International vehicle sales have seen a sudden drop off in recent months thanks to some decisions made at various levels of Government and the market.
2017 was a mixed year: China is now the biggest market with over 25M sales followed by Europe, Middle East and Africa with 21M and North America in 3rd place with 20M sales. However there were some markets that did remarkably well with Argentina, Chile, Thailand and Russia getting double digit growth, however the US, UK and South Korea saw declines. With these large markets in decline it meant the overall market was only slightly up by about 2.5%.
Not surprisingly, the largest increase was in the electric car market: a 78% increase to over 680,000 units. The Alternative Fuel segment, which means hybrid engines, was up 27% and even petrol cars were up 3%. The biggest loser were diesel cars and that is not a huge surprise given the reputation that they have. SUVs were the biggest segment up 4% to 34% – that’s over one third of all sales! The Renault-Nissan-Mitsubishi alliance was the biggest supplier of vehicles with Volkswagen and Toyota chasing them closely, however on a single marque status, Toyota was the top seller.
However, so far in 2018, most of the manufacturers are hurting – especially as we head to the end of the year. In September, European sales fell by 23% however, that was countered by a rise in August of 31%. That was simply due to new emissions controls technology that is now being applied to vehicles – buyers wanted the older tech because it performs better! To meet new worldwide standards, many manufacturers are detuning vehicles to conform.
In the US, dealers have seen a slow down as well. Some reports suggest that buyers are taking more time to make their decision and sales managers are “digging deep” as one said to CNBC. That suggests bigger incentives and that means less profit. With Ford, amongst others, focusing on SUVs and trucks, it was no surprise to hear that US sales are now split 50/50 between cars and trucks. The overall worry of trade tariffs is also hurting the manufacturers Stateside as they import more cars and build trucks locally.
In Australia, the last six months have seen a reduction year-on-year of sales. Some of that can be put down to Government taxation changes that affect luxury car sales in some areas. As series production has now ended and all cars are imported – with a great many over the low price threshold for a “luxury” car, it has meant that sales are under stress. It doesn’t help that buyers are nervous about the future of the economy with political instability getting in the way.
Analysts still expect a flat year for the global market, so if the industry does increase, it will be mostly off the back of China and their desire for electric vehicles.