On January 11, PricewaterhouseCoopers’ Autofacts announced its 2011 global light vehicle assembly forecast to exceed 75 million units, a new industry peak. Although some uncertainties persist in various regional economies, the baseline global assembly estimate is reflective of:
- Continued mature market recovery volume in North America, the European Union, and developed Asia-Pacific (Japan, South Korea, and Australia).
- New organic growth in emerging automotive markets primarily within developing Asia-Pacific (China, India, and ASEAN), South America, and Eastern Europe, which are forecasted to contribute more than 70 percent of global assembly volume growth from 2010-2015.
- Increased demand for premium brands, estimated to increase by 9.2 percent in 2011 versus a growth rate of 5.9 percent for non-premium brands.
"Unlike the past, vehicle assembly volumes are increasing due to natural market recovery as opposed to artificial stimulus such as automaker incentives and government intervention," explained Anthony Pratt, senior automotive analyst, PwC's Autofacts. "Automakers who took a bitter pill by making difficult decisions to make significant cost reductions throughout their organization are reaping the benefits. This is evident for companies who are achieving profitable growth."
China remains the No. 1 automotive sales market after surpassing the U.S. in January 2009. In 2011, Autofacts forecasts China's vehicle assembly volume to reach more than 15 million units, an increase from 14 million units in 2010. However, the growth rate is expected to plateau as the government ends tax incentives for small cars and attempts to suppress asset price bubble concerns. Instead of China's tremendous sales increase of 31 percent year-over-year recorded in 2010, Autofacts expects a 20 percent rise. With gross domestic product (GDP) per capita in China exceeding the $7,500 threshold, when sales tend to surge, Autofacts does not envision the possibility of single-digit growth in the short-term.
"China is the poster child for stimulus driven market performance," continued Pratt. "We expect sales in the first half of 2011 to slow as a result of pull-ahead incentives."
Due to booming global demand, premium automotive manufacturers are facing capacity constraints. This is a major concern given that a future China market of 40 million units would double the size of the world premium brand market.
Furthermore, premium brand assembly growth is forecasted to increase by more than 50 percent by 2017, while non-premium segments are anticipated to grow by 36 percent during the same period. This may be counter-intuitive considering the significant growth taking place in low cost segments in emerging markets.
