A Changing Road Map

The 2009 Honda Pilot includes 434 pounds of finished aluminum, accounting for slightly more than 10 percent of the vehicle’s overall weight. Photo courtesy of Honda

As the health of the economy continues to improve, pent-up demand for new cars is giving way to increased car sales and, consequently, more cars destined for shredders. That’s good news for recyclers, who may have seen scrappage rates declining in recent years, as people held on to their vehicles longer.

But now, the relatively high age of cars in use on the road is convincing auto industry analysts that more people will upgrade in the coming months, and 2012 is expected to be an even better year for car sales in the United States. According to data from the National Automobile Dealers Assocation, vehicles on the road are older than usual, at 10.6 years old.

Ron Krupitzer, vice president, automotive market, for the Steel Market Development Institute, based in Southfield, Mich., says that figure is historically below 10 years. “People have been delaying their normal purchases, which creates an extra demand for these vehicles, and that’s the strength that analysts feel will help drive improving sales in 2012,” Krupitzer explains.

Analysts from the automotive research firm Polk in Southfield, Mich., expect U.S. car sales to grow by 7 percent in 2012, to a level of almost 14 million.

And Polk says the growing trend is expected to continue for the next four years, to a level of 16.1 million in 2016. Sales were at the 16 million level in the earlier part of the decade.

“The revival of the market is going to continue,” says Tom Libby, a senior automotive analyst at Polk.

Similarly, Krupitzer notes that strong automotive sales in recent months have beat forecasts. “We are encouraged by the strength of the automotive market right now,” Krupitzer says.

With increased car sales, rising vehicle scrappage rates are expected to follow. Libby notes while the vehicle scrappage rate has been steadily declining since 1990, the decline is expected to reverse. The rate was 4.5 percent as of June 30, 2011, Libby says, compared with 5.5 percent of cars in use scrapped in 2010.

“As the industry improves,” Libby says, “we’ll see more and more older vehicles that will be scrapped.”

Ultimately, as the U.S. automotive market heats up and fuel-efficiency standards continue to tighten, recyclers can expect continuing changes on the horizon in the automotive materials mix.
 

Lightening Up
Along with the increase in new car sales, the composition of cars is also in a relative state of flux, as carmakers scramble to offer more fuel-efficient vehicles and smaller, more efficient engines.

Part of the drive for fuel efficiency comes from the government’s Corporate Average Fuel Efficiency (CAFE) standards calling for passenger cars and light trucks to meet an estimated combined average mpg level of 34.1 by 2016. Those rates will continue to increase: Cars and light trucks will have to achieve 54.5 mpg by the 2025 model year.

High gas prices are another factor directly impacting consumers. With gas prices nearing $4 per gallon, consumers also are demanding greater fuel efficiency out of the vehicles they buy.

To make that happen, automakers are busy trying to figure out how to meet the newest standards and consumer demands. That means the industry is likely to see a changing materials mix in autos going forward.

The trend to lightweight vehicles is the major way carmakers have been able to offer fuel efficiency, and they can do that in a number of ways. “The overall trend is that vehicles are becoming lighter, and that takes many forms, including the vehicles themselves and including the powertrain,” Libby explains. “They are religiously pursuing the reduction of content.”

For this reason, Libby also says crossover vehicles—those with the lighter unibody architecture rather than the heavier steel-on-frame construction—will continue to sell well among consumers.

The use of smaller, lighter, yet more efficient or turbocharged, powertrains is another trend expected to help manufacturers offer higher fuel efficiencies, Libby notes. For example, the popular midsize Hyundai Sonata is now only offered with a four-cylinder engine, Libby notes. It’s a telling sign of things to come, Libby says, because traditionally, midsize car buyers could choose from either a six-cylinder or four-cylinder engine.

Libby adds, though, that today’s smaller turbocharged engines are not like their predecessors. “They are able to design these powertrains so they have much more power with much less weight and fewer cylinders,” he says. “So the four-cylinders of today, some of them with turbocharging, are getting the horsepower of the six-cylinders of 10 years ago.”

Libby says automakers also will continue to explore the use of lighter materials, such as aluminum, composite plastics and high-strength steels while also continuing to remove superfluous items.

“They’re examining every part of the vehicle and either taking it out or reducing its weight, again to meet this 54.5 mpg [goal],” Libby says.
 

Steel on a Roll
For their part, automotive steel industry experts are betting that various grades of high-strength steel, and advanced high-strength steel, will be silver bullets for automakers looking to remove weight.

Krupitzer says the automotive sector has seen the strongest comeback thus far among all major steel markets since the recession. “We’re definitely coming back very steadily, and the last several months have been better than forecast for automotive sales as well,” he says.

Krupitzer also says the types of vehicles selling well, whether cars or light trucks, are largely affected by prices at the pump. “Passenger cars I think were doing the best when gas prices were high several years ago, and then trucks recovered,” Krupitzer says. “The bottom line is that as fuel prices go up, people desire to have more of the smaller vehicles and that generally means more passenger cars,” Krupitzer says.

The lightweighting trend is already evident where steel is concerned. Jim Woods, director of public and education relations for the Steel Recycling Institute, based in Pittsburgh, says today’s new cars contain about 1.3 tons of steel on average. In contrast, vehicles coming off the road have 1.4 tons on average, Woods says.

Part of the reason for that decline is the increased use of high-strength steels designed for strength and good formability. Krupitzer notes that with high-strength steels, car parts are stronger, and at the same time can be made thinner and lighter.

But Krupitzer says while vehicles have gotten lighter, the percentage of steel in vehicles has remained relatively constant. “If you look at overall steel content say from mid-1990s to today, it’s very much the same,” he says. “We’re probably 58 to 60 percent total steel in the vehicle,” he says, but adds, during the last 10 years, the amount of high-strength steel has gone from zero to 150 pounds. “That’s replaced the mild steel or the traditional steel,” he explains.

Krupitzer says the newer critical crash tests also have forced carmakers to use more reinforcing high-strength steels. “Today’s vehicles are much safer than vehicles of 10 years ago and they may have especially large quantities of advanced high-strength steel.

Krupitzer says two general areas where high-strength steel is likely to be used are the front- and rear-end structures and the pillar separating the front and rear doors.

The steel industry continues to develop and market the high-strength steels for automakers. “As we’ve worked the last 10 years to put more of these advanced high-strength steels into vehicles, we still have more work to do to make that happen more completely in the next 10 years.”

Toward that end Krupitzer refers to the FutureSteelVehicle program, created by WorldAutoSteel as the global steel industry’s lightweighting initiative designed to offer steel solutions to automakers around the world. According to a study conducted for the program, the industry expects to double the number of steel grades available by 2020.

“It’s clear the vehicle has to change if we’re going to satisfy all the tough crash and fuel economy requirements coming at us down the road,” Krupitzer says. To stay in the game, he says, steel has to refresh itself continually with new grades and new strengths. “It’s going to take a lot of work, working on high-strength steel grades maybe four or five times as strong as the car companies are used to using, to make this happen.”
 

Aluminum Rising
Meanwhile aluminum, the No. 2 material in vehicles since 2006, is expected to grow substantially as a part of the vehicle materials mix.

A 2011 study of North American automakers by research firm Ducker Worldwide says aluminum as a percentage of the overall automobile materials mix will double by 2025, reaching a level of 16 percent.

“What OEMs have said is that they are essentially going to double the percentage of the use of aluminum in a car,” notes Kevin Lowery, director of communications for Alcoa, based in Pittsburgh. “It’s going to grow by leaps and bounds.”

Lowery also notes he’s heard hints of concern among OEMs of high-strength steel’s possibly being “maxed out.”

According to the Ducker study, today’s U.S. cars contain about 343 pounds of aluminum, a level of about 8 percent. That weight is expected to increase to an average of 550 pounds by 2016.

Lowery says lightweighting vehicles with aluminum in place of steel is the fastest and most effective way to reduce a car’s weight and also to maintain other desirable properties, such as durability, performance and energy absorption. For this reason, Lowery says, more and more body closure panels are switching over to aluminum in place of steel and even high-strength steel. “Anything on the outside of the vehicle is really moving to aluminum,” he says.

The next phase, Lowery continues, is more completely aluminum-intensive vehicles, which includes the auto frame as well as the closure panels. In fact, Lowery says, aluminum is expected to be considered for use across the entire car, whether for bumper systems, deck lids or braking systems.

“There’s not an OEM in the world that we haven’t spoken to about helping to make their vehicles more fuel efficient,” Lowery adds.

The interest in lightweighting also is being driven by the fact that as weight is added to vehicles by way of increasing gadgetry such as electronics, manufacturers continue to look for ways to offset some of those weights in other aspects of the materials mix, Lowery observes.

“It’s multifaceted,” concludes Lowery. “Fuel efficiency is one thing, performance is another thing. They want it all.”
 

Competition Continues
Krupitzer acknowledges that in light of the increasing CAFE standards, the aluminum industry is working just as hard as the steel industry to take over automotive parts. He points out that while aluminum is more expensive than steel, aluminum manufacturers believe carmakers will be willing to invest in the light metal. But, he adds, “Steel is no doubt the most cost-effective choice for building a car or truck and probably always will be.”

Similarly Lowery observes that competition between aluminum and steel makers, for use in automotive applications, has been going on for decades and will continue. But he concludes, “Aluminum has grown every year for the past 40 years in the automotive market here in the United States.”

“The winner is going to be the customer and the car companies,” Krupitzer says. “They are going to have a lot more choices to pick from to make better vehicles for the future.”

The author is a managing editor with the Recycling Today Media Group and can be reached at lmckenna@gie.net.