The worldwide auto sales are likely to see an uptrend in 2012 on the strength of emerging markets besides the pent up demand and improving economy in the U.S. These apart the average age of the vehicles will also force consumers to go in for a replacement. The upbeat mood in the auto segment comes despite an uncertain economic outlook and the Euro Zone trying to come out of the credit crisis mess.
The latest optimism comes in the wake of reports of strong auto sales in the U.S. for the second consecutive year in 2011 after being mauled in 2009deeply hurt by recession and financial turmoil. The auto industry should be credited for turning around tremendously especially after leading automakers were being pushed into seeking bankruptcy protection. General Motors (GM) and Chrysler sought bankruptcy protection, while Ford (F) slipped in to red and its loss ballooned to $12.6 billion at one point of time forcing it to stop dividend.
Globally, cars and light trucks will likely to see a growth of 6.7 percent in 2012 helped by strong demand from China, R.L. Polk & Co. has reportedly said. Sales are expected to grow to 77.7 million driven by a 16 percent rise in China to 17.9 million, the research company disclosed.
For the year 2011, auto sales estimated to remain unchanged at 15.5 million in China following the withdrawal of incentives by the Government. However, Polk's director of forecasting for the America's, Anthony Pratt, told Bloomberg, "The growth there will be more a function of natural demand than stimulus, and the expansion in the second-and third-tier cities is a trend that's going to continue to develop."
The U.S. is likely to see a 7.3 percent uptick of sales in cars and light trucks to 13.7 million in 2012, though it may continue to struggle to reach the pre-recession level of 16 million vehicles at least not before 2015 leave alone surpassing it. The luxury car segment will likely to see a faster growth in the U.S. market with estimated 14 percent upside in 2012 on top of an expected 12.7 million sales in 2011, according to Polk.
Despite the current credit crisis in the Euro Zone, Polk reportedly estimate the regional sales to remain unchanged in 2012 totaling approximately 19.2 million, the same figure in 2011, on top of 18.5 million units recorded in 2010.
The year ahead will also see tough competition among Korea-based Hyundai Motor Co., Kia Motors Corp, Japan's Toyota Motor Corp. (TM) and Honda Motor Co. (HMC) For the year 2011, Hyundai recorded sales growth of 12.3 percent with domestic sales upside of 3.6 percent and international sales increase of 14.2 percent. While Polk estimate sales of Hyundai and Kia to see uptick, their market share is not likely to see a similar trend as the research company expects Toyota and Honda to tighten their noose to get back the lost market share following production cuts in the wake of earthquake and tsunami in Japan.
The optimism of strong auto sales comes on the back of average age of vehicles at 10.6 years forcing the consumers to opt for a newer brand when the credit is available easily with lower interest rates ruling the rust. These apart, there is expectation of additional consumers in the age group of teens and twenties lining up to buy their favorite brand to push the demand thereby lifting overall growth of the economy.
The emerging markets, especially BRIC nations, Brazil, India, Russia and China, are expected to better the matured markets in the next few years. While Brazil is likely to exceed Germany in 2011 itself, Polk projects India to surpass Germany in 2014. Auto sales in Russia will likely to remain unchanged in 2012, yet above Germany's projected 2015 level.
The auto companies will report sales for the year 2011 on January 4 with new cars and trucks are estimated to cross 12.5 million, indicating a growth of around 9 percent over 2010's sales figure of 11.5 million and 10.4 million in 2009. Government data indicates that an additional approximately $40 billion were spent on new cars and trucks in 2011 over 2009.