Where Auto Sales Are Expected to Go in China and Globally

by Jon LeSage, Edi­tor, Used Car Mar­ket Reports

In recent years, we’ve seen Chi­na become the largest new vehi­cle sales mar­ket in the world, sur­pass­ing the U.S. and start­ing to cre­ate its own grow­ing sup­ply of used vehi­cles. What does that look like for this year and next, and what do ana­lysts expect over­all glob­al sales trends to look like?

New vehi­cle sales in Chi­na are now declin­ing faster than expect­ed as the days of rapid growth are over for now. Eco­nom­ic uncer­tain­ty and gov­ern­ment restric­tions over vehi­cle own­er­ship have tak­en their toll on sales, accord­ing to PwC. Automak­ers have had to slash prices in an effort to cut full inven­to­ry lev­els in the near term. Mon­e­tary pol­i­cy and a sta­bi­liz­ing real estate mar­ket will affect the next wave of new vehi­cle sales, says Moody’s Investors Ser­vice.

“While over­all sales growth has been slow­ing and mar­ket share bat­tles are becom­ing increas­ing­ly com­pet­i­tive in the Chi­nese car and mini­van mar­ket the SUV and mul­ti­pur­pose vehi­cles (MPV) seg­ments show sig­nif­i­cant strength,“ said Rick Han­na, Glob­al Auto­mo­tive Leader, PwC. “Look­ing for­ward, automak­ers will need to focus on inte­ri­or cities to sup­port long-term growth – and if they can do this while lever­ag­ing their prod­uct port­fo­lio, they can weath­er the storm and main­tain a stake in the most lucra­tive mar­ket in the auto sec­tor.”

The future in Chi­na may still hold promise if adjust­ments are made to automak­ers’ strate­gies, PwC says. Although eco­nom­ic con­di­tions remain chal­leng­ing in Chi­na, Moody’s expects the auto mar­ket to recov­er.

Moody’s expects glob­al auto sales to improve in 2016, with steady growth in the US and strong sales in West­ern Europe mit­i­gat­ing sharply low­er sales in Japan and slow­ing growth in Chi­na. Moody’s fore­casts glob­al light vehi­cle sales of 2.5% in 2016, an improve­ment from 1.2% in 2015. Chi­na could be a sig­nif­i­cant dri­ver of this growth, as a loos­er mon­e­tary pol­i­cy and sta­bi­liz­ing real estate mar­ket push Chi­nese auto sales to com­prise 27.8% of glob­al auto sales in 2016, up from 27.1% of sales in 2015, accord­ing to Moody’s.

Declin­ing auto sales in Brazil and Rus­sia will place a fur­ther drag on auto sales growth. Moody’s expects that a rebound in India will some­what mit­i­gate the effect in BRIC coun­tries (Brazil, Rus­sia, India, and Chi­na).

As for the U.S., it looks like the mar­ket could end the year with sales of 17.72 mil­lion new vehi­cles, accord­ing to Ward­sAuto. That would beat 2014’s 16.5 mil­lion units sold – the high­est num­ber since the record lev­el of 16.94 mil­lion in 2006.



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