Ammar Master, Senior Manager, Asia Pacific Vehicle Forecasts
01 July 2019
01 July 2019
Asia can no longer cushion global slowdown
Three years ago, global automakers could count on growing volumes in Asia-Pacific to offset any slowdown in other major markets such as Europe or North America. This is no longer the case.
Looking back to 2016 reveals that Light Vehicle sales in Asia-Pacific (along with Central America) climbed at the fastest rate in the world, growing by 9% year-on-year (YoY), versus YoY increases of 7% in Europe and just 2% in North America.
The robust upturn in the region was undoubtedly driven by China, while India also made a healthy contribution. China was firing on all cylinders then, with the market expanding by 13% YoY, following single-digit growth in the previous two years. Likewise, Light Vehicle demand in India accelerated by 7% YoY.
Race ahead to the present day and the road is riddled with sinkholes. The sharp contraction in China is not news. However, the weakness in the Indian market since the second half of 2018 is troubling. Worse still, both China and India have performed below our expectations in 2019. This has forced us to lower our projections for both markets since the start of the year.
In short, growth in Asia-Pacific this year is no longer guaranteed, while sales in the next five years are estimated to expand by a mere 3-4% YoY.
This certainly impacts Asia-based OEMs, but other automakers – including VW Group, Daimler Group, BMW Group and General Motors – are also at risk, given that the region accounts for a sizeable share of their global volume.
Automakers will undoubtedly have to find volumes from new markets such as those in Africa and the Middle East. But with the risk of conflict and political upheaval omnipresent, both regions are highly unpredictable.
Global automakers – as the purported Chinese saying goes – are living in interesting times …