Automobiles being fueled by flower power

Over the past 15 years OEMs ( Original Equipment Manufacturers) have been facing mature market conditions i.e. stiff price competition (Veloso and Kumar 2002, 2). On top of that over the few past years, the entire automotive industry has entered stagnancy due to the maturity of the developed markets and the lowered demands. The Triad regions (Western Europe, Japan, and United States) have been affected particularly by this downward trend. As a result OEMs around the world are under pressure to meet the challenge of producing distinctive and innovative cars while keeping the cost low. The maturity and demand fall down has lead the industry shift into the emerging markets. South America, India, People’s Republic of China (PRC), and Eastern Europe have emerged as promising markets due to their economical progress, sustainable development and considerable demand of car. Thus most OEMs have invested heavily in plants outside their home base to better reach local consumers and meet their demands. Trade, safety, and environmental regulations establish incentives and requirements for modernization and change in design or production (Veloso, and Kumar, 2002, 2; EMCC, 2004). For instance a compulsory emissions standard dictated by EU Commission for all the EU Member States has led the large-scale industrialization in the industry and moreover biofuels has started to be taken into consideration by the automobile industry that is adapting its motorizations (EurObserv’er 2007). Although internal combustion engine most likely will continue to dominate the automobile industry, I believe that there is still a room for alternatives. Alternative such as ethanol-capable flexible-fuel vehicles (FFV); at present thay are being sold more and more which would have seen impossible just only a few years ago (MacKenzie 2007, 5). Moreover upward slope towards being more environmental friendly especially in the central Europe gives me more confidence to bet on the alternatives.

In today many car manufacturers are working on a host of different technologies of emission. It seems that competition on eco-car market will gain speed since European Commission set an average goal of 130 grams of CO2 per kilometer for all new cars by 2012. To overcome this issue, Saab unveiled its latest 9-5 BioPower car, which runs on biofuel ethanol for the Swedish market, where 80 percent of the Saab 9-5s sold are now BioPower, as well as promoting sales in other European markets and extending BioPower to other models (Saab’s official website). The number of FFVs in Sweden currently has exceeded 70,000 (See Figure).

References:

Bennett, J. (2007) Lessons Learned – Key Biofuel Markets, Power Point Presentation, ASEAN-U.S. Enhanced Partnership - Biofuels and the Automotive Industry Seminar, Bangkok

EMCC, European Monitoring Centre of Change (2004) ‘Trends and drivers of change in the European automotive industry: Mapping report’, prepared for the European Foundation for the Improvement of Living and Working Conditions.

EurObserv'ER (2007) ‘Biofuels Barometer’, www.ethanolstatistics.com/Expert Opinion Interview, Per Carstedt, SEKAB, 22.10.2007.

MacKenzie, D. (2007) ‘The Environmental Performance of Car Companies’, Union of Concerned Scientists.

Veloso, F. and Kumar, R. (2002) ‘The Automotive Supply Chain: Bibliography 143 Global Trends and Asian Perspectives’, Working Paper, Asian Development Bank (ADB), Jan. 2002.