Slower world sales growth to be supported by consumer windfall
from sharply lower oil prices
With 2015 off to a good start, IHS Automotive, part of IHS Inc.
(NYSE: IHS), forecasts global automotive sales for 2015 to reach
88.6 million, an increase of 2.4 percent over 2014, continuing an
unbroken five-year run of sales recovery and growth from the low
point set in the depth of the Great Recession in 2009. However, a
slowdown is being signaled with just two of the high-potential BRIC
markets likely to see increased sales this year.
China will lead the sector’s volume growth, though IHS expects
the market to slow from 2014. The North American market will
continue its upswing, though the pace differs by country. The size
of the contraction of the Russian car market remains a significant
wild card that will impact the European market throughout the year,
according to the analysis, while other countries in the region
continue to recover at a rate of 2.5 to 3 percent, helped by the
European Central Bank’s (ECB) commitment to full-blown Quantitative
Easing (QE).
APAC Growth Continues to Lead Industry; A Slowing China Does
Most of the Lifting
For the APAC region in 2015, China’s economic growth will
decelerate further, to 6.5 percent from 7.4 percent in 2014, as a
result of industrial overcapacity and weakness in the real estate
sector. However, IHS Automotive analysts still expect light vehicle
sales in China to grow by 7 percent in 2015 to 25.2 million units,
aided with increased auto finance penetration, fast dealership
expansion and government vehicle scrappage programs.
According to the analysis, the current anti-trust campaign
environment could alter the relationships among consumers, dealer
and OEMs. The campaign is expected to have a long-lasting effect on
premium parts/vehicle prices in China. Coupled with this, the
momentum could lead to downward adjustment in premium pricing,
which helps provide solid foundation for premium vehicle
penetration to further increase in China in the next decade. We
expect premium vehicles in China to top two million units in 2015
with year-over-year growth of 15 percent.
IHS Automotive experts also expect SUVs to remain the
fastest-growing segment in China in 2015. “We see SUV market share
(as percent of passenger vehicle sales) to increase from 26 percent
in 2014 to 28 percent in 2015 as consumers look to this segment to
address evolving transportation needs,” said Lin Huaibin, manager,
China light vehicle sales forecast, IHS Automotive.
In India, falling inflation, lower interest rates, energy prices
and a regained confidence will help lift the car market into growth
mode starting in 2015 after a two-year lull.
U.S. Growth Stimulates Global Demand Levels
North America continues to be an impetus to global light vehicle
demand levels. Improving credit conditions throughout the region
and sustained, but tenuous, economic growth among the countries in
the region have helped to motivate total auto sales levels.
“Although the economic conditions and pace of recovery differ
slightly among the North American countries, consumer confidence,
credit availability and pent-up demand have played key roles in
sustaining auto demand momentum since the Great Recession,” said
Chris Hopson, manager, North American light vehicle sales
forecasting, IHS Automotive. “This should help motivate sales once
again in 2015.”
IHS Automotive projects regional light vehicle sales volume in
North America to hit more than 20 million units in 2015, up 2.5
percent from last year.
In the United States, IHS Automotive analysts continue to
believe the upside risks for auto demand are more apparent than the
downside risks. With a strong exit to 2014, and gasoline prices
currently plunging, consumers may feel even more positive
throughout 2015. The IHS Automotive U.S. light vehicle sales
forecast for 2015 is 16.9 million units.
Light vehicle sales in Canada set an annual record in 2014 that
is scheduled to be broken once again in 2015. Light truck sales,
especially CUVs, helped motivate demand levels last year and with
lower fuel prices expected, should once again dominate growth in
2015. The Canadian light vehicle sales forecast from IHS Automotive
for 2015 stands at 1.88 million units.
In Mexico, auto sales stalled through the first seven months of
2014, causing some concern that new tax policies implemented at the
beginning of 2014 were hurting auto demand growth; however,
motivated by incentives to help spark demand, light vehicle sales
grew throughout the second half of the year. This momentum should
continue in 2015, and IHS projects sales volume to grow 3 percent
to 1.17 million units.
There was a stark change in 2014 South America automotive demand
compared to 2013, when monthly sales broke the 500,000 unit mark
seven times. The year preliminarily closed with 5.34 million units
– a 10 percent drop from 2013; with politics impairing Argentina
and Venezuela, and the economic climate weighing down markets like
Brazil, Chile and Peru, where it may take a few years for demand to
recover to previous highs.
Uncertainty lingers over Argentina, Brazil, Chile and Venezuela
for 2015. Argentina is displaying hints of the “tango crisis” of
1998: uncontrolled inflation, lack of foreign currency and risk of
devaluation. As a result, IHS Automotive is expecting 2015 sales in
Argentina of roughly 500,000 units. In Brazil, banks have been
tightening credit for the last three years, and they are not
showing interest in boosting credit to the automotive sector. This,
along with the increase in the IPI (an industry tax) in early
January, higher financing rates and weak job generation should
translate into sales in Brazil of 3.25 million units.
In Chile, doubt over car sales is drawn from the emissions tax
and the risk of further currency devaluations will ring in the
market close to the 300,000 unit mark. Finally, it is difficult to
imagine the Venezuelan market tumbling any lower than it already
has; however, as oil prices plummet, the government’s access to
foreign currency will continue to be limited, thus impairing
vehicle production.
European Market Continues to be Influenced by Russia
In Europe, the crisis in Russia could offset the boon of lower
fuel prices for Europe’s car buyers and even the new QE boost from
the ECB. As the Russian economy slumps into a deep recession in
2015, its negative impact on the Eurozone and surrounding countries
could be large enough to offset the consumer benefit from falling
fuel prices. Overall, the IHS forecast for light vehicle sales in
Western Europe has only been fractionally upgraded for 2015 despite
the benefits of $60 oil.
After a better-than-expected 5 percent increase in 2014, light
vehicle sales in the mature West European region are forecast to
improve by another 3 percent in 2015, with upside coming if the
apparent open-ended commitment to QE by the ECB pushes the Euro
down still further.
“The size of the market contraction in Russia is the biggest
wild card facing vehicle manufacturers across the European
continent, if not the world, in 2015 and 2016,” said Nigel
Griffiths, chief automotive economist, IHS Automotive.
After the recent enormous volatility of the Russian currency,
prices of imported cars look like they will increase well over 20
percent or so and even domestically-produced vehicles will have to
see double-digit price hikes. This, along with a deep recession
compounded by the recent credit rating downgrades, could push the
market down to just 1.8 million units; a 27 percent decline over
2014 and nearly 40 percent (1.2 million) below the market level
recorded in 2012.
Global Sales Growth Continues amid Volatile Price
Signals
From a global perspective, the auto industry is now being faced
with and will have to adjust to very large and widespread exchange
rate movements, commodity and raw material price changes and, of
course, the new low oil prices. The last two will be significant
tailwinds for the auto sector, its margins and for most of the
world consumers, but at the same time, their unpredictability will
mean long-term business plans will likely change at a more cautious
pace.
About IHS Automotive
(www.ihs.com/automotive)
IHS Automotive, part of IHS Inc. (NYSE: IHS), offers clients the
most comprehensive content and deepest expertise and insight on the
automotive industry available anywhere in the world today. With
last year’s addition of Polk, IHS Automotive now provides expertise
and predictive insight across the entire automotive value chain
from product inception—across design and production—to the sales
and marketing efforts used to maximize potential in the
marketplace. No other source provides a more complete picture of
the global automotive industry. IHS is the leading source of
information, insight and analytics in critical areas that shape
today’s business landscape. IHS has been in business since 1959 and
became a publicly traded company on the New York Stock Exchange in
2005. Headquartered in Englewood, Colorado, USA, IHS is committed
to sustainable, profitable growth and employs about 8,800 people in
32 countries around the world.
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IHS AutomotiveMichelle Culver,
+1-248-728-7496Michelle.Culver@ihs.comorIHS Media Relations,
+1-303-305-8021press@ihs.com
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