PwC's Autofacts Forecasts Global Light Vehicle Assembly to Reach 81.8 Million Units in 2013, a 3.3 Percent Increase from 2012

Technological innovation, strategic partnerships and mergers and acquisition activity will set the stage for growth in 2014

 

DETROIT, 29 October 2013 – Global light vehicle assembly is expected to reach 81.8 million units in 2013, representing a 3.3 percent year-over-year gain, according to Autofacts, PwC’s automotive analyst group. While there has been speculation around the long awaited recovery of the European Union (EU), 2013 is poised to mark a turning point, setting the stage for recovery in 2014. This will bring the region in sync with the recent recoveries in North America and Eastern Europe and the continued growth in developing Asia-Pacific and South America.

“Consumer demands and regulatory requirements are motivating the global automotive industry to push ahead with technological breakthroughs on a larger scale,” said Rick Hanna, PwC’s global automotive leader. “Innovation ranging from new investments in lightweight materials, advanced drivetrains and infotainment systems to fresh approaches in engaging customers, will continue to shape the industry.  The automakers that effectively leverage high-tech advancements in vehicles, mobile devices and data analytics will likely gain a competitive advantage in this dynamic market.”

Global automotive industry regional highlights: 

  • North America--All three countries in North America continue to grow at impressive rates, with the US leading on a volume basis and Mexico on a percentage basis. While the EU sees potential recovery, North America sold more vehicles in September 2013 than it did in all of 2010, easily surpassing last year’s 14.4 million units. Autofacts sees full-year 2013 sales reaching 15.6 million units – the region’s fourth consecutive year, with an increase of over a million units.   Canada is currently on track for a record year of new vehicle sales, surpassing the previous high of 1.69 million units in 2007.  The region is now forecasted to produce nearly 16.2 million units in 2013, the largest amount since 2002.  Capacity in the region is forecasted to grow from 15.4 million units in 2012 to 18.7 million units in 2019.
  • South America--Encouraging growth in Brazil during the first half of the year has dissipated, even as the Industrial Products Tax (IPI) holiday winds down in October. Stimulus measures such as lowered interest rates are offset by tighter credit restrictions in lending, restraining the full-year 2013 sales forecast to approximately 1.3 percent year-over-year growth.

In contrast to the stagnant sales market, the assembly volumes in Brazil have seen steady growth with full-year 2013 assembly expected to reach approximately 3.4 million units. Several global OEMs have announced capacity investments in the next few years, pushing assembly to just below 4 million units by 2015. Meanwhile, Argentinean production has been impacted by the sluggish Brazilian sales market, seeing an overall decline in demand from their largest trading partner. Though assembly has not kept pace with sales, full-year growth of approximately 7.7 percent for 2013 is still expected. As with much of the region, Argentina’s expansion hinges on multiple monetary and economic variables, most of which are subject to significant state intervention and thus, remains volatile.

  • European Union + EFTA--As predicted, the EU reached its bottom after more than five years of decline; third quarter 2013 experienced the first quarterly year-on-year growth in two years, with a 2.6 percent increase. Full-year registrations are expected to reach 12.15 million – a 3 percent decline in total. For 2014, Autofacts anticipates growth of 3.5 percent to just fewer than 12.6 million units, with EU assembly forecast to 15.8 million units for the full year 2013, which is a meagre 0.9 percent year-over-year decline. In the 2014 outlook, the region is expected to show signs of recovery with 3.2 percent growth forecasted as exports stabilise and demand growth within the region is more closely tied to vehicle output. Approximately 500 thousand units of assembly could be added, pushing regional output past 17 million by 2015 and also helping to push capacity utilisation above 80 percent by 2016.
  • Eastern Europe--New vehicle sales and registrations within Eastern European continue to show diverse results between markets. Registrations are still trending downward in Russia with seven consecutive months of decline, prompting ministry officials to offer interest rate subsidies to stimulate sales.  The program, enacted in July and continuing into 2014, is expected to boost sales by an estimated 250 thousand units.  Early consumer response has been positive, resulting in a reduction in the forecasted full-year decline of 5.9 percent. Though the sales market has slowed in Russia, assembly remains positive, with approximately 12,000 additional units of output in 2013, as compared to 2012, to reach just under 2.1 million units. More definitive growth is expected for 2014 and beyond, with investments by global OEMs, which could help shift away from relying on importing and instead increase domestic production.

Full-year sales for Turkey in 2013 are forecasted to reach 840 thousand units, an 8.2 percent growth over 2012. Turkey is already seeing a boost in locally produced models, which has supported the full-year 2013 production expected to total approximately one million units and reach nearly 1.2 million units by 2014. Overall, the Eastern European region is rife with opportunity, and as long as progress continues, these emerging countries could become future assembly bases as OEMs continue toward the mantra of “build it where you sell it.”

  • Developed Asia-Pacific--The Japanese light vehicle sales market continues to post declines. Japanese brands continue to struggle within their home market. Smaller, more efficient vehicles such as minis and hybrids remain popular, increasing their respective market share to 41 percent and 15 percent. Import sales volume, though a relatively low portion of the total market at 172 thousand units, is also experiencing robust growth, gaining a full percent of market share from four percent to five percent. Concurrent declines in domestic sales and export volumes have resulted in decreased total assembly volumes in Japan, which are expected to decrease year-over-year by 6.8 percent to reach just over 8.7 million units for the full year.

Year-to-date vehicle sales in Australia grew to 737 thousand units, putting the market on pace for another year of sales surpassing the one million unit mark. With recent withdrawals from the Australian assembly base, volumes are expected to remain relatively flat at around 250 thousand units for the remainder of the decade.

Consumers in South Korea have shown a marked shift toward imports, which have jumped 29 percent year-over-year as domestic brands have been holding flat in terms of sales. South Korean assembly volumes remain flat, growing at a scant 0.14 percent year-over-year to reach just under 4.4 million units.

The total assembly volume in the developed Asia-Pacific Region is forecasted to hover around 4.5 million for the remainder of the forecast window.

  • Developing Asia-Pacific--Light vehicle sales showed strong growth in 2013 compared to 2012, with China reaching 12.5 million units and forecasted to reach 18.5 million units by year end. SUVs continue to outpace other segments, reporting an increase of 47.1 percent in year-to-date sales through August. While 2013 continues to see growth in China, PwC’s Autofacts is forecasting Indian light vehicle full-year sales to decline by over 5 percent for 2013, marking India’s ninth consecutive month of decline.

For more details about PwC's quarterly forecast update, download the October issue of PwC’s Analyst Note at: www.autofacts.com or download the Autofacts iPad application.

About PwC's Automotive Practice

PwC's global automotive practice leverages its extensive experience in the industry to help companies solve complex business challenges with efficiency and quality.  One of PwC's global automotive practice's key competitive advantages is Autofacts®, a team of automotive industry specialists dedicated to ongoing analysis of sector trends.  Autofacts provides our team of more than 4,800 automotive professionals and our clients with data and analysis to assess implications make recommendations, and support decisions to compete in the global marketplace.

About Autofacts®

Autofacts is a key strategic asset of PwC’s global automotive practice. Fully integrated with PwC’s more than 4,800 global automotive professionals, Autofacts provides ongoing auto industry analysis our clients use to shape business strategy, assess implications and support a variety of operational decisions. The Autofacts team also draws from the strengths of PwC’s marketing, sales and financial services groups to support other key areas of automotive companies’ functions. Since 1985, our market-tested approach, diverse service offerings and dedication to client service have made Autofacts a trusted advisor throughout the industry. For more information, visit www.autofacts.com.

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