Visit Our Sponsors
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 uptick in global sales growth of 2.7 percent, IHS Automotive forecasts.
The 2016 global forecast from IHS calls for sales of 89.8 million units -- just shy of the possibility of a global automotive light vehicle market reaching 90 million units.
The U.S. auto market has been powered by a combination of low interest rates and low gas 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 West Europe, momentum is also strong, even after the recovery last year being well above expectations. The current forecast for a 2.5 percent to 3 percent 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 ongoing political and partial economic troubles in the European Union, West Europe, together with the U.S., will build the fundamentals for solid global demand growth in 2016,” said Henner Lehne, senior director, global light vehicle forecasting at IHS Automotive.
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 to 6 percent 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 percent this year, according to IHS Automotive. 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.
Source: IHS Automotive
Enjoy curated articles directly to your inbox.