The World’s Largest Auto Market Shifts Gear

Charles Mills

Currently, new-vehicle shoppers in China have the world’s widest range of choices, with 94 brands and 476 models from which to choose, according to our research and analysis with LMC Automotive.* That compares with fewer than 40 brands and nearly 100 fewer models available in the U.S. market, the second-largest automotive market in the world in 2011.

Entry-Level Segment Sales Hardest Hit in China’s Auto Market

In our overall analysis of global sales this year, we see that China new-vehicle sales in the first quarter of 2012 increased by just 2% from the same period last year. This sluggish sales growth has affected sales in entry-level vehicle segments more than other segments, despite a continued increase in retail gas prices in China. Fuel prices in China are now more than 20% higher than the average price in the United States. Continue reading ›

Optimism at New York Show Bodes Well for Global Auto Show Circuit

David Sargent

The global automotive spotlight was shining brightly on the dozens of new model debuts and more than 1,000 vehicles on display earlier this month at the New York International Auto Show. While some of the vehicles shown in New York had already debuted at previous shows in Los Angeles, Detroit or Geneva, Switzerland, many were seen for the first time by the public.

There was an overall buzz at the Javits Center in New York City about the auto industry rebounding to sales levels last seen before the financial crisis of 2008. J.D. Power’s forecasting alliance partner LMC Automotive expects global light-vehicle sales to increase to 79.2 million in 2012, a 5% increase from 2011. All major regions are expected to post stronger sales in 2012, compared with 2011.

Japan is expected to see strong growth with sales of 4.8 million, up 16% from 2011. Sales in India are expected to reach 3.2 million in 2012, up 11% from 2011, while China’s sales are expected to increase 9% to 19.7 million. Brazil’s sales are expected to grow 1% in 2012 to 3.5 million. In addition, LMC Automotive expects 14.1 million new light vehicles to be sold in the U.S. this year. Continue reading ›

A Long Runway for Growth in China and Some Notable Trends

Geoff Broderick

In the coming scramble to win sales in the Tier 2-4 markets and earn profits in China, there is the temptation for OEMs to invest heavily in production, which can result in overcapacity. Discipline must be maintained in China or history will repeat itself—as illustrated by the imbalance of supply and demand in the U.S. market during the past decade. There is likely still more consolidation to come in the global auto market, but there is room for the smart players with solid business and product plans.

In the past five years, the combined vehicle sales market share of the emerging countries—including China and India—grew from less than 20% of the world’s total, to more than 50%. Among all emerging markets, China has one of the longest runways for continued growth based on its low penetration rate (vehicles per 1,000 people), in addition to a growing per capita income and rising disposable income. There also is a real opportunity for a steep takeoff, especially in China’s Tier 2 and 3 urban markets.

China Remains a Pillar in the Global Auto Industry

By 2018, China, the United States, India, Brazil and Russia will be the world’s five largest auto markets in terms of light-vehicle sales, with China as the far-and-away frontrunner at almost double the sales of the United States (30-35 million units vs. 17 million units). Japan, followed by Germany, the UK, Italy and France will round out the 10 largest markets, according to J.D. Power and LMC Automotive Forecasting.*

With closely aligned global supply and demand coupled with improved macroeconomic conditions—albeit slower for Europe—and significant new product introductions and an improvement in available credit—at least in the U.S. market—global sales, led by China (32.9 million unit sales), will boom by 2018 to slightly less than 114 million units.Although China will continue to see an increase in discretionary income, as well as much sales growth fueled from a further penetration of financing and the introduction of leasing, there will likely be intense competition to gain share in Tier 2 and Tier 3 markets. Continue reading ›