By Brian Dunn
This year should be a record-breaking one for vehicle sales, thanks to strong demand for trucks and SUVs, which have replaced automobiles in driving demand. In fact, conventional auto sales in the U.S. are “dead and they’re not coming back” even if gas prices skyrocket, according to Kevin Tynan, Senior Automotive Analyst, Bloomberg Intelligence, during a presentation at the International Economic Forum of the Americas in Montreal on June 13. That’s because trucks have become more fuel efficient over the last few years due to the Corporate Average Fuel Economy (CAFE) standards first enacted by the U.S. Congress in 1975, in the wake of the Arab Oil Embargo to improve the average fuel economy of cars and trucks produced for sale in the U.S. Trucks such as the Ford F-150, Dodge RAM and GM Silverado, account for 60 per cent of all vehicle sales in North America, up eight per cent from last year, while passenger vehicle sales are down eight per cent during the same period. In addition to being more fuel efficient, vans and trucks appeal to families who deem them safer than cars and because automakers are heavily promoting them as they add more value to their bottom lines.
In order to meet the 2025 CAFE standards, automakers are relying on three major improvements, namely weight reduction, lower aerodynamic drag, and power train improvements. CAFE requirements are driving aluminium demand to reduce weight, Mr. Tynan said. But the steel industry is fighting back with its own products made with carbon fibres.
“The bigger the vehicle, the more weight you can take out of it which bodes well for the aluminium industry,” said Mr. Tynan. “Advanced high strength steels are battling it out with aluminium and magnesium and the biggest loser is standard steel, although steel is still the dominant material in vehicle manufacturing.”
Because of falling commodity prices and the drive towards a greener planet, the aluminium industry must become more efficient and find alternative uses for its product. That may prove challenging since China produces half of the world’s aluminum primarily from electricity generated by burning coal, noted Jean Simard, President, CEO, Aluminium Association of Canada. And the price of aluminium has fallen from $3,000 a tonne in 2008 to around $1,200 today with over 40 per cent of production capacity being redundant, said Mr. Simard.
“The drive towards improved production efficiencies and techniques is therefore under way. It is against this background and new business environment that the industry is repositioning for the future. It’s about responsible production and decarbonisation of the global economy by producing better with fewer resources.”
Aluminium production is an energy intensive industry, but only accounts for two per cent of CO2 emissions, noted Fiona Solomon, Executive Director, Aluminium Stewardship Initiative. “Aluminium used in cars reduces carbon emissions and recycling it uses only five per cent of the energy used to produce it. Therefore, how can aluminium be produced with recycling in mind?” Her organization is looking at developing a third party certificate program and standards for the mining industry which has lagged a lot of other industries, Ms. Solomon pointed out. ‘We want to help companies define sustainable development, support regional climate initiatives and help reduce duplication among different companies. The point is to develop long-term change.”