Slightly growth for European and Global car sales says IHS Markit

Automotive data specialist IHS Markit forecasts total 2017 global light vehicle sales of 93.5 million units. Compared to 2016 this is an increase with 1.5%. The bad news, according to IHS Markit analysists is the high industry risk in mature markets across the globe. “The risk is at the highest level it has been since the Lehman Brothers collapse and the global industry downturn from 2008 through 2010.”

Diesel and alternative powertrains
The second element that will impact global automotive sales this year is alternative engine propulsion choice combined with decline of diesel popularity which in various markets, and more specifically bin Europe, could play a significant role. IHS Markit forecasts that in 2017 the decline of diesel vehicle sales in Europe will further accelerate more than the European light vehicle market has experienced in the last decade. This represents just the start of a growing trend of diesel decline expected in the coming years, due in part to significant challenges around RDE regulation alongside the arrival of the EU6d emission standards.

Despite the daily publicity and the increased marketing, sales of BEV (battery electric vehicles) and PHEV (plug-in hybrid electric vehicles) light vehicles will not exponentially grow in 2017, according to IHS Markit analysis. Global BEV production will remain below 1 million units and will represent just 0.7 percent of new vehicle supply globally in 2017 states IHS Markit forecasts.

Europe
For Western Europe, Brexit uncertainty, banking fears, and election concerns are on the agenda for the EU projection—and after a decent 2016 (up 6.2 percent), the market could lose momentum for 2017, though IHS Markit forecasts the industry will close out the year with 1.0 percent growth. The outcomes of elections in France and Germany could skew consumer confidence and policy, and therefore influence new vehicle purchases.

China
The majority of global growth can be attributed to a revised Chinese automotive legislative regime, as Chinese-targeted auto excise duty incentives are expected to continue through 2017, albeit at a lower rate of 7.5 percent for qualifying vehicles (up from 5 percent in 2016). Looking forward, IHS Markit expects China to continue to be the world’s largest car market for the foreseeable future, and has upgraded its 2017 China forecast to 28 million units (up 1.9 percent).

South Asian demand should recover further in 2017 and light vehicle sales in the region are expected to be 5.9 percent in 2017, but India is expected to feel a negative demonetization impact and limit 2017 growth to just 7.7 percent. Meanwhile, Association of Southeast Asian Nations (ASEAN) car markets are forecast to accelerate by 4.6 percent as recoveries continue in key markets. Japan and South Korea remain similarly depressed by tax-related hangovers and economic (Japan) and political (Korea) concerns.

U.S.
U.S. auto sales have lost some momentum already this year, and the policies and changes proposed by the Trump administration regarding trade and environmental regulations creates some uncertainty, countered by a slightly improved economic picture for 2018–21, according to IHS Markit analysis. In 2017, IHS Markit forecasts U.S. light vehicle sales at an unchanged 17.4 million units, a slight moderation on 2016 levels, down just 1.0 percent.    

Russia
After four consecutive years of decline, the light vehicle sales market in Russia seems to have finally reached its bottom. IHS Markit forecasts a growth rate of 8.25 percent for 2017 – even considering the expected stagnation in the coming 4-6 months.  According to forecasts, in the second half of 2017, a slight recovery is expected as the light vehicle sales market will profit from somewhat improved energy prices, a stabilized exchange rate and improved consumer expectations.

Brazil
Brazil remained in the red for 2016, but appears to be close to the cyclical low. According to IHS Markit forecasts, the country should regain momentum through 2017 (up 1.1 percent).

Source: IHS Markit, 2017