View From The Bridge - Bulletin 111 (Mar 10)
The world looks different depending on your location
After attending conferences recently in New York and London, it’s been exciting to visit China. The National People’s Congress, with 3000 delegates, comes together to hear China’s future plan which, unlike many western political events, has a high probability of being implemented. The confidence is self-evident. Efficient public transport, lots of new building investment, extensive levels of spoken English. Shanghai is almost a microcosm of the West/East analogy; the art-deco architecture of the western Bund contrasting with the modernistic 21st century building on the Eastern side.
While Japan is rebounding 35% after a terrible 2009, car sales in China are up 60% on top of a previous year of record growth. The government’s demand stimulus has been working exceptionally well. China is now the world’s leading car producer and consumer (a 13.5 million car market). This takes China's vehicle parc close to 200 million.
With the explosive parc growth, lubricants demand will have to match this. Though competition for first fill is apparently ferocious, the opportunities in the service market continue to expand as the channels evolve. We expect to see the same pressures played out in China as elsewhere; the OEMs trying to retain the Lubricant service revenue for their dealer networks, while the Lubricants businesses compete to supply the higher margin service volumes to the repair workshop. In a growth market of this size there are opportunities aplenty. OATS’ task is to ensure we gather the most accurate, up-to-date local OEM data.
An automotive milestone of a different sort was also in the news this month as Ford regained US market leadership for the first time since 1968. Toyota and GM’s troubles have left Ford as the “last man standing” (if you ignore the Korean car makers who are also roaring ahead). And this is without Government assistance. Will Ford continue to hold on once the market recovers from its dose of “recall-itis”? Once again – we shall see!
Sebastian Crawshaw, Chairman OATS
