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The June slowdown in new-vehicle retail sales in the United States, coupled with increasing uncertainty within the European automotive market, indicate that recovery in established automotive markets may be flagging, according to J.D. Power and Associates. As a result, sales growth in emerging markets – particularly Brazil, Russia, India and China – will become increasingly important to sustaining global recovery.
During the second half of 2010, J.D. Power projects that China will grow its lead as the world's largest vehicle market, even though sales in the country have slowed to a low double-digit rate of growth in 2010, from growth averaging 50 percent in 2009.
"The center of the automotive universe is shifting quite rapidly away from the established markets of North America and Europe," said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates.
North America Light-Vehicle Market
J.D. Power forecasts North America sales for 2010 will come in at 14.2 million units, a 12 percent increase from 2009, but still 25 percent below 2007 levels.
Despite slowing growth between May and June, new-vehicle retail sales in the U.S. have improved year over year to a seasonally adjusted annual rate (SAAR) of 11.0 million units in June 2010, up from 9.7 million units in June 2009. U.S. retail sales are projected to total 11.8 million units for 2010 – an increase of 13 percent from 2009. However, due to the increasing likelihood of a slower recovery, there remains the possibility that final sales totals for 2010 could come in 200,000 units below current projections. Despite this projected year-over-year improvement, sales are still down by 25 percent from pre-recessionary levels.
Within North America, Mexico is forecasted to show the largest year-over-year gain, with a 14 percent increase in 2010, compared with 2009. However, new-vehicle sales are forecasted to come in at 860,000 units – well below the market's peak of 1.1 million units in 2007. New light-vehicle sales in Canada, which have managed to escape heavy negative impact from the recession, are projected to increase by 5 percent in 2009, to total 1.53 million units in 2010.
Europe Light-Vehicle Market
New-vehicle sales in the European market, where payback from robust scrappage programs and various countries' debt crises have derailed recovery, are forecasted to decline by 5 percent from 2009, to 17.2 million units. Leading the declines from 2009 within the major Western European markets are Germany (down by 20 percent), the UK (down by 7 percent) and Italy (down by 5 percent.)
Asia Pacific Light-Vehicle Market
In contrast to the outlook for Europe, automotive sales in Japan appear more promising, with sales forecasted to increase by 11 percent in 2010, compared with 2009. Sales in Japan are projected to come in at 5.0 million units in 2010, still a fraction of the once-powerful market's peak sales of nearly 8 million units in 1990.
"It is the Asia Pacific automotive market that is turning into the global powerhouse," said Humphrey. "Sales in the region are forecasted to grow by 16 percent year over year, to end 2010 at 27.9 million units. China is doing the heavy lifting, even though there are signs that growth in the China market is slowing slightly."
Brazil, Russia, India and China (BRIC) Light-Vehicle Markets
According to Humphrey, while the projected 20 percent growth for China in 2010 might seem low – considering that during its peak growth period, sales rates once approached triple-digit figures – sales volume is still projected to reach 15.6 million units for 2010. This would once again position China as the world's largest vehicle market, with sales more than 3 million units higher than that of the U.S.
While China new-vehicle sales should account for more than the rest of the BRIC markets combined, the other key emerging economies are helping to sustain the global automotive recovery. Brazil, which has been experiencing solid economic growth, is projected to reach sales of 3.3 million units in 2010, an increase of 8 percent from 2009.
India is currently experiencing production growth at a rate similar to that experienced by Brazil one decade ago, with numerous manufacturers establishing themselves singly or as part of joint ventures. According to Humphrey, while there are still significant infrastructural and political challenges that may prevent India from experiencing the same sort of explosive growth seen in China, it has the potential for high rates of growth in the coming years. New-vehicle sales volume in India is projected to reach 2.5 million units in 2010, a 19 percent increase from 2009.
Although new-vehicle sales in Russia declined by one-half in 2009 to end the year at just 1.5 million units, the market is showing signs of modest recovery, with sales forecasted to reach 1.6 million in 2010. However, according to J.D. Power, new-vehicle sales in Russia will likely not achieve the peak levels seen in 2008 until 2014.
"Deterioration in consumer confidence on the heels of a significant rate of GDP decline, combined with tightening credit, led to a massive decline in the Russia automotive market," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "Although it remains the most fragile and tenuous economy of the four BRIC nations, Russia has a distinct advantage over the other emerging markets – deep reserves of oil that fuel its economy in better years. In contrast, China and Brazil, in particular, remain vulnerable to global fuel uncertainties and are continuing efforts to turn to alternative energy sources, notably in their transportation bases."
Global Alternative Powertrain Vehicle Sales
The global hybrid market is quickly transitioning from niche to mainstream, with global hybrid-vehicle sales projected to reach 910,000 units in 2010, a year-over-year increase of 25 percent. In 2015, hybrid vehicles are expected to come in at 2.3 million units, and to comprise 4 percent of global light-vehicle sales.
In the second half of 2010, several manufacturers will launch new battery-electric models across the globe, such as the Nissan Leaf and Ford Transit Connect, as well as plug-in electric models, such as the Chevrolet Volt. The launch of these models is expected to double sales of electric-powered vehicles to 24,000 units worldwide in 2010. In 2015, sales of electric vehicles are expected to total 500,000 units globally.
About J.D. Power and Associates
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. The company's quality and satisfaction measurements are based on responses from millions of consumers annually.