AUTHORS
Philip Nothard
INSIGHT DIRECTOR
COX AUTOMOTIVE
Phillip Northard
INSIGHT DIRECTOR
Phillip Northard
INSIGHT DIRECTOR
Ancient Greek philosopher Heraclitus wrote that change is the only constant. No one steps into the same river twice, he concluded. He might have been talking about the UK automotive industry as it stands, especially in the past three years when so much of what we know and have come to expect has been upended by a disruptive blend of internal and external factors.
Making reasoned estimates about the road ahead then, is challenging. That’s especially the case if you don’t have the data to back up your claims. Fortunately, reliable data is precisely what we, at Cox Automotive, have.
In this section, our UK industry forecasts lay out a future for the new and used car markets to aid the confident business decisions and strategic direction of our partners and stakeholders.
The projections have been formulated by reflecting on market dynamics of the past and how they’ve been shaped by global production trends, localised regulations and government legislation that’s impacted our sector, both directly and indirectly.
Benchmarks and milestones
Examining and understanding historical benchmarks is crucial when considering any return to 'normal' global production levels. First, we must define what we mean by normal.
Vehicle production has only reached the milestone of 95 million vehicles three times in the past two decades: 2016 (94,976,569), 2017 (97,302,534) and 2018 (95,634,593)1.
In the 17 years between 2002 and the pre-pandemic year 2019, average global production stood at 78,633,808. Therefore, when the industry witnessed a decrease, mid-pandemic, to 77,000,621 just a year later, the total wasn't significantly below that two-decade average.
In 2022, drawing parallels to the situation in 2010 when global production began accelerating, we witnessed a 6.1% increase compared to 2021 when the total average reached 85,016,728 vehicles. Our calculations indicate a 3% rise in 2023, meaning the global average will reach 87.5 million vehicles.
2025 and the pandemic bounce back
To make accurate estimates about new and used vehicle volumes up to 2025, we must first establish the total that global production levels will reach. Additionally, we need to consider market-specific factors such as local legislation and government financial support. We've observed a swift recovery following the compound challenge posed by the pandemic and the Ukraine conflict on OEM supply chains. With this in mind, we anticipate that the market will eventually be split between manufacturers who want profitability at the cost of volume and market share and those who will return to a 'push' market at the cost of profit for volume and market share.
A look beyond the pandemic rebound tells us that production will continue to increase, albeit slowly. Our current forecast points to a production figure exceeding 90 million vehicles by the end of 2025. Alongside shifts in production volume, we anticipate significant changes in manufacturing locations, as well as wholesale changes in fuel types that vehicles are designed for and a significant rethink of the target markets for those vehicles.
A fierce battle is underway to determine the dominant manufacturing regions and primary markets for production volume in the coming decade. This era of change is set to continue, so keeping pace with the coming modifications and reacting sharply will serve players in the automotive sector well.
References
PERSPECTIVE
Phillip Northard
INSIGHT DIRECTOR
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