Global automotive market remains divided, says Euler Hermes research

Global automotive market remains divided, says Euler Hermes research

Sandhya D'Mello

Published: Mon 5 Sep 2016, 9:39 PM

Last updated: Mon 5 Sep 2016, 11:49 PM

The Paris Motor Show opens in Paris on October 1, 2016  and this year, there are two notable trends, first is greater intervention by public policy in market dynamics and second is the growing public fascination with the future of the sector and in particular the autonomous car, says a research report from Euler Hermes. 
"In 2016, the global automotive market remains divided. On the one hand, Europe, China, and US will post strong growth. On the other, India is stagnant, Japan is floundering and Russia and Brazil continue their dizzying drop. Public policies will determine growth in many markets," said Ludovic Subran, chief economist at Euler Hermes
The report states that the largest market in the world, China, aroused concern last year when sales slowed sharply. The government intervened immediately and lowered the VAT rate on small and medium-sized vehicles. This measure, which will be maintained at least until December 31, 2016, restored some life to the market, which has returned to an eight per cent growth rate in 2016.
"Driven by low-interest rates and fuel prices, in 2016 the US market is expected to set a new record of 18 million units sold, representing one per cent growth. In 2017, the end of this alignment of the planets points to a slight slackening. Sales were down two per cent, to 17.6 million units," said Subran.
In Japan, the market, still depressed by the 2015 VAT hike which caused it to collapse by 14 per cent, is expected to stabilise at five million units in 2016 before a moderate five per cent rebound in 2017.
In Europe, growth remains sustained at 5.5 per cent in 2016, i.e. 15 million units, but 2017 will probably see a stabilisation due to Brexit and the end of the Spanish fever (end of old car scrapping incentives, not offset by moderate growth in the rest of Europe).
 "With five per cent growth to 3.35 million units, the German market has regained its medium-term level. We therefore expect a stabilisation in 2017.  In France, the market is confirming its recovery, with six per cent growth in 2016 following seven per cent in 2015.We expect a market of 2.1 million units in 2017, posting three per cent growth. As for the UK, after achieving record sales of 2.7 million units by mid-2016, the market will slow down towards the end of the year as a result of Brexit. We expect modest  one per cent growth this year, before a sharp contraction in 2017 (-9 per cent)," added Subran.
At the same time, Brazil and Russia continued their dizzying drops. Brazil will post 1.7 million new car registrations in 2016, down 19 per cent, in the wake of its 24 per cent drop in 2015. Russia, for its part, will see its third year of decline in succession: -10 per cent in 2014, -36 per cent in 2015, -11 per cent estimated for 2016. India and Turkey, formerly growth drivers, ran out of steam in 2016, posting +1 per cent and -1 per cent respectively.
The report further states that the new potential in Latin America, the Middle East, and Asia undoubtedly offers prospects in the medium term, but their growth has not stabilised and their markets will have very contrasting growth patterns. -

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