Global assembly of light vehicles is forecast to reach 82.1 million units this year, representing 4% year-on-year growth. The fortunes of the global industry are split, however, along geographical lines according to the consulting company making the forecast.
Automakers continue to await a recovery in the European auto market and PwC Autofacts (Detroit, MI) predicts production will decline a further ca. 4% this year to just under 15.3 million units. And while assembly is expected to recover beyond 2013, it won't be solely due to an improvement in local demand. Rather, strategic localization of assembly that is currently imported to the market is expected to play a major role in boosting assembly output resulting in 500,000 to 600,000 units of incremental growth annually for the region.
|Excess assembly capacity remains at global automakers.|
The US automotive market meanwhile, has continued to shrug off mixed macro-economic news to slowly and steadily grow sales month by month according to Autofacts. "While this trend isn't expected to last absent real economic growth, it remains an encouraging sign for the industry."
Through March this year in the US, the seasonally adjusted annual rate is trending at 15.3 million units according to Autofacts, which is forecasting full-year sales of just over 15.4 million units. From a regional standpoint, meanwhile, North American assembly is forecasted to reach over 15.9 million units, representing a 3.6% increase from 2012. "While this growth is incremental, a slow and steady recovery is ideal for the supply chain, allowing for proper capacity investment," says Autofacts.
Turning to Japan, while the weakening of the Yen along with the strong possibility of further currency-related action by the central government has been a positive development for Japanese automakers, the long-term trend of assembly localization to current export markets is expected to continue. Toyota Motor Corp., for example, still only has 59% of its assembly capacity outside of Japan, compared to 76% for General Motors and 77% for VW according to consultancy Oliver Wyman (New York, NY). In the near-term, assembly in Japan is forecast to drop to 8.4 million units in 2013, a year-on-year reduction of 7.7%.
The outlook in China, meanwhile, appears positive. While growth in 2012 of 7.9% was considered a relatively slow year, Autofacts is forecasting 2013 assembly of 18.9 million units, an impressive jump of 14%. This rise will be driven by a mix of new model launches, economic measures, and demand growth. However, longer-term market growth is expected to slow slightly as the sector starts to follow trends indicative of a mature market.