Q1 auto sales rise just 1.9% in world’s ‘Top 7’ markets

Consumer demand

SHARE THIS STORY

All autos Apr15Its hard to be optimistic about the outlook for the global auto market.  The chart above of the Top 7 markets, which account for around 2/3rds of global sales, highlights the growing uncertainty.  It shows Q1 sales in 2015 (blue column) versus 2014 (blue).  Overall, these were up just 1.9% at 15.8m.  And although the 3 largest markets showed reasonable growth, there are growing questions about the underlying trends.

China’s market appears to have done well, up 7.6% at 5.2m.  But Chinese data is constructed on a different basis to the rest of the world, as “sales” actually represent factory deliveries rather than retail purchases.   And one sign of trouble is that a price war has broken out, with China Daily warning:

China’s auto industry’s profits have been on a downward trend this year, plagued by a slowing market and plunging car prices”.

Analysts Macquarie add that “there has been almost no sales growth in recent months in certain segments”.  And used car sales growth has already overtaken that for new cars, whilst China’s auto association is warning that:

The overall market downturn would push the auto industry to further polarize.  Carmakers which have competitive products will continue to have decent profits, but those without competitive products will have meager profits and even losses,”

The US market is also giving off conflicting signals.  Sales were up 5.6% at 3.9m, but March sales were flat at 1.5m.  This seems to confirm my fears back in January that the end of the shale gas bubble would also start to reverse the recent recovery in auto sales (as well as housing starts).

4 out of 5 cars are now bought with credit or leased, with an average term of 5 1/2 years.  This tactic essentially buys sales from the future, as a car sold today won’t be replaced before 2020.  In addition, an increasing proportion of sales are now to subprime buyers, whose default rates are alarmingly high.

The European market also presents some puzzles.  Sales were up 8.7% at 3.5m, but analysts EY note that purchases by private individuals are at the lowest levels since 1990. They warn there is:

Significant concern over self-registrations, where dealers sell the cars to themselves to help shift vehicles and meet incentive targets. They continue to distort the true level of demand.

In addition, of course, the European market also continues to see major discounting, with levels of 20% easily available in many countries.

The position in the other 4 BRIJ markets is clearly weak.  Sales were down 15.5% at 3.1m, as I discussed last week, with the only positive signs in India.

Overall, therefore, Q1 data tends to support my view back in October that global auto sales have reached their ‘top of the mountain‘ moment.  Suppliers to the industry, and investors, face a difficult outlook as these trends continue to develop.

PREVIOUS POST

China Q1 electricity consumption up only 1% as economy slows

21/04/2015

More and more evidence is emerging of the major slowdown now underway in China&#...

Learn more
NEXT POST

Propylene strength a major support for European petchems

23/04/2015

Vast over-expansion is underway in the global petrochemicals industry, as compan...

Learn more
More posts
Brand-owners start to focus on renewable carbon
13/06/2021

The original debate on plastics recycling owed its prominence to Ellen MacArthur, the yachtswoman wh...

Read
“One size no longer fits all” as the global smartphone market breaks down into different segments
30/05/2021

The pandemic was very good news for some companies, with demand for online activities rocketing. But...

Read
Biden’s Earth Day Summit puts plastics recycling on the fast track
25/04/2021

Plastics has long been the ‘odd one out’ in terms of recycling. Steel, aluminium, glass,...

Read
Americans hunker down on spending as the pandemic’s impact continues
11/04/2021

US stock markets have been hitting new records recently, as investors swoon over the idea that the $...

Read
Circular economy set to replace today’s broken global supply chains
21/03/2021

The Great Freeze in Texas has confirmed once again the problems with today’s global supply cha...

Read
Smartphone sales highlight new trends in consumer markets
07/02/2021

Smartphone markets continue to provide early warning of the major changes taking place in consumer m...

Read
Buyers scramble for product as global supply chains breakdown
24/01/2021

Asian LNG prices reached $32.50/MMBTU this month, up from less than $2/MMBTU in June. The Shanghai C...

Read
5 key questions for success in the New Normal
17/01/2021

Sustainability rather than globalisation is becoming the key driver for business. And the paradigm s...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more