The longer the supply squeeze lasts, the more
potential there is for "lost" or "destroyed" demand.
SOUTHFIELD, Mich., Dec. 20,
2022 /PRNewswire/ -- Global new light vehicle sales
will reach nearly 83.6 million units in 2023, a 5.6% increase
year-over-year, according to a new forecast by S&P Global
Mobility, a world leader in information, analytics and solutions.
The auto industry continues to navigate supply chain challenges
while confronted by several markets facing deteriorating economic
conditions and fading pent-up demand. As semiconductor availability
plays out, demand destruction is expected to take a more
fundamental role in 2023, impacting production and the inventory
restocking cycle.
Global new light vehicle sales will reach
nearly 83.6 million units in 2023, a 5.6% increase
year-over-year.
S&P Global Mobility remains wary on recovery prospects.
Destroyed demand is a key feature of the tepid forecast outlook –
impacted by a blend of general economic impacts, higher interest
rates, tight supply chains, an intensifying affordability squeeze,
higher new-car prices, weakening consumer confidence, and
heightened energy price/supply concerns. Two trailing years of
pent-up demand remains, but headwinds risk an orderly
release—including patchy recovery patterns for semiconductor
supply, energy risks (especially through a European winter), and
logistics log jams. With the auto industry already operating at, or
near, recessionary levels, the forecast outlook remains mixed at
best.
"2023 is expected to be a year of recovery, but likely a
cautious one as the world approaches a gloomy trio of anniversaries
– three years of COVID, two years of semiconductor disruption, and
one year of Russia-Ukraine war impacts," said Colin Couchman, executive director, global light
vehicle forecasting, S&P Global Mobility. "The rapid zero-COVID
policy exit in mainland China
provides further food for thought as we approach the New Year."
Full-year 2022 light vehicle sales – projected to reach nearly
79.2 million units by S&P Global Mobility – represent a 1.3%
decline from 2021 levels.
Market-by-market forecasts
Europe: The European
auto industry is suffering supply frictions, stalling economics,
energy concerns, higher raw material/component prices, and wider
security unease. Western/Central European 2022 vehicle sales should
post 12.9 million units (-6.7% y/y). Order fulfilment remains a
struggle, with long waiting lists, stretched lead times and
challenging logistics. For 2023, the narrative shifts from supply
constraints to demand destruction. With a mild recession looming
for Western Europe, 2023 demand is
forecasted at 13.9 million units (+7.4% y/y), according to S&P
Global Mobility.
"For Europe, the evolving
electrification transition adds further uncertainty, especially for
vehicle prices, model availability, wait-and-see customers, and
lurking Chinese OEMs," Couchman said.
United States: US sales
volumes are expected to reach 14.8 million units in 2023, an
estimated increase of 7.0% from the projected 2022 level of 13.8
million units. "The US auto market is struggling, impacted by
supply chain, labor, logistics, inflation, and wider economic
concerns," said Chris Hopson,
manager, North American light vehicle sales forecast, S&P
Global Mobility.
"Ongoing supply chain challenges and recessionary fears will
result in a cautious build-back for the market. US consumers are
hunkering down, and recovery towards pre-pandemic vehicle demand
levels feels like a hard sell. Inventory and incentive activity
will be key barometers to gauge potential demand destruction."
Mainland China: S&P Global Mobility
analysts have rebalanced the outlook on the rapid zero-COVID policy
exit, a still-weak economy, and ongoing stimulus. With 2022 set at
24.8 million units (+3.6% y/y), some demand fulfilment has been
effectively delayed into 2023-24. For 2023, the CNY100 billion extension of NEV incentives and
recovering local vehicle production should support domestic sales
–2023 should see a recovery to 25.9 million units (+4.5% y/y),
according to S&P Global Mobility. The market faces significant
uncertainty as COVID infection levels could potentially surge
following the ease in COVID rules.
Production recovery momentum eases for 2023
Global light vehicle production in 2022 is expected to finish at
81.8 million units – a hard-fought 6.0% improvement over 2021
levels – in a year that has been defined once again by supply chain
constraints, debilitating lockdowns in China and, since February, the spillover
effects of Russia's invasion of
Ukraine, which has intensified the
risk of widespread recession.
For 2023, S&P Global Mobility forecasts continued growth in
output even against a backdrop which looks more challenging than
the last 12 months. Light vehicle production levels are expected to
rise by 4.0%, to 85.0 million units. While we entered 2022
imagining a return to pre-pandemic levels of production would be
achieved in 2023, this optimism is now postponed until 2025 at the
earliest.
In Mainland China, S&P Global Mobility forecasts modest
production growth for 2023 of 1.1 percent, to 26.4 million units.
Europe is expected to produce 16.6
million units in 2023, up from an estimated 15.6 million this year.
For the North American region, upside pressure surrounding
restocking and fulfilling pent-up demand provides support moving
into 2023, with the forecast set at close to 15.1 million
units.
Friction in the supply chain remains, not just involving
semiconductors but also across labor and logistics – even if it is
becoming harder to identify.
The structural semiconductor capacity deficit will take years to
solve. While the supply-side issues won't see any immediate relief,
the demand side will bring some respite. More of the existing
capacity in the sector has been allocated to automotive since the
second half of 2022, which will continue into 2023 due to slowing
demand in other chip-hungry industries like telecoms and consumer
electronics.
"These conditions may mask the ongoing capacity issues the auto
industry faces," said Jeremie
Bouchaud, director, semiconductor, E/E and autonomy
practice, S&P Global Mobility. "The average chip content per
car is increasing at an accelerated rate because of
electrification, and the capacity deficit will resurface as soon as
demand from other industries picks up again. The structural chip
capacity deficit for cars will only be solved by 2024 at the
earliest."
Though semiconductor availability remains an important
consideration and continues to impact production operations, demand
constraints are expected to play a more fundamental role and
accelerate in second-half 2023 and into 2024, impacting production
and influencing the speed and scale of inventory restocking.
Another major variable is emerging in Mainland China.
While most of the world has adapted to living with COVID-19, the
recent signals from Mainland China point towards a dichotomy that
will be difficult to read. The recent relaxation of strict
zero-COVID restrictions should free up businesses and services, but
must be balanced against the increase in caseloads that will
inevitably follow.
"The response of individuals, central and regional governments
to these developments will be critical to the direction of the
world's largest market next year," said Mark Fulthorpe, executive director of light
vehicle production forecasts, S&P Global Mobility.
Electrification looks unstoppable
This year saw many OEMs double down on electrification ambitions
for the coming five to 15 years, with 2022 seeing some carmakers
dramatically scrambling to catch up. China's NEV policy, Europe's "Fit for 55," and the USA's IRA have moved the goalposts, resulting
in electrification becoming firmly embedded in policymakers'
visions for a greener future for mobility.
S&P Global Mobility projects global demand for battery
electric passenger vehicles is on track to hit almost 10 million
units for 2023, accounting for an estimated 13.3% of global
passenger vehicle demand.
As many markets shift to greater levels of electrification, we
expect vehicle pricing to be pressured to the upside, presenting a
headwind to demand in the short-to-intermediate term. Longer-term
questions remain, especially regarding charging infrastructure,
grid power, battery supply chains, and the appropriate level of
policymaker support to help smooth the transition from fossil fuel
vehicles to electric vehicles.
About S&P Global Mobility
www.spglobal.com/mobility
At S&P Global Mobility, we provide invaluable insights
derived from unmatched automotive data, enabling our customers to
anticipate change and make decisions with conviction. Our expertise
helps them to optimize their businesses, reach the right consumers,
and shape the future of mobility. We open the door to automotive
innovation, revealing the buying patterns of today and helping
customers plan for the emerging technologies of tomorrow.
S&P Global Mobility is a division of S&P Global (NYSE:
SPGI). S&P Global is the world's foremost provider of credit
ratings, benchmarks, analytics and workflow solutions in the global
capital, commodity and automotive markets. With every one of our
offerings, we help many of the world's leading organizations
navigate the economic landscape so they can plan for tomorrow,
today. For more information, visit www.spglobal.com/mobility.
Media Contact:
Michelle Culver
S&P Global Mobility
Office: +1 248 728 7496 Mobile: +1 248 342 6211
michelle.culver@spglobal.com
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SOURCE S&P Global Mobility