The UK automotive market is likely to struggle this year while other regions have received mixed predictions for 2010.
A new report from PricewaterhouseCoopers says that while some car manufacturing regions such as China and America are likely to experience positive growth in 2010, Europe is likely to encounter another difficult year.
According to the report, the European sector’s dependence on scrappage schemes during 2009 has preserved an abundance of capacity.
Industry adviser, Autofacts, currently estimates that 6.5 million units of excess capacity exist in the EU alone. Such surplus suggests that the region will again struggle to align supply and demand. PwC Autofacts expects overall EU light vehicle demand to fall by 900,000 units in 2010.
In comparison, 2010 holds “considerable promise” for the US due to “dramatic industry restructuring throughout every level of the value chain [which] has delivered most surviving entities to a leaner and more agile state.” This is despite 2009 seeing the US record its lowest light vehicle sales since 1982 and its lowest light vehicle production since the 1940s.
With the US economy exiting the recession in the final period of 2009 and destocking allowing for inventory correction, the outlook for North America sales is positive in 2010. Autofacts forecasts a 10% improvement to 13.9 million units.
Autofacts continues to take an optimistic view on China’s prospects due to the bold initiatives outlined by the Beijing government, although the sales tax for sub 1.6L vehicles has been revised upward to 7.5% from 5%. Furthermore, according to Chinese Ministry of Commerce officials, Chinese scrappage incentives are set to be a long-term strategic input into the industry’s development.
According to the report: “The incentives, allied with continuing strong economic performance, should enable China’s GDP per capita to breach the US$5,000 barrier in 2012. That barrier traditionally signals a strong upturn in a country’s light vehicle sales, thus in 2010, Autofacts anticipates a 10% sales growth rate, down from 2009’s astonishing 48%.”
Other regions have received varied forecasts in the report for their respective automotive markets. Growth is predicted to continue in the Indian and South American markets while Eastern Europe is likely to face another challenging year with the potential for only slight growth.
Korea and Japan, who both suffered declines in exports of more than 20% in 2009 are also set for another difficult year and will be largely reliant on an improvement in export performance to stimulate growth.
Tim Brown
