Slower, Not Lower: IHS Automotive Forecasting 88.6 Million Unit Global Light Vehicle Market in 2015
Slower world sales growth to be supported by consumer windfall from sharply lower oil prices
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SOUTHFIELD, Mich.–(BUSINESS WIRE)–With two thousand fifteen off to a good embark, IHS Automotive, part of IHS Inc. (NYSE: IHS), forecasts global automotive sales for two thousand fifteen to reach 88.6 million, an increase of Two.Four percent over 2014, continuing an unbroken five-year run of sales recovery and growth from the low point set in the depth of the Good Recession in 2009. However, a slowdown is being signaled with just two of the high-potential BRIC markets likely to see enhanced sales this year.
China will lead the sector’s volume growth, however IHS expects the market to slow from 2014. The North American market will proceed its upswing, however the tempo differs by country. The size of the spasm of the Russian car market remains a significant wild card that will influence the European market across the year, according to the analysis, while other countries in the region proceed to recover at a rate of Two.Five to three percent, helped by the European Central Bank’s (ECB) commitment to full-blown Quantitative Easing (QE).
APAC Growth Proceeds to Lead Industry; A Slowing China Does Most of the Lifting
For the APAC region in 2015, China’s economic growth will decelerate further, to 6.Five percent from 7.Four percent in 2014, as a result of industrial overcapacity and weakness in the real estate sector. However, IHS Automotive analysts still expect light vehicle sales in China to grow by seven percent in two thousand fifteen to 25.Two million units, aided with enhanced auto finance invasion, rapid dealership expansion and government vehicle scrappage programs.
According to the analysis, the current anti-trust campaign environment could alter the relationships among consumers, dealer and OEMs. The campaign is expected to have a long-lasting effect on premium parts/vehicle prices in China. Coupled with this, the momentum could lead to downward adjustment in premium pricing, which helps provide solid foundation for premium vehicle invasion to further increase in China in the next decade. We expect premium vehicles in China to top two million units in two thousand fifteen with year-over-year growth of fifteen percent.
IHS Automotive experts also expect SUVs to remain the fastest-growing segment in China in 2015. “We see SUV market share (as percent of passenger vehicle sales) to increase from twenty six percent in two thousand fourteen to twenty eight percent in two thousand fifteen as consumers look to this segment to address evolving transportation needs,” said Lin Huaibin, manager, China light vehicle sales forecast, IHS Automotive.
In India, falling inflation, lower interest rates, energy prices and a regained confidence will help lift the car market into growth mode beginning in two thousand fifteen after a two-year lull.
U.S. Growth Stimulates Global Request Levels
North America proceeds to be an impetus to global light vehicle request levels. Improving credit conditions across the region and sustained, but tenuous, economic growth among the countries in the region have helped to motivate total auto sales levels.
“Although the economic conditions and tempo of recovery differ slightly among the North American countries, consumer confidence, credit availability and pent-up request have played key roles in sustaining auto request momentum since the Good Recession,” said Chris Hopson, manager, North American light vehicle sales forecasting, IHS Automotive. “This should help motivate sales once again in 2015.”
IHS Automotive projects regional light vehicle sales volume in North America to hit more than twenty million units in 2015, up Two.Five percent from last year.
In the United States, IHS Automotive analysts proceed to believe the upside risks for auto request are more apparent than the downside risks. With a strong exit to 2014, and gasoline prices presently plunging, consumers may feel even more positive via 2015. The IHS Automotive U.S. light vehicle sales forecast for two thousand fifteen is 16.9 million units.
Light vehicle sales in Canada set an annual record in two thousand fourteen that is scheduled to be violated once again in 2015. Light truck sales, especially CUVs, helped motivate request levels last year and with lower fuel prices expected, should once again predominate growth in 2015. The Canadian light vehicle sales forecast from IHS Automotive for two thousand fifteen stands at 1.88 million units.
In Mexico, auto sales stalled through the very first seven months of 2014, causing some concern that fresh tax policies implemented at the beginning of two thousand fourteen were hurting auto request growth; however, motivated by incentives to help spark request, light vehicle sales grew via the 2nd half of the year. This momentum should proceed in 2015, and IHS projects sales volume to grow three percent to 1.17 million units.
There was a stark switch in two thousand fourteen South America automotive request compared to 2013, when monthly sales broke the 500,000 unit mark seven times. The year preliminarily closed with Five.34 million units – a ten percent drop from 2013; with politics impairing Argentina and Venezuela, and the economic climate weighing down markets like Brazil, Chile and Peru, where it may take a few years for request to recover to previous highs.
Uncertainty remains over Argentina, Brazil, Chile and Venezuela for 2015. Argentina is displaying hints of the “tango crisis” of 1998: uncontrolled inflation, lack of foreign currency and risk of devaluation. As a result, IHS Automotive is expecting two thousand fifteen sales in Argentina of harshly 500,000 units. In Brazil, banks have been tightening credit for the last three years, and they are not showcasing interest in boosting credit to the automotive sector. This, along with the increase in the IPI (an industry tax) in early January, higher financing rates and powerless job generation should translate into sales in Brazil of Three.25 million units.
In Chile, doubt over car sales is drawn from the emissions tax and the risk of further currency devaluations will ring in the market close to the 300,000 unit mark. Ultimately, it is difficult to imagine the Venezuelan market tumbling any lower than it already has; however, as oil prices plummet, the government’s access to foreign currency will proceed to be limited, thus impairing vehicle production.
European Market Proceeds to be Influenced by Russia
In Europe, the crisis in Russia could offset the boon of lower fuel prices for Europe’s car buyers and even the fresh QE boost from the ECB. As the Russian economy slumps into a deep recession in 2015, its negative influence on the Eurozone and surrounding countries could be large enough to offset the consumer benefit from falling fuel prices. Overall, the IHS forecast for light vehicle sales in Western Europe has only been fractionally upgraded for two thousand fifteen despite the benefits of $60 oil.
After a better-than-expected five percent increase in 2014, light vehicle sales in the mature West European region are forecast to improve by another three percent in 2015, with upside coming if the apparent open-ended commitment to QE by the ECB thrusts the Euro down still further.
“The size of the market spasm in Russia is the largest wild card facing vehicle manufacturers across the European continent, if not the world, in two thousand fifteen and 2016,” said Nigel Griffiths, chief automotive economist, IHS Automotive.
After the latest enormous volatility of the Russian currency, prices of imported cars look like they will increase well over twenty percent or so and even domestically-produced vehicles will have to see double-digit price hikes. This, along with a deep recession compounded by the latest credit rating downgrades, could shove the market down to just 1.8 million units; a twenty seven percent decline over two thousand fourteen and almost forty percent (1.Two million) below the market level recorded in 2012.
Global Sales Growth Proceeds amid Volatile Price Signals
From a global perspective, the auto industry is now being faced with and will have to adjust to very large and widespread exchange rate movements, commodity and raw material price switches and, of course, the fresh low oil prices. The last two will be significant tailwinds for the auto sector, its margins and for most of the world consumers, but at the same time, their unpredictability will mean long-term business plans will likely switch at a more cautious tempo.
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