Automotive Industry and Markets

Market international

After seven years of growth and the 2016 record of 17.5 million vehicles, the US market showed signs of slight saturation in 2017.

Economic development

Economic development gathered pace in 2017. Notwithstanding political and economic risks, there was broad-based growth in the global economy. Both industrial countries and emerging countries shared in the global recovery.

The 2017 growth rate in the USA was higher than the year before. In 2017 Japan’s economy experienced its strongest growth in years. The upturn is continuing in Europe as well, thanks also to expansive monetary policy. The economy is now also visibly recovering in crisis-stricken countries, such as Italy and Greece.

The emerging countries as well are posting positive growth. China’s growth continues virtually unabated. India’s catch-up has also continued apace. Brazil and Russia have made significant steps to escape recession and should have put the worst of their economic woes behind them. Both economies benefited from rising raw materials prices.

China

In 2017 things were also going nicely for the Chinese automotive economy: a total of 24.2 million new automobiles were sold last year – growth of 2 percent. That means China remains far and away the worlds biggest single market.

The lower value-added tax on new vehicles with up to 1.6 liter displacement also continued to play a critical role. These account for around 70 percent of new vehicles in China. In 2015 and 2016, purchasers of these cars only needed to stump up 5 instead of the usual 10 percent value-added tax. In 2017 the preferential tax rate increased to 7.5 percent, prompting customers to bring forward purchases to the closing months of 2016. The next year’s growth was rather muted by Chinese standards, primarily because of this pre-emptive effect.

China is not just the world’s biggest automobile market in total, but also when it comes to new registrations of electric cars and plug-in hybrids. Some 581,300 cars powered by an electric motor were sold there in 2017. That was 72 percent more than in 2016. The proportion of electric vehicles within the total market has therefore increased from 1.4 percent in 2016 to 2.4 percent in 2017. Last year the Chinese government decided to introduce an e-car quota. As of 2019, manufacturers must comply with minimum targets for the production and sale of vehicles with alternative drives. A complex points system was devised to that end. If a manufacturer fails to comply with the requirements, points must be purchased from other manufacturers or fines paid.

USA

After seven years of growth and a record level of 17.5 million vehicles in 2016, in 2017 the US market showed some signs of saturation. Light vehicle sales fell by 2 percent to 17.1 million units. The two late summer hurricanes Harvey and Irma, which destroyed numerous cars, provided an exceptional boom. According to estimates, around 100,000 new vehicles had to be purchased as a result.

The environment in the USA was fundamentally good for the automotive economy. The price of gasoline was significantly lower in 2017 than the average for the previous five years. This was boosted by an excellent labor market situation and a strong consumer climate. Notwithstanding three base rate increases by the US Federal Reserve bank, financing conditions remained favorable. Manufacturers also offered big rebates.

The trend to light trucks, apparent not only in the USA, continued in 2017. Whereas sales of pickups, SUVs, CUVs and vans increased by all of 4 percent to almost 11.1 million vehicles, basic car sales slumped 12 percent to approx. 6.1 million units. That made the light truck share last year almost 65 percent, its highest level ever.

In the light truck category, the CUV (Cross Utility Vehicles) segment has been the most dynamic segment for years. Its share of the total market increased to 35 percent. For comparison: in 2005 the CUV share was only 13 percent. SUVs had an 8 percent share. Pickups, which have always been especially popular in the USA, accounted for a 16 percent market share. Vans were the only light truck subsegment to post a decline (minus 8 percent) last year. Their market share was 5 percent (year before: 6 percent).

South America

The automotive year 2017 in South America was a successful one after the market lost 10 percent of its volume the year before. A market volume of around 3.9 million light vehicles was achieved – 13 percent more than the year before.

In 2017, South America’s most important automotive market, Brazil, grew by 9 percent to 2.2 million units. But this was still around 40 percent off 2012’s record level. Light vehicle sales in Argentina were up 23 percent thanks to a recovery in the overall economic situation. With 883,800 new registrations, 2017 was the second best year to date for the Argentinian light vehicle market.

India

The Indian automobile market remained dynamic in 2017 as well. More than 3.2 million automobiles were sold in India last year, almost 9 percent more than the year before. Nevertheless, there is still considerable headroom for the Indian automobile market. With almost 25 automobiles per 1,000 inhabitants, automobile density is comparatively low. Rising incomes and a growing middle class point to further growth. In the long-term, the Indian automobile market has the potential to achieve the highest sales volume globally after China and the USA.

Dr. Manuel Kallweit Head of Department Markets, Analysis, Raw Materials, Statistics

Tel: +49 30 897842 330 Fax: +49 30 897842 607
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