90 million global car market in 2016?

By / 8 years ago / Comments / No Comments

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.

This, combined with the new autos targeted stimulus in China, is likely to provide a mild uplift in global sales growth of 2.7%. The 2016 global forecast from IHS forecasts sales of 89.8 million units.

The U.S. auto market has been powered by a combination of low interest rates and low fuel 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 Western Europe, momentum is also strong, even after the recovery last year being well above expectations.

The current forecast for a 2.5% to 3% uplift in sales in Europe could be even stronger. However, some northern European markets are peaking. In Spain, some payback is expected after eight consecutive scrapping incentives in recent years comes to an end.

Despite on-going political and partial economic troubles in the European Union, Western Europe, together with the U.S. will build the fundamentals for solid global demand growth in 2016.

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. 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.

For more of the latest industry news, click here.

Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. Natalie edits all the Fleet World websites and newsletters, and loves to hear about any latest industry news - or gossip.

Leave a comment

You must be logged in to post a comment.