IHS had forecasted sales to cross 88.6 million unit mark, but the estimated sales have for 2015 have come in 1% lower than the forecast at 87.5 million units.
13 Jan 2016 | 3309 Views | By Autocar Professional Bureau
Worldwide automotive sales are likely to inch closer to the 90-million-unit mark in 2016, according to the latest forecast by IHS Automotive.
Incremental volume growth in the US and Europe is forecast to be solid but less spectacular, while on the other side of the balance sheet, further downside ...
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Worldwide automotive sales are likely to inch closer to the 90-million-unit mark in 2016, according to the latest forecast by IHS Automotive.
Incremental volume growth in the US and Europe is forecast to be solid but less spectacular, while on the other side of the balance sheet, further downside from Russia, South America and some big ASEAN car markets will be less of a drag on global volumes as their impact lessens, having already suffered severe market contractions in 2015. This, combined with the new autos targeted stimulus in China, is likely to provide a mild uptick in global sales growth of 2.7%, IHS Automotive forecasts.
By absolute volume, the forecast has pegged global automotive sales in 2016 to be around 89.80 million units. IHS had forecasted sales to cross 88.6 million unit mark, but the estimated sales have for 2015 have come in 1% lower than the forecast at 87.5 million units.
Last year was characterized as a good year in the mature car markets, though it was largely offset by a very poor year for many of the world’s emerging markets.
Region-wise forecasts
The US auto market has been powered by a combination of low interest rates and low gas prices, allowing for market momentum to remain strong. Although interest rates will be a slight headwind, buying conditions will remain positive, allowing the market to continue to grow in 2016 and 2017. IHS estimates there is still strong upside potential as a strengthening US economy and stronger employment takes the US market to 18 million units over the next two years or so.
In West Europe, momentum is also strong, even after the recovery last year being well above expectations. The current forecast for 2.5-3.0% uplift in sales in Europe could be even stronger. However, some northern European markets are peaking. In Spain, some correction is expected after eight consecutive years of scrapping incentives comes to an end.
“Despite ongoing political and partial economic troubles in the European Union, West Europe, together with the US, will build the fundamentals for solid global demand growth in 2016,” said Henner Lehne, senior director, global light vehicle forecasting at IHS Automotive.
Optimism for sales activity in the Chinese market has increased dramatically since the government announced measures to reduce the vehicle purchase tax on smaller cars. However, continued stock market volatility may intimidate some buyers. Despite a slowing economy, IHS Automotive now expects light vehicle sales growth to increase 5-6% in 2016 – enough to add more than 1.3 million units of additional sales.
For several markets in the ASEAN region, 2016 will be a year of transition from the disappointing sales slump in recent years. In the key volume markets of Thailand and Indonesia, a return to growth should begin by the second half of 2016 and build momentum the following year. India’s auto market should accelerate as lower energy prices and falling interest rates allow a return to double digit growth for the first time since 2010, according to IHS forecasts.
For Brazil and Russia, 2016 is likely to be a difficult period. Both markets have now been in decline for three consecutive years and 2016 will likely extend that to four years as their economies continue to contract. Brazil’s vehicle market is likely to decline 14% this year, according to IHS Automotive. In Russia, the market will continue to contract as well, due to the lingering effects of low oil prices and sanctions on the Russian economy and its exchange rate.
Automotive production outlook shows promise
North America and Europe are expected to see production output levels rise again in 2016. In addition, improvement in a number of key emerging markets leads to an estimated 3.2% growth globally in 2016.
During 2015, a number of emerging markets had stalled, but with the exception of South America, all major regions are expected to see output grow in 2016.
IHS Automotive forecasts that Europe will grow by 1.7% and surpass 21.0 million units of production in 2016 after 3.3% growth in 2015. Western Europe is expected to grow by 2.4% with support from the ongoing recovery in domestic markets and exports to the buoyant US market.
The pull of China remains, but growth will slow and localisation will continue. Eastern Europe remains constrained, but Russia could halt the sharp declines of 2014 and 2015. Central Europe is effectively flat, according to IHS forecasts.
The NAFTA region should demonstrate continued strength in 2016 as the domestic US market reaches new peaks and key investments continue at a number of European and Asian manufacturers. While exports to China and South America might be blunted, opportunities elsewhere are enhanced by new, globally focused products. The outlook is for growth to accelerate and production levels to exceed 18 million units.
Japanese output fell during 2015, but 2016 offers more support as exports continue to benefit from exchange rates and as the impact of domestic tax changes made during 2014 and 2015 are worked through the system. In 2016, IHS Automotive expects production growth of 2.3%.
In China, recent stimulus is expected to be the most influential development, likely to support a 5.2% increase in output in 2016, offsetting the weaker fundamentals. International joint venture operations are expected to grow most strongly during 2016 as they respond to the strength of the SUV sector with new or revised offerings.
ASEAN output declined during 2015, largely due to the slowdown in Indonesia, the region’s second biggest market. The ASEAN market should post a modest increase of 1.3% in 2016, in part due to Thailand’s ability to grow exports despite a slowing domestic market, according to IHS forecasts. Indian growth may have disappointed during 2015, but is still expected to have increased by nearly 6%. IHS expects this to accelerate further in 2016, rising 9.2%.
South America saw output fall sharply during 2015, down an estimated 20% for the region as a whole and 22% in Brazil. Unlike Asia, or even Eastern Europe, there is very little evidence to support anything other than a further decline in output during 2016. Without a dramatic change in conditions, IHS forecasters expect output to fall a further 5% in 2016.