Global car production will decline by a low single-digit percentage in 2024, compared to the flat-to-slightly-positive growth anticipated earlier this year, ING Bank says in a note sent to Kallanish. Output will slow in the second half-year amid high inventories in the US and a slowdown in electric vehicle (EV) adoption in Europe.
The second-quarter results season was mixed for the auto sector, with multiple revisions of initial full-year targets.
Vehicle electrification has slowed in Europe and the US due to saturation in the early adoption buyers category, lack of infrastructure, the ending of government incentives for consumers in Germany, and prices remaining elevated for electric vehicles against more constrained customer buying power.
Hybrid cars have been enjoying something of a renaissance this year, with several manufacturers introducing new plug-in hybrid electric vehicles (PHEVs) in reponse to consumer preferences.
The forecast for global car sales has been revised down to 1.8% growth in 2024 following the end of the buoyant post-Covid phase, with elevated, although declining, interest rates and political and policy uncertainties clouding the outlook. Furthermore, used cars have become more attractive again after prices started to drop following better stock positions.
“We expect a stabilisation in the global auto market volume next year [2025], with some positive aspects more likely than a sharp negative downturn; the expected lower interest rate backdrop in the United States and Europe should provide a tailwind for consumer sentiment,” ING notes.
“Auto markets in key geographies may have to rely on some policy support in order for constructive scenarios for the year to materialise. Such policy measures could potentially include new EV subsidies in Europe, including Germany, tailwinds from the economic stimulus measures in China or some supportive measures after the US elections,” the bank continues.
Higher tariffs on Chinese electric vehicles meanwhile will not stop Chinese brands from making inroads in Europe. They will simply speed up initiatives to produce more locally.
“The higher barriers provide time and some room to manoeuvre for carmakers but won’t change the direction of travel and will likely delay the downward trend in EV prices for consumers. In 2024 around 25% of the EVs sold in the EU are built in China. This includes the majority of Western brands, such as Tesla (+7.8% tariff increase), Volvo (18.8% tariff increase) and BMW (20.7% tariff increase),” ING concludes.
Adam Smith Poland
