World Auto Sales Set for Modest Gains in 2013

Global Auto Forecast After a 5% gain in global light-vehicle sales to 81 million units in 2012, the world outlook for 2013 from our strategic partner LMC Automotive is for slower expansion, with global sales rising by 3% to 83 million units this year. While some large markets performed solidly in 2012—notably the United States and China—the key macroeconomic risks that prevailed during 2012 look likely to persist well into 2013 with negative implications, and an unbalanced risk profile, for Europe. Regional variations will continue this year, according to Pete Kelley, managing director of LMC Automotive.

Some forecast highlights are featured from a recent issue of China Automotive Monthly—Market Trends:

More Favorable Economic Outlook to Boost China Sales in 2013

China light -vehicle sales (including imports) rose by 6.2% to 19.1 million units in 2012 from 2011, which was higher than the annual growth rate of 4.4% in 2011 vs. 2010. This advance was largely due to the phase‐out of the pay‐back effect from booming car sales in 2009-2010, and in particular the surge of the light commercial vehicle sector.

China mapWith a more favorable economic environment expected in 2013, the global light-vehicle market is expected to reach 21 million units, a 10% increase from 2012. John Zeng, LMC Automotive’s Asia Pacific Director in Shanghai, points out, “With a change in political leadership being formalized in early 2013, the positive impact of the political‐business cycle should provide support for vehicle demand.” Zeng said that the sales momentum that started to rebuild in the fourth quarter of 2012 also bodes well for a good start of the light-vehicle market in the first quarter of 2013.

Meanwhile, other markets in the Asia Pacific region are poised for further growth. India and the ASEAN region performed well in 2012, with ASEAN light-vehicle sales climbing 40% from 2011 and sales in India up by 12%. The outlook for 2013 is positive and favors continued growth in the region. “However, we are likely to see lower growth in the Asia Pacific region this year. While growth will remain relatively strong in China, India and Indonesia, 2013 looks to be a tough year for other markets in the region—particularly for Japan and Thailand, where vehicle demand is expected to decline, with the end of government incentives that propped up the market in 2012,” concludes May Arthapan, Asia Pacific Director of LMC’s Bangkok office.

North America Moves into Solid Recovery after Recession

Recovery from the depths of the major 2009 recession is expected to continue in the United States. In 2012, light-vehicle sales surged to 14.5 million units—up by 14% from the prior year. The selling rate in the U.S. market continued to improve through 2012, ending on a high note in December at more than 15 million units.

North American light-vehicle sales in 2013 are expected to reach 17.8 million units, up 4% from 2012, as the U.S. market posts further growth at a slower rate. “The U.S. faces the hurdle of the budget and spending debate, but otherwise is set to be one of the few bright spots of the major markets around the world in 2013,” said Jeff Schuster, senior vice president of LMC Automotive in the U.S. market. He noted that “it has been several years since the market has faced more upside potential than downside risk.”

Western Europe Likely to Experience a Continued Decline

EuropeWest European light-vehicle sales declined by 9% in 2012 from 2011. This market is expected to further deteriorate in 2013—with a drop in the 2-5% range expected. LMC projects a baseline forecast for a 3% dip to 12.7 million unit sales. Eastern Europe, notably Russia, will offset some of the decline. Russian light-vehicle sales were up 11% from 2011. However, there is a risk that growth in Eastern Europe may slow considerably in 2013.

“While some European manufacturers have performed well through broad geographical diversity and strength in premium and export markets, those tied closely to the performance of European markets will find the going tough in 2013. Inventory accumulation in the context of continued overcapacity may haunt a number of European OEMs this year and beyond,” suggests Justin Cox, who leads European Production Forecasting at LMC’s Oxford, UK office.

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