demand is suppressed. Car rental volume has fallen by 70%; 21% of car buyers have delayed their purchases due to COVID-19. Only 5% of car buyers are buying new cars.

Harbour believes that "combination complexity" is a problem, and many original equipment manufacturers have a high-mix, low-volume product portfolio. "Original equipment manufacturers must reduce complexity." She pointed out. Original equipment manufacturers can reduce trim options from 8 to 6, engine models from 11 to 5, and combinations from 200 to less than 100. They should also have 12% cross-model common components, which would mean less customization. Harbour said these measures will reduce the cost of new molds for original equipment manufacturers from $600 million to $480 million.

HRI predicts that automakers will face difficult strategic decisions about where to invest money and what cars to launch. The current forecast for mold spending in 2021 is $7.8 billion, as new electric vehicle (EV) manufacturers enter the market, and existing automakers are also launching new electric vehicles and trucks. However, as the industry rebounds, many planned cars will be at risk.

Because financial challenges and changes in the manufacturing landscape, HRI predicts that 30% of North American manufacturers will close in the next year and half; 10% to 15% of them will be mold-related.

"We expect that automakers will be forced to make a series of difficult decisions to ensure that they have the funds to invest in electric vehicles and self-driving cars, while maintaining profits," Harbour said. "We guess that some plans to launch in the future Cars may be delayed. This will have a negative impact on moldmakers who have already felt the crisis."

Harbour suggested that as the mold market shrinks, positioning for the future is important. She said: “Leaders need to promote marginalization and eliminate complacency. Equally important, moldmakers need to continue to make plans to compensate for weaknesses, maximize the use of technology and talent, and spending controlling.”

Posted By Leila

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