The global car market is recovering strongly


Li Peiran


Thanks to the low sales base of the same period last year, as well as the easing of supply chain problems, the increasing popularity of electric vehicles and other factors, the global auto market recovery trend has further continued. As the world's largest new car market, China's auto production and sales in the first three quarters of this year were 210.75 million and 210.69 million, respectively, up 7.3% and 8.2% year-on-year. Similarly, major markets such as the United States, Europe, Japan, India, Brazil, and Russia have basically achieved substantial double-digit or near double-digit growth.


Us: Recovery strong The impact of the strike is yet to be felt


The U.S. auto market continues its upward trend. Statistics from MarkLines, a global automotive information platform, show that in September this year, new car sales in the United States were 1.341 million units, up 19.3% from a year earlier. From the point of view of monthly changes, from January to September this year, new car sales in the United States have achieved varying increases each month. In the first three quarters of this year, the cumulative sales of new vehicles in the United States was 11.7 million, an increase of 13.7 percent year-on-year.


From the performance of car companies, in the first three quarters of this year, most car companies achieved year-on-year sales growth in the United States, and some companies rose quite large, exceeding the industry average. For example, General Motors grew 19.4 percent, Honda 33.3 percent, Nissan 29.5 percent, Kia 16.7 percent, Tesla 26.3 percent, Mazda 26.6 percent and Audi 26.4 percent. The main reason is that problems such as semiconductor chip shortage affected production last year, dragging down the sales performance of car companies, and these problems are easing this year.


General Motors is still No. 1, selling about 1.96 million vehicles in the first three quarters. Toyota followed with 1.63 million; Ford was third, with 1.5 million vehicles sold; Stellantis followed with 1.19 million. In addition, it is worth noting that due to the failure of labor agreement negotiations for the next four years, the United Auto Workers (UAW) launched a general strike against General Motors, Ford and Stellantis in the early morning of September 15, which has lasted for 1 month. The impact of the strike on the U.S. auto market is likely to be felt in October and the fourth quarter.


In addition, in the context of the United States government to vigorously promote the development of electric vehicles, the sales of many electric vehicle companies are rising. MarkLines statistics show that in the first three quarters of this year, Tesla sold about 490,000 vehicles in the United States, an increase of 26%, more than Volkswagen, BMW, Mercedes-Benz, Subaru and other car companies. At present, in front of Tesla are General Motors, Toyota, Ford, Stellantis, Honda, Hyundai, Nissan and Kia: eight car companies. Considering Tesla's growth in the U.S. market, its ranking is expected to continue to climb in the future.


It is worth mentioning that the performance of the new forces of car manufacturing is also good, and the delivery volume has steadily increased. Rivian sold 36,000 vehicles in the first three quarters of this year, up 194% from the same period last year. Polaris, which is backed by Volvo Cars and Geely Holding Group, sold 8,904 vehicles, up 34% from a year earlier. Lucid, a US start-up, delivered 4,428 vehicles, up 177 per cent from a year earlier; Vinfast, a new car maker in Vietnam, also delivered 2009 vehicles. In addition, in order to meet the requirements of the US Inflation Reduction Act to enter the list of electric vehicle subsidies, many traditional large car companies are stepping up production in the United States. Toyota recently signed an agreement with LG New Energy to purchase batteries for its North American plants.


Europe: The market share of nearly 30% of the tram fire market


Like the United States, the European automotive market continues to maintain strong growth momentum. In terms of market performance in major countries, new car sales in the United Kingdom reached 273,000 units in September, an increase of 21% year-on-year, the 14th consecutive month of positive growth; New car sales in France rose 10.7 per cent year on year to 156,300. New car sales in Italy rose 22.8 per cent year on year to 136,200. New car sales in Spain reached 68,800 in September, up 2.3 per cent from a year earlier. The exception was Germany, where new car sales edged down 0.1 per cent year-on-year to 224,500. The main reason was the end of the German government's electric car incentives for corporate buyers, which led to a 35% year-on-year drop in pure electric vehicle sales in Germany to 47,000 units in the month.


As of now, the European Automobile Industry Association (ACEA) has not released September new car sales data in Europe, but the data from January to August as a reference, you can see that the European car market is rapidly recovering. According to the data, as of August this year, the European passenger car market has achieved positive year-on-year growth for 13 consecutive months. Among them, the number of new cars registered in August was 904,500, an increase of 21%; From January to August, the cumulative number of registered vehicles was 8.517 million, an increase of 18%.


The main reason for the strong sales in Europe is that automakers led by Volkswagen Group and Stellantis continue to benefit from a backlog of previous parts shortages, but that momentum will be tested by central banks raising borrowing costs to curb inflation. As production recovers and backlogs are delivered, demand is "likely to reverse in the second half".


Electric vehicles are one of the main drivers of the rapid growth of new car sales in Europe. ACEA data show that in August, 196,600 pure electric vehicles were sold in the European market, an increase of 102% on the same month last year, taking the market share to 21.7%. The sales volume of hybrid vehicles was 67,700 units, an increase of 8.8%, and the market share was 7.5%. In other words, the market share of electric vehicles in Europe was close to 30% in August. That's a pretty high percentage. It can also be seen from the above data that the situation that pure electric vehicles and plug-in hybrid vehicles occupy half of the European electrification field no longer exists, and European governments and car companies have poured more resources into the field of pure electric vehicles. At present, in the European market, the identity of the "green car" is questioned.


From the perspective of car companies, Tesla has repeatedly reduced car prices this year, and Chinese electric vehicle companies such as BYD and NIO are also actively entering the European market. However, the European Commission recently announced that it decided to launch an anti-subsidy investigation into pure electric passenger vehicles imported from China. Not only for Chinese brands, but also for electric vehicles built in China and exported to Europe. This could affect the rate of adoption of electric vehicles in Europe.


Japan: Production stabilizes and sales rise for the 13th consecutive year


According to the Japan Automobile Dealers Association (JADA) and the National Federation of Light Vehicle Associations of Japan, new car sales in Japan from January to September this year reached 3.6073 million units, up 15.6 percent from the same period last year. Among them, the sales volume of new cars registered with ordinary automobile license plates was 2.3036 million, an increase of 19.9%; Sales of minicars (with engines below 660cc) were 1.303,700 units, up 8.7 percent year-on-year. It is worth mentioning that since September last year, new car sales in Japan have maintained positive year-on-year growth for 13 consecutive months.


It is understood that due to the shortage of chips and various parts led to the production of cars, last year's Japanese car sales base is relatively low. In 2023, with the easing of the "core shortage", the production of major car companies in Japan has accelerated the recovery, driving new car sales to surge year-on-year. In addition, as an important minicar manufacturer, at the end of June this year, due to the shortage of parts caused by the supplier's factory fire, Daihatsu had to temporarily stop production for more than 10 days, which brought a greater impact on its sales, but also made the month of Japan's domestic minicar sales in a year's rare year-on-year decline. Without the accident, Japan's new-car sales figures would have been higher.


In addition to the recovery in production, another reason for the rise in new car sales in Japan is that the Japanese economy is recovering and many large companies are raising wages this spring. However, it is worth noting that the second statistical report released by the Japanese Cabinet Office on September 8 revised down the economic growth rate in the second quarter, the quarter-on-quarter growth rate was revised down from 1.5% to 1.2%, translating into an annual growth rate of 4.8%, which was revised down from the initial growth rate of 6%. While Japan's gross domestic product (GDP) has been boosted by factors such as an easing chip shortage and rising car exports, the economy faces a number of challenges, which also create uncertainty about the future development of the Japanese auto market.


Looking at imported cars, Japan's imported cars include foreign brands and Japanese brands (Japanese cars produced overseas and shipped to Japan). Statistics released by the Japan Automobile Import Association (JAIA) show that from January to September this year, the number of imported foreign brands was 185,000, an increase of 5.4%; The number of imported vehicles of Japanese brands was 46,384, down 11.1% year-on-year, a large decline. The combined total was 231,000 units, up 1.6 per cent from a year earlier. Among them, Mercedes-Benz, BMW, Volkswagen, Audi and other German brands are popular in the Japanese imported car market.


In addition, the share of electric vehicles in the Japanese car market is slowly increasing. According to JADA statistics, in September this year, Japan's domestic passenger car market (excluding minicars), pure electric vehicle sales were 4,818 units, an increase of 47%. The sales volume of hybrid vehicles was 5,670 units, an increase of 22.6% year-on-year, and the combined market share of the two was 4.4%.


India: Passenger car demand is booming stock level warning


The Motor Vehicle Dealers Federation of India (FADA) recently said that India's car sales continued to grow in September due to continued increase in demand in the rural market. Sales of passenger cars rose 19 per cent year-on-year to 330,000 units. Commercial vehicle sales rose 5 per cent year-on-year to 81,000 units. With the festive season in India, FADA's outlook on the market has changed from "cautiously optimistic" to "optimistic".


At the same time, FADA warned about high inventories, saying that the number of days of passenger vehicles in stock in September was between 60 and 65 days, up from 58 to 63 days in August. Manish Raj Singhania, president of FADA, said: "With passenger car inventories at unprecedented levels in India, automakers must be careful to prevent overstocking to ensure a vibrant and stable market during the festive season."


From the performance of car companies, in the Indian passenger car market, the local Maruti Suzuki, Tata, Mahindra, and South Korea's Hyundai, Kia, as well as Japan's Toyota, Honda and other ranking is relatively high. Specifically, in September this year, India's largest car company Maruti Suzuki ranked first with an absolute lead, with sales of 150,000 vehicles, an increase of 2%. Hyundai came in second with 54,000 units, up 5 percent from a year earlier, the company's best monthly sales to date, helped in part by its new Exter subcompact SUV, which is selling well in the Indian market.


Tata Motors, in third place, sold 45,000 passenger cars in September, down 9 per cent from a year earlier. Shailesh Chandra, managing director of Tata Motors' passenger car and electric mobility business, said this was mainly due to the company reducing the supply of relevant models in order to smooth the transition to the next generation of models. Tata Motors' sales are expected to return to growth as deliveries of the new generation of products begin. In addition, from January to September this year, Tata Motors' total sales of electric vehicles reached 54,000 units, an increase of 75%.


No. 4 Mahindra sold 41,000 units, up 20 percent from a year earlier, thanks in large part to surging demand for its SUV products. To that end, Mahindra plans to ramp up production to 49,000 SUVs a month in the coming months, up from 29,000 at the end of last year.


Toyota sold 22,000 vehicles in India in September, up 44 per cent from a year earlier and its best monthly sales this year, thanks to new models and a three-shift system that boosted production. Kia sold 20,000 vehicles, down 23 per cent from a year earlier. In total, only these six companies sold more than 10,000 units in the Indian passenger car market in September.


Saic MG is also doing well in India, where September sales rose 31 per cent year on year to 5,003 vehicles. The company says electric vehicle sales account for about 25 percent of its total sales in India.


Brazil: Domestic sales growth exports decline significantly


In the first three quarters of this year, cumulative car sales in Brazil were 1.63m, up 8.5 per cent from a year earlier, according to Anfavea, the Brazilian automobile manufacturers' association. Among them, 1.21 million passenger cars, an increase of 8.3%; 325,000 light commercial vehicles, up 15.8% year on year; 79,000 trucks, down 15.2% year on year; The number of passenger cars was 15,800, an increase of 32.6%.


In terms of monthly changes, car sales in Brazil have fluctuated, alternating between year-on-year increases and declines. For example, sales jumped 24 per cent in July, edged down 0.4 per cent in August and rose 1.9 per cent in September. It is understood that the Brazilian government introduced a temporary program in June this year to reduce car prices through tax incentives, which has helped the Brazilian car market, and July sales reflected this. However, the tax breaks provided by the program quickly ran out of money, and the market remained largely stable after that. Brazil's domestic car market is performing better than previously expected, and in response, Anfavea raised his forecast for 2023 Brazilian car sales to 2.23 million units from 2.17 million units previously.


Although car sales have increased in Brazil, production has not increased together. Data show that in the first three quarters of this year, the cumulative production of vehicles in Brazil was 1.751 million, down 0.3% year-on-year. "Two-thirds of the increase in domestic demand was met by imports," said Anfavea chairman Leiter. The association expects Brazilian car production to reach 2.37 million units in 2023, a slight increase of 0.1% over 2022, down from a previous forecast of 2.2% growth.


Compared with imports, Brazil's car exports have performed poorly. In the first three quarters, Brazil exported a total of 323,000 vehicles, down 11.2% year-on-year. Especially since April this year, the monthly export volume has been declining, and the decline rate of more than 20% in many months. For example, year-on-year declines were 24% in April, 22.6% in June, 27.6% in July, 26.2% in August and 3.9% in September.


In this regard, Anfavea said that due to the severe economic crisis in neighboring Argentina, Brazil's car exports will show a double-digit decline in 2023 compared with last year. The association expects Brazil's car exports to fall 12.7 percent year on year to 420,000 units in 2023. Anfavea said Argentina was Brazil's largest trading partner, but the economic crisis caused the country to lose its position as Brazil's top auto exporter to Mexico.


"Exports were the weak link in the Brazilian auto industry in the first nine months of this year." Anfavea points out. In addition to the economic crisis in Argentina, the loss of market share in other countries such as Chile and Colombia has also affected Brazilian car exports.


Russia: The market gradually recovers the strength of Chinese and Russian brands


The Russian car market is showing strong signs of recovery. Recently, the Moscow-based Association of European Business (AEB) Automobile Manufacturers Committee (AMC) released data showing that in the first three quarters of this year, new car sales in Russia totaled 638,800 units, an increase of 26.1%. Among them, 1,256 were pure electric vehicles.


The AEB's sales figures have traditionally come mainly from car manufacturers and official importers. Starting in June 2023, the association began to incorporate data from the PPC JSC consultancy, which counts retail sales of vehicles delivered to owners, some of which are not covered by the AEB. The AEB believes that the new PPC JSC data will help to provide a more objective assessment of the current situation and dynamics of the new car sales market in Russia. PPC JSC data show that in the first three quarters of this year, new car sales in Russia reached 761,000 units, up 42.8 percent year-on-year.


AEB AMC Chairman Alexei Kalitshev said: "New car sales in Russia have grown steadily in the first nine months of the year. This shows that despite rising prices and fluctuations in the rouble exchange rate, the new car market in Russia has great potential and is gradually recovering." Kalitshev also predicted that new car sales in Russia could reach 1 million in 2023. Similarly, Russia's largest car company Avtovaz recently adjusted its forecast for 2023 new car sales in Russia to 1 million units from 875,000 previously.


Due to the hopeless resumption of work, a number of European, American and Japanese brands have withdrawn from the Russian market, and even South Korea's Hyundai Motor, which has been sticking to it for a long time, recently announced that it would sell its factory in St. Petersburg to AGR Automotive Group. The decision makes it the second car company to say goodbye to Russia after Renault, Toyota, Nissan, Volkswagen and others.


Today, local Russian brands and Chinese brands each occupy half of the Russian car market. From January to September this year, the top 10 brands in the Russian new car market by sales volume are: Lada, Chery, Haval, Geely, GAZ LCV, Omenda, Star Road, UAZ, Changan, Kia. Of these, Chinese brands accounted for six.


Among the top 10 brands in the Russian car market, except for Kia, other brands have achieved high growth. The number one Lada, a brand owned by Avtovaz, continues to hold the number one spot by an overwhelming margin, selling around 240,000 units in the first nine months of this year, up 96% year on year; In addition, other Russian brands such as GAZ LCV and UAZ have increased by about 50% year-on-year. Chery, Haver, Geely, Star Road, Changan and other Chinese brands have achieved 2 to 3 times the rapid growth, but there is still a big gap between sales and the "leader" Lada.


Originally published by China Automotive News, October 18, 2023