Global light vehicle sales are expected to reach 79.4m units in 2012, 5% up on 2011’s record 75.5m, according to LMC Automotive.
The firm, formerly JD Power Automotive Forecasting, said sales in the first half of 2012 set “a very robust” selling rate of 80m units, as key markets including the United States, Japan and China outpaced the sales level of a year ago. The selling rate in H1 2011 was 74.5m.
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“However, the selling pace is expected to soften through the second half of the year, as both emerging and mature markets weigh slowing economic growth and curbed consumer spending,” LMC noted.
“As the level of uncertainty rises as the result of the European crisis and its impact on other markets, so does the amount of pressure on auto sales around the world,” said forecasting chief Jeff Schuster. “All eyes are on Europe for a signal of the direction, as volume growth holds in 2012 but remains at risk next year.”
LMC expects 2013 sales to rise 6% to nearly 85m units.
“Many markets are expected to continue to be extremely dynamic, which puts downward volume risk next year at 3m to 5m units globally.”
Europe
LMC said weakness had “plagued” Europe, as light vehicle sales in the west fell 8% in the first half of 2012. Economic recession and concerns over the future of the eurozone have weighed heavily on the region’s vehicle markets. Among the five key markets in western Europe, there has been a divergence between the relatively better performing markets in the United Kingdom and Germany and those of Spain, France and Italy – the latter two hit by double-digit percentage declines so far in 2012.
“The pressure in the European market is immense at the moment as the auto industry struggles with falling sales volumes, increased discounting and idle plant capacity,” said European sales forecasting head Jonathon Poskitt.
“The risk of the Eurozone crisis worsening threatens any meaningful recovery in the near-term, and even the German market is showing clear signs of a slowdown.”
For 2012, LMC projects the region will decline 5% to 18.2m units. But an 8% drop in western Europe is expected to be offset by a 4% increase in the east, the Russian market having benefited from higher oil prices earlier in the year. For 2013, light vehicle sales are expected to grow by 2% if the eurozone storm is weathered but could decline by 2m units if a costly break-up [countries exiting the euro] occurs.
North America
In contrast to the year to date declines in Europe, the North American market increased by 14% during the first half of 2012, with the United States and Mexico increasing by double digits (15% and 12% respectively) and Canada not far behind with a 7% increase.
“The United States and Canada posted stable selling rates in July but the growth rate for the remainder of the year is no longer expected to be as strong as the economy cools and concerns with Europe rise,” said Schuster.
“However, we do expect the North American market to be able to ride out the potential storm, albeit at a lower level.”
As a result of higher economic-driven risk, LMC Automotive has lowered its 2012 light vehicle forecast for the US to 14.3m units from 14.5m units and trimmed the 2013 outlook to 15m units from 15.2m.
Asia
The light vehicle markets across Asia ended the first half of 2012 in positive territory with year over year growth being led by Japan, up 53% as the market recovers from the 2011 earthquake/tsunami disaster, helped by tax incentives for fuel efficient vehicles.
India posted a 14% increase, but the month over month selling rate declined during the past four months.
China sales remained strong, with an increase of 6% and a selling rate of 18.9m units for the first half of 2012.
Thailand continued to recover strongly from the floods in October 2011 with first half light-vehicle sales volume up 40% year on year.
For 2012, sales in the region as a whole are projected at 33.4m units, up 10% from 2011. As China’s and India’s economies begin to cool and exports to Europe slow further, there remains risk of weaker auto sales in the remainder of 2012 and into 2013. Sales in China are forecast at 19.5m units and India is expected to sell 3.2m units. Combined, volume risk is in the 500,000 unit range for this year.
Light-vehicle sales in Asia are expected to grow to nearly 37m units in 2013, with China representing 90% of the growth, on the likelihood that the new government leaders, who take office in October, will increase investment spending and launch a vehicle subsidy programme in rural areas.
South America
Even as the economic outlook has been downgraded, light vehicle sales have increased sharply over the last two months in Brazil as the August expiration of the temporary IPI tax cut has driven an increase in volume. Even with the significant increase, volume in Brazil for the first half of 2012 was down 4% from the same period last year with a selling rate of 3.3m compared with 3.5m last year.
Argentina averaged a selling rate of 777,000 in the first half of 2012 with volume down 10% from the same period in 2011.
For the full year, sales in the region are projected at 5.3m units, 100,000 units short of 2011 volume. If the Brazilian tax cut is extended until December, the market could see a boost, bringing 2012 sales to the level of those in 2011. However, this would have a negative impact (pull-ahead) on 2013 light-vehicle sales.
LMC’s forecast for South America in 2013 is for an increase of 6% to 5.7m units, driven by expected economic growth in the run-up to the 2014 World Cup in Brazil.
