Steel is still expected to remain the main material of choice for carmakers, as shifting to aluminium is a costly process and Asian markets are unlikely to be open to taking on these costs, according to a report published Friday by Bernstein Research.
In the report, Bernstein said that while some carmakers, like Ford, had effectively replaced steel with aluminium in some of their models, other major producers like Volkswagen and Honda had replaced aluminium with high-strength steels.
Bernstein said the explanation could not be found in a mere comparison of different business models and that the main reason for aluminium not replacing steel was that almost 100% of the automotive production growth by 2020 is expected to come from China and South Asia, where margins are tight and the use of more costlier aluminium is unlikely.
It said Chinese auto production growth between 2012 and 2020 is expected to be 65% to 230 million vehicles, while in South Asia the growth is expected to be 48% or an additional 90 million vehicles.
"Chinese and Indian automotive manufacturers suffer from weak margins. It is likely that as these companies develop they will move into using higher- quality materials, but this shift is almost certainly going to be in favor of higher quality steel before any move into aluminium," the report said.
"Emissions standards in these countries are more relaxed than in the EU or US, manufacturers do not have the same pressures to reduce weight and improve efficiency."
"If there is to be a major switch out of steel and into aluminium, we are much more likely to see this in EU and US, which are low to no growth markets over the next decade," the report concluded. "We're even seeing a substitution out of aluminium back into steel by higher end manufacturers like VW on some models. So even in markets where it is more likely, we still find it hard to believe we are on the cusp of a massive shift out of steel use and into aluminium in the automotive industry."
