US light vehicle sales would begin a slow but steady recovery in 2009, building to 17.7m units by 2014 as the vehicle mix changes, while there would be “huge new demand” for light vehicles in emerging markets over the next 20 years, new analysis from forecaster CSM Worldwide said.
Go deeper with GlobalData
CSM predicted US domestic sales gradually would return to the historical growth average of 140,000 vehicles a year as the housing downturn bottoms out and the credit crunch eases.
Driven by economic growth, auto sales would show strong growth in China, India and Russia, but the market mix would differ dramatically among those countries.
Fast economic growth in developing regions would eat away at the US share of the global economy, CSM noted. China would overtake the US as global economic leader sometime in the 2040s, India would surpass Japan to become the world’s third-largest economy during that same decade, and Russia would pass Germany as the European auto sales leader in 2014.
“There are great opportunities in developing markets for global OEMs,” said CSM vice president, global vehicle forecasts, Michael Robinet. “But in order to succeed, they must build economies of scale through the use of global platforms and commonality in the build process.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“Because these emerging markets are very different from each other, regional product flexibility and a broad production base would be necessary to attain sustainable success.”
CSM said the world economy would grow at a 3% rate in 2008, with developing countries growing three times as fast. The US, European Union and Japan would expand less than 2%. Even though China and India lag far behind in terms of per-capita gross domestic product (GDP), they have large and growing wealthy segments.
Global light vehicle production would increase at a compound annual growth rate (CAGR) of 3.6% to 87m units by 2014, with more than two-thirds of the increase coming from developing countries.
By that year, 43% of General Motors production would be based in developing markets, versus 34% for Toyota.
North America
US vehicle sales would return to slow but steady growth beginning in 2009, but most of the increase would go to the “Asian 4” (Toyota, Honda, Nissan, Hyundai/Kia) as segment volumes continued to shift toward smaller vehicles, primarily at the expense of the mid-size segment. The growth of the small-vehicle segment would closely mirror rising petrol prices. Smaller unibody crossovers would grow to the detriment of mid-size, full-frame SUVs.
The subcompact B segment (Toyota Yaris, Honda Fit, etc.) would reach 1m units by 2014.
The aging baby-boomer population would increase the demand for luxury cars, “fixed-income-friendly” vehicles and driving-assist features.
The projected 2008 production of 14.3m light vehicles in North America could be in jeopardy if the UAW-AAM strike continues beyond mid-April.
The continued depression in the housing sector, coupled with the credit crunch, would slow US GDP growth to 1.6% in 2008 as recession worries continue. “Stagflation,” a stagnant economy coupled with inflation, remained a threat.
Aggressive interest-rate actions by the Federal Reserve Board plus the stimulus effect of upcoming tax rebates would lay the groundwork for recovery beginning in the second half of 2008.
GDP growth should rebound in 2009 thanks to recovering private investment and robust productivity growth.
The weakening of the dollar makes US-produced goods more affordable globally; exports are rising, partially offsetting the housing slump.
Europe
Almost all sales growth would be in central and eastern Europe, which together would grow at a CAGR of 3.7% per year through 2014, while western Europe showed a gain of less than 1%. Russia provides the best growth opportunity in Europe due to its dynamic economy and large population (145m).
Sales in Russia would grow steadily at about 5% per year, fuelled by strong per-capita GDP increases, falling unemployment and moderating inflation.
Russia would surpass Germany as the largest European auto market by 2014.
Growth in the Russian market would predominate in the B and C (subcompact and compact) segments, lead by tall wagons and downsized SUVs.
Production would grow 5.5% in central and eastern Europe compared to 0.8% in western Europe.
Germany would remain the production leader by a substantial margin.
The falling dollar would continue to squeeze margins on vehicle exports to the US. Conversely, exchange rates make production shifts to North America more appealing.
India
India’s economy would continue to grow at a brisk rate as its per-capita GDP increases 286%, to US$2,900, by 2030. Wealth would be comparable to today’s Russia or Turkey. The urban population and middle class would expand, driving demand for an additional 200m vehicles over the next 20 years and triggering light-vehicle production growth of 16% per year.
Low-cost, low-content mini-cars and subcompacts (A and B segments) would dominate the market as consumers move up from scooters and motorcycles into their first cars. A contributing factor is the current lower excise tax on small cars – 12% – compared to 24% for larger vehicles.
Vehicle penetration is expected to reach 166 vehicles per 1,000 people by 2030.
India’s working-class population group is growing at twice the rate of China’s.
Domestic production for light vehicles is likely to cross 5m by 2014; Tata, with its much-heralded $2,500 Nano mini-car, would challenge Maruti Suzuki for market leadership.
Diesel engines would gain market share as new technology is adopted to take advantage of India’s high price differential for diesel fuel.
Economies of scale, coupled with a well-developed supplier base featuring a competitive cost structure and quality meeting international standards, would position India to become a global centre for the design, development and export of small cars and components.
The success in using India as a small-car export hub enjoyed by Suzuki and Hyundai is encouraging other OEMs, including General Motors, Nissan and Toyota, to move more small-car, design, development and production there.
China
The growth of China’s economy is slowing due to tighter monetary policies. Inflation reached a 10-year high in 2007 and would remain high in 2008. Per-capita GDP is expected to top $8,000 by 2030 — a 300% gain that would represent wealth comparable to the Czech Republic today.
China would need an additional 350m vehicles over the next 20 years. Vehicle penetration of 50 per 1,000 could grow to 250 by 2030.
Annual auto sales would exceed the US by the mid-2020s.
Larger C- and D-segment sedans dominate the market; small cars are not popular.
Market is strongly polarised: low-cost, entry-level vehicles from local OEMs versus mid-premium and premium offerings from foreign OEMs.
The government is encouraging hybrid and electric development, discouraging diesel; Chinese OEM BYD is planning to launch all-electric vehicle by the end of 2009.
The Chinese auto industry faces several short- and long-term challenges: domestic OEMs are facing quality and brand-image issues. A flood of new models (83 in 2008, including 53 from Chinese OEMs) and intense competition are forcing prices down – 5% decline this year.
Economies of scale are poor – too many models and platforms, too few models per platform, far behind Japan in this regard.
Exports would become more difficult due to rising costs, intense local competition and the stronger Chinese currency.
