Worldwide Auto Sales 2008: The Saturated Will Go Hungry
Fasten your seat belts, turbulence ahead. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited.
One of the few reliable sources for worldwide automotive data, J.D. Power and Associates, just released their forecast for worldwide 2008 auto sales. In a nutshell: It will be a mess.
The slowdown will affect all corners of the planet. Not all corners will see equally rotten sales. Mature and saturated markets will be hit hardest as consumers put their appetite for new cars on a diet. Emerging markets with room to grow will continue to grow – but grow no longer at double digit rates. The all-around winner will be after-sales.
Will emerge stronger: China. The booming Chinese light vehicle market (which includes passenger vehicle and light commercial vehicle segments) will slow in 2008, yet, it will still grow at very attractive rates. J.D. Power thinks Chinese light vehicle sales will come in at 8.9 million units in 2008. This would represent an increase of 9.7 % compared to 2007. That number will be more subdued than the 24.1 % growth achieved in China in 2007. But many U.S. and European auto executives would sell their first-born for these growth rates. (Side note: The Indian light vehicle market will remain tepid. 1.8 million units are expected to change hands in 2008, nearly the same as in 2007. India has approximately the same population as China, making 1.8 million units pretty much a non-event when measured on a global scale.)
Down, but not out: Europe. Light-vehicle sales in Europe as a whole are seen to fall to 21.3 million units in 2008. This would be a rather mild decline, 3.1 % compared to 2007. For the more saturated Western Europe market, J.D. Power projects a contraction to 15.6 million units sold, which would be 7.5 % less than 2007. Eastern Europe will still see growth. Eastern European unit sales should be around 5.8 million in 2008, an amazing (in light of the circumstances) jump of 11.3 % compared to 2007. However, like in China, growth in Eastern Europe is expected to slow.
Downright ugly: U.S. J.D. Power and Associates forecasts total U.S. new light-vehicle sales to plummet to 13.6 million units in 2008, a 16 % decline from the 16.1 million units sold in 2007. For 2009, J.D. Power and Associates sees even lower numbers: 13.2 units. J.D. Power says the numbers may be 200,000 lower, depending on how the 4th quarter of 2008 may play out.
All continents: J.D. Power think that all world markets are in for leaner times. Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates, said that “any truly pronounced recovery appears to be more than 18 months away.” And before it gets better, it surely should get worse: “While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse,” Schuster said. “While mature markets are being impacted more severely than emerging markets, no country or region is completely immune to the turmoil.”
After-sales should do well. J.D. Power noted that “approximately two-thirds of the decline in retail sales can be attributed to consumers delaying vehicle purchases.” People hold on longer to their cars. This means that more parts and labor are needed to keep the car on the road. Discretionary purchases, such as buying a new car, or even a used car can be delayed. Yet, if the brakes fail, then it’s either a trip to the workshop, or taking the bus to work. Parts and services are one of the few recession proof segments in this collapsing economy.
The world is looking to China for strength. China is taking a breather. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited....
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