Global car sales have been facing several challenges over the last 3 years. First, it was the pandemic and the lockdowns. Then came the semiconductor and supply chain issues. In 2022, the Russian invasion in Ukraine made life even more difficult for the health of the industry. In the new year the industry is heading into another complex year due to the continuous geopolitical tensions and inflation around the world.
According to my own research and forecast, the global sales volume of passenger cars, light commercial vehicles and pickup trucks is due to remain stable in the mature markets and with mixed results in the developing world.
In 2022 the estimations for global vehicle sales are around 79.4 million units, or down 1.9% than in 2021. In 2023, under several assumptions, the sales are expected to total between 79 and 81 million units.
Growth driven by China and India
The positive forecast is mainly explained by increases expected in China and India, the world’s first and fourth largest new vehicle markets. In China the stronger push on electrified vehicles, the wider offer, and the recent re-opening of the economy after months of lockdowns, should boost sales by 8% and 12% by the end of the year.
India is set to accelerate its growth and get even closer to Japan, the world’s third largest market. As the government goes ahead with economic reforms, and a big part of the population hits the middle class, the vehicle market should keep expanding. The Indian car market is already getting a lot of Chinese investment and more Chinese car brands are due to arrive soon.
Stalling sales in USA and Europe
The situation in some of the mature markets is not really promising. As inflation issues continue in USA and Europe, their sales are due to remain stable, or grow by very small percentages. In the United States, the volume should not exceed 14 million units. Although demand is positively responding to the new electric vehicles available, the majority of the consumers are still reluctant to the shift from ICE to EV.
In Europe, there is still uncertainty about economic growth, the war in Ukraine, and the rising prices of cars. Growth should not exceed 3% by the end of 2023. Despite the strong EV boom, partly boosted by public incentives and more competitive offers, the consumer is increasingly struggling to afford more expensive cars.
Russia, the dark spot
Russia and its deteriorating economy will be responsible for a big part of the negative side of this story. In 2022, the preliminary sales volume was down by 65% compared to 2021. In 2023, sales should continue to fall but at a more moderated rate, between -10% and -15%. However, it will become the year of the Chinese car invasion in this country.
The author of the article, Felipe Munoz, is an Automotive Industry Specialist at JATO Dynamics.