Despite sluggish sales in the U.S. and China, global auto sales are expected to set a new record in 2018.
Global auto sales are expected to hit an all-time record in 2018 of 97.3 million vehicles, according to a new forecast by LMC Automotive.
That 2.1% jump over 2017 would come despite a weak market in North America, as well as softening growth in what is now the world’s largest automotive market, China, LMC researchers said during a media conference call.
The U.S., in particular, posted its first annual decline in vehicle sales since the market hit bottom in 2010, and it remains unclear what will happen in 2018, LMC Managing Director Pete Kelly cautioning that it “could go either way.”
Right now, “we’re assuming it will be down a little,” again this year, but Kelly added that, “Perhaps if we did see a bit more strength in the economy, that negative 1% could disappear, and it could be flat or slightly up.”
(Automotive consumer debt continues to rise. Click Here for the story.)
Sales in the U.S. are expected to be down again in 2018, but a strong economy could change that.
A variety of factors could influence overall North American light vehicle sales, according to LMC, including the ongoing negotiations aimed at revising NAFTA. A breakdown of the North American Free Trade Agreement would likely lead to an increase in prices and a concurrent decline in vehicle demand. On the other hand, a stronger economy – and a good resolution of the NAFTA talks – could help demand rebound after last year’s slight drop.
While January sales in the U.S. left the long-term picture unclear, things looked good for much of the rest of the world. Preliminary figures gathered by industry trade groups showed that vehicle registrations jumped 7.1% in Europe last month. Global sales were up 7% year-over-year, according to LMC, though that partially reflects having an additional sales day on the calendar in many markets.
While the U.S. economic rebound certainly helped get the global auto industry moving, China has become the real powerhouse during the past decade. The overall market hit 28.9 million units in 2017. But some observers have been waving a caution flag. During much of the last 10 years, the country’s automotive demand surged at double-digit rates, even nearing triple digits at one point. Last year, however, it slowed to barely 3%, reported the China Association of Automobile Manufacturers.
(Click Here for more about automaker concerns for 2018 sales after a slow December.)
And due to changes in tax and other policies, there are question about 2018 and beyond, though most analysts, including LMC, expect China’s vehicle sales to remain in positive territory. But some issues are hard to factor, such as the restrictions many major cities now have implemented on new vehicle registrations, as well as new national regulations meant to encourage a switch to electrified vehicles.
As a result, LMC’s forecast projects China, as well as the rest of Asia and Western Europe, will see modest sales gains in 2018. The big drivers of global growth in 2018 will be Central and Eastern Europe, it projects, as well as a rebounding South American market. All three of those regions are expected to post double-digit gains this year.
Even a slight shift in the global economy could yield significant fluctuations in vehicle sales, industry analysts agree. The recent plunge in worldwide stock prices sent a shiver through the industry, though stock markets now appear to be recouping some of their losses.
(New vehicle sales hold steady in January. Click Here for the story.)
The question is whether some positive economic news could spur motorists now on the fence. It would take only a couple percentage points of an increase to finally push the worldwide automotive market above the 100 million mark for the first time ever.