While sales in North America may fall, IHS Markit expects global auto sales to rise in 2017.
Even with sales dropping in North America and uncertainty over the outlook in China, total global light vehicle sales will increase by 1.5%, according to a new report from IHS Markit.
However, industry risk in mature markets is at the highest level it has been since the Lehman Brothers collapse and global industry downturn from 2008 through 2010, and will be a key factor for the near future, the IHS forecast said. Total 2017 global light vehicle sales should increase to 93.5 million units, IHS Market said.
“Political uncertainty could cause a significant rift in light vehicle sales both in the U.S. and Europe, as both regions are undergoing fluctuations in policy, leadership and other dynamics,” said Henner Lehne, senior director, global vehicle group for IHS Markit.
In addition, IHS Markit forecasts in 2017 the decline of diesel vehicle sales share in Europe will further accelerate more than the European light vehicle market has experienced in the last decade.
The IHS report noted the drop represents just the start of a growing trend of diesel decline expected in the coming years, due in part to significant challenges around regulation alongside the arrival of the EU6 emission standards.
(Ghosn stepping down as CEO of Nissan. Click Here for the story.)
The Chinese version of the Buick Envision is selling well. How the Chinese market will perform this year is tough to predict.
IHS said despite a slow start in January, 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% for qualifying vehicles.
Provisional figures analyzed by IHS Markit suggest that China accounted for approximately 76% of the 2016 volume growth in global auto sales, with December being the last month of a full-tax break stimulus program.
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%) and expected payback effects will now be in play for 2018 (slipping 0.8%).
U.S. auto sales have lost some momentum already this year, and the change of administration somewhat complicates the near-term picture. 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.
It is difficult (and unlikely) to sustain and continue to grow at the same rates the U.S. market has seen during the past eight years, and a leveling off is underway. 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%.
(Click Here for details about why Jeep sales are expected to be flat this year.)
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%), the market could lose momentum for 2017, though IHS Markit forecasts the industry will close out the year with 1% growth.
The outcomes of elections in France and Germany could skew consumer confidence and policy, and therefore influence new vehicle purchases. From a manufacturing perspective, the recent hard Brexit announcements had various automakers publicly state that they would need to revisit the terms of their investments, though some had made agreements with the UK government following the Brexit announcement, which intensifies the risk to UK-based auto manufacturing.
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% for 2017 – even considering the expected stagnation in the coming four to six months.
South Asian demand should recover further in 2017 and light vehicle sales in the region are expected to be 5.9% in 2017, but India is expected to feel a negative demonetization impact and limit 2017 growth to just 7.7%.
Meanwhile, Association of Southeast Asian Nations car markets are forecast to accelerate by 4.6% as recoveries continue in key markets. Japan and South Korea remain similarly depressed by tax-related hangovers and economic in Japan and political concerns in Korea.
(To see more about American Honda’s John Mendel stepping down, Click Here.)
Brazil remained in the red for 2016, but appears to be close to the cyclical low. The Middle East region is also forecast to stabilize, supported by oil prices and the end of Iranian sanctions, with light vehicle sales forecast to grow 1.3% from 2016, according to IHS.