Autos are the largest manufacturing business in the world, and are also the largest single source of demand for chemicals and plastics. So developments in the major markets are key to future economic growth and demand patterns.
The chart summarises developments since 2008 in the 7 major markets, which account for 85% of global volume, using national auto and Scotiabank data. Overall, sales grew 19% from 52m to 63m over the period, but performance in individual markets has been dramatically different:
• China (red line) has become the largest market, doubling sales to 14.7m
• The USA (black) has been volatile, but sales were up 9% overall
• The EU (purple) was once the largest market, but sales were down 13% overall
• Japan (green) was also volatile due to the tsunami tragedy, but sales are up 8%
• Russia (orange) has been very volatile, with sales up just 1%
• Brazil (brown) surged in 2008-10 but then slowed, with sales up 27%
• India (blue) also surged before plateauing, with sales up 33%
Overall, therefore, the industry has become very dependent on the Asian market for growth. It is now 40% of the global market, compared to 29% in 2008, with sales up 64% from 15m to 25m.
By comparison, sales in the major Western markets of N America and the European Union are now 46% of the global market, compared to 56%. And overall, sales have actually fallen 2%.
Two conclusions stand out from this analysis:
• Asian sales are most unlikely to maintain recent growth levels. China’s new leadership has set tackling pollution as one of its main targets, and autos are a key contributor to this. Whilst India’s market is now declining for the first time in a decade. Brazil and Russia are being similarly impacted by the slowdown in their major trading partners in China and the West
• Western sales will likely be stable at best over the next few years. Ageing consumers no longer need to drive so much, as they retire from work and the trips to shopping malls become less frequent. Equally, the markets are now mainly replacement-based, as young people are not only fewer in number but also appear to have less interest in buying new cars
So overall, growth is likely to be very slow. It could even be negative for a period if China really does get serious about rebalancing its economy in favour of the 80% of the population who earn less than $10/day. But this does not mean there are no opportunities for companies prepared to refocus on business model and technical innovation.
Low-cost cars, such as Renault’s Dacia range and Nissan’s planned $3k Datsun launch will likely start to dominate the mass market. Whilst car-sharing models, such as Mercedes’ Car2Go service, will aim to provide mobility without the hassle and cost of full ownership.