It is expected that there will not be much growth in the automotive market between 2019 and 2020 due to basic low growth condition. Political and trade conflicts between countries and increased geographical risks will cause low growth. Rate of growth of developing countries will not be much fast either. However, it is expected that the SUV market and the luxury and eco-friendly car markets will continue to grow despite unfavorable conditions.
“Despite small growth in emerging markets, number of car sales globally will only increase by 0.4% from 86.95 million units in 2019 to 87.30 million units in 2020 as the American market and the western European market continue to go through a slump.” said Manager Lee Bo-sung of Hyundai Motor Group’s Global Business Intelligence Center at a seminar that was held at Hyundai Motor Group’s company building in Yangjae-dong while giving a presentation on the prediction of the automotive industry in 2020. “It is unclear when 90 million cars will be sold globally again.”
“While basic low growth condition will be maintained in 2020, political situation will be the key variable in global car sales.” said Manager Lee. “Automotive manufacturers will need to pay attention to exchange rate and change in international oil price.”
Some of major issues related to the automotive market in 2020 are the trade war between the U.S. and China and basic low growth condition, geographical risks between countries, possibility of a no-deal Brexit, and deteriorating relationship between South Korea and Japan and continuous nuclear risk by North Korea.
It is estimated that number of car sales in the U.S. will decrease by 1.6% from 2019 to 2020 (16.8 million units) due to increased economic uncertainty. On the other hand, number of car sales in China, where 10% reduction was expected this year, will increase by 3.9% from 2019 to 2020 (21.3 million units) due to special effects from Chinese Government’s subsidy policy on NEV (New Energy Vehicle).
“While automotive markets in advanced countries have been stagnant in the past few years, markets in rising countries have continue to grow.” said Manager Lee. “Stagnation will be a bigger problem in 2020 as global economic situation continues to be bad and four major rising markets (China, India, Brazil, Russia) reach the peak of their growth.”
It is expected that amount of growth of rising markets such as India, Brazil, and Russia will be limited in 2020. It is estimated that number of car sales in India, which faced a sharp 13% decrease in car sales at one point this year, will increase by 4.0% from 2019 to 2020 (3.03 million units) as it resolves political uncertainties and enters a state of economic recovery. Brazil, which has shown a sharp upward trend (6.8%) in car sales, is expected to see a 3.2% increase next year (2.73 million units) due to weakened growth of the fleet market despite positive sales from economic recovery.
Small jump in car sales is predicted for the South Korean market. 1.75 million car sales and 2.6% reduction were estimated for this year due to supply issue of imported cars and weakened consumption mentality from deterioration of major models. However, 1.2% increase and 1.77 million car sales are estimated for next year due to release of new major cars despite economic slump.
Despite lack of car sales globally, it is predicted that the SUV market and the luxury and eco-friendly car markets will continue to grow in 2020. It is estimated that the percentage of SUV sales within the entire market will increase from 35.6% to 36.9% due to increased level of preference by consumers and increased releases of new SUVs. The luxury car market will see a 2.8% increase from 10.27 million units to 10.56 million units due to growth of rising countries and diversification of classes of luxury car.
4.29 million car sales (15.3% increase) were estimated for the eco-friendly car market due to tightened regulations by major countries and positive sales of BEVs (Battery Electric Vehicle). It is estimated the market will grow by 29.3% (5.55 million units) next year due to increased releases of new BEV models by major automotive manufacturers and tightened emission gas regulation in Europe.
“There is no reason for automotive manufacturers, which need to carry out large investments as they face a future car era, to increase their supplies next year when basic low growth condition is expected to continue.” said Manager Lee. “Ultimately, reducing production cost will be the important issue because automotive manufacturers will not be able to raise their car prices due to fierce competitions.”
Staff Reporter Jung, Chiyeon | chiyeon@etnews.com