Where Auto Sales Are Expected to Go in China and Globally

by Jon LeSage, Editor, Used Car Market Reports

In recent years, we’ve seen China become the largest new vehicle sales market in the world, surpassing the U.S. and starting to create its own growing supply of used vehicles. What does that look like for this year and next, and what do analysts expect overall global sales trends to look like?

New vehicle sales in China are now declining faster than expected as the days of rapid growth are over for now. Economic uncertainty and government restrictions over vehicle ownership have taken their toll on sales, according to PwC. Automakers have had to slash prices in an effort to cut full inventory levels in the near term. Monetary policy and a stabilizing real estate market will affect the next wave of new vehicle sales, says Moody’s Investors Service.

“While overall sales growth has been slowing and market share battles are becoming increasingly competitive in the Chinese car and minivan market the SUV and multipurpose vehicles (MPV) segments show significant strength,“ said Rick Hanna, Global Automotive Leader, PwC. “Looking forward, automakers will need to focus on interior cities to support long-term growth – and if they can do this while leveraging their product portfolio, they can weather the storm and maintain a stake in the most lucrative market in the auto sector.”

The future in China may still hold promise if adjustments are made to automakers’ strategies, PwC says. Although economic conditions remain challenging in China, Moody’s expects the auto market to recover.

Moody’s expects global auto sales to improve in 2016, with steady growth in the US and strong sales in Western Europe mitigating sharply lower sales in Japan and slowing growth in China. Moody’s forecasts global light vehicle sales of 2.5% in 2016, an improvement from 1.2% in 2015. China could be a significant driver of this growth, as a looser monetary policy and stabilizing real estate market push Chinese auto sales to comprise 27.8% of global auto sales in 2016, up from 27.1% of sales in 2015, according to Moody’s.

Declining auto sales in Brazil and Russia will place a further drag on auto sales growth. Moody’s expects that a rebound in India will somewhat mitigate the effect in BRIC countries (Brazil, Russia, India, and China).

, it looks like the market could end the year with sales of 17.72 million new vehicles, according to WardsAuto. That would beat 2014’s 16.5 million units sold – the highest number since the record level of 16.94 million in 2006.

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