Today's News by Jack Nerad for Driving Today

Global Automotive Market Actually Growing

Thursday, August 26, 2010

The global automotive aftermarket is set to grow by 0.7 percent by the end of 2010 -- but strong first half figures for leading industry players do not mean that troubles are over, says independent market analyst Datamonitor.

The predicted market increase and recovery in global volumes is fueled by emerging markets and a 2.2 percent growth in vehicles in use. However, as government subsidies like the U.S. Cash for Clunkers of last year are withdrawn in other countries, manufacturers face a shortfall in demand at a time when increasing commodity prices and higher interest rates will begin to bite.
 
“Despite a wave of optimism, industry players must note that this is a recovery, not absolute growth, and a lot must be done to make sure that this recovery is uniform,” said Marcus Johnson, automotive analyst at Datamontior.
 
In Europe, the weakening bloc currency and end of government scrappage (cash for clunkers) schemes have dampened the effects of growth. Despite restructuring efforts and a respectable growth in gross domestic product in the U.S., the American market is set to stay below recession levels for some time. In fact, China replaced the U.S. as the world’s largest automotive production market last year, and Datamonitor is forecasting growth there of over 30 percent out to 2013.
 
“It’s difficult to ignore that when it comes to automotive recovery, China is holding the torch,” said Marcus. “However, even in China, we expect the second half of 2010 to be more sobering as sales stabilize from a period of high growth.”
 
Other emerging markets are also showing high potential for growth, though not to the level of China. Datamonitor identifies India, Japan and Brazil as worthy of note due to increasing GDP and international investment. However, huge investments are needed to reduce emissions and to design high-volume models that are fuel-efficient, compact and able to meet the demands of these regions.

The natural consensus is that the automotive aftermarket will recover, but the fundamental question remains when. Datamonitor expects the global aftermarket to reach 640 billion euros in 2011 (following a growth of 2.1 percent over 2010) as automotive players shift their focus away from Western markets and toward high-growth emerging economies.

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