Automakers have curbed recent supply chain challenges while, at the same time, consumer confidence is returning. Combined, this will ensure that lucrative opportunities exist around the world. To better gauge the automotive industry outlook in 2024 and beyond, ABI Research recently published its Vehicle Shipments and Mobility Services Market Data Overview: 3Q 2024 presentation. The report provides worldwide vehicle sales forecasts, as well as regional analyses. Some of the key trends and data from the report are shared in this article.
Key Findings:
- Passenger vehicle sales are returning to pre-pandemic levels, reaching 91.7 million shipments in 2023 and 94.7 million shipments in 2024.
- The 3.3% sales growth in 2024 is down from the 11.7% growth rate in 2023.
- The Electric Vehicle (EV) market is experiencing a mild slowdown. However, overall sales growth remains stronger than Internal Combustion Engine (ICE) sales.
- Asia-Pacific is, by far, the largest automobile market, with developing countries in the region rapidly transitioning from 2-wheel to 4-wheel vehicles.
- Chinese carmakers will be key in increasing passenger vehicle adoption in economically sensitive regions. These brands have cost-effective supply chains that enable them to sell vehicles at a low price.
Automotive Industry Recovery in 2023
Consumers bought 91.7 million vehicles in 2023, equating to an 11.7% sales growth Year-over-Year (YoY). This number was significantly higher than we forecast, originally expecting the 90+ million highwater mark not to be achieved until 2025.
Global macroeconomic improvements primarily stimulated this growth in vehicle sales volume. Inflation dropped and wages have been high in key regional markets, resulting in higher consumer spending on new vehicle purchases. Also helping drive new car sales is improved supply chain visibility capabilities, enabling carmakers to overcome logistics challenges such as supplier shortages.
YoY vehicle sales growth was strong across regions in 2023. The economically sensitive Eastern European and Middle East & African regions had the highest increase in vehicle sales, given their comparatively lower overall installed base. Automakers sold 32.9% more vehicles in Eastern Europe in 2023 compared to 2022, followed by 17% for the Middle East & Africa.
Interestingly, the more affluent Western European and North American regions had higher vehicle sales growth than Asia-Pacific and Latin America. In 2023, Western Europe and North America witnessed 13.9% and 12.5% YoY sales growth, respectively. This contrasts with the more modest 9.8% and 6.4% sales growth for Asia-Pacific and Latin America.
Vehicle Sales Growth in 2024 Will Not Match 2023’s Level
The automotive industry will sustain its recovery in 2024 after the slowdown in 2022, albeit not as significant as in 2023. Our analysts expect 94.7 million vehicles to ship globally this year for a 3.3% overall sales growth. This increased uptake is partially contingent on interest rates falling in the second half of the year, as they are currently expected to. If monetary policy is more unfavorable than anticipated, it will be reflected in a future update to ABI Research’s vehicle shipment forecasts.
Of the three major economies, Western Europe will experience the biggest jump in vehicles sold in 2024, with a forecast of 3.5% YoY sales growth. North America and Asia-Pacific will closely trail, with 3% and 2.9% sales growth, respectively. Sales growth in Eastern Europe and the Middle East & Africa will slow down significantly to 5.9% and 7.6%, respectively. Latin America will lag behind, forecast to see only 1.7% more vehicles sold in 2024.
Electric Vehicle Sales Continue to Increase
Consumer Electric Vehicle (EV) sales volume has been strong in recent years, even during the 2022 automotive industry downturn. While there is currently an EV market slowdown due to the withdrawal of many government subsidies/tax breaks, the trend of strong overall sales growth will continue. Broader buildout of public EV charging infrastructure will also be important, helping alleviate consumers’ range anxiety concerns.
After selling 13.5 million powered EVs in 2023, automakers will sell 17.1 million vehicles in 2024. This translates into a 24% YoY shipment growth, down from 35% last year. ABI Research’s EV sales forecasts include both Plug-in Electric Vehicles (PEVs) and hybrids. China is easily the biggest EV market and will reach a 50% adoption rate by 2025. This will be fueled by lower EV sticker prices and regulatory preference for Battery Electric Vehicles (BEVs).
Subsidies are a key catalyst for EV sales growth in Europe. However, some notable countries such as Germany and the United Kingdom have rolled back incentives to purchase EVs. A key spark for the EV market to propel forward will be introducing low-cost models like the Volkswagen ID.2, the Opel Frontera, and the Renault 5 E-Tech. This upward sales trend will materialize around 2027/2028.
Consumers in Asia-Pacific purchase 65.8% of EVs sold worldwide, forecast to ship 11.3 million EVs in 2024. By 2030, this figure will still be an impressive 59%. In a distant second, Western Europe accounts for 18.7% of total EV sales. North America will lag behind Western Europe through 2035 as U.S. states vary in EV mandates and ICE bans.
Learn more: For further insights on the key trends shaping the EV market, and more granular EV and EV component forecasts, please see ABI Research’s Electric Vehicles Research Service.
The Future of the Automotive Industry Drives through Asia
Asia is home to more than half the world’s population, so it is unsurprising that the region heavily influences the automobile industry. Spearheaded by China’s growing middle class, the Asia-Pacific region accounts for 51.5% of total vehicles sold globally. This translates to an anticipated 48.8 million vehicles sold in 2024.
For global vehicle sales to reach 95+ million annually, it is vital that developing countries continue to transition from 2-wheel to 4-wheel/passenger vehicle-based transportation. This is a trend that has steadily increased in recent years as labor wages have gone up.
Chinese automakers, notably EV brands, will make significant strides in addressing this market gap as they aim to expand their reach to developing nations. Due to highly efficient supply chain models, such as BYD’s vertical integration, Chinese car brands can produce more vehicles than they currently sell. As a result, it is a lucrative opportunity for Chinese brands to branch out to neighboring countries, as well as Latin America and Africa. For example, the CAOA Chery was a top-10 best-selling car brand in Brazil last year.
Our team expects similar trends to develop as Chinese automakers chip away at other companies’ market share in developing countries.
For more automotive industry trends and sales forecasts, visit ABI Research’s Smart Mobility & Automotive Research Service page.
