The automotive market is anticipated to stabilize in the current year. On one hand, we foresee a slowdown in car registrations following a robust recovery in 2023. Conversely, car manufacturers are encountering diminished pricing leverage and shrinking margins due to heightened competition and an uncertain business environment. Anticipated factors contributing to subdued consumer spending, particularly in China and Europe, alongside below-par global economic growth, lead us to project a modest 1.9% increase in new auto sales this year. Despite significant challenges, electric vehicles (EVs) maintain a favorable position, with new EV passenger car sales expected to surpass 18 million (a 32.8% year-on-year increase) in 2024, led by Europe with a 41.2% growth rate.
On the production front, we anticipate declines in gross and EBIT margins to 18.7% (a decrease of 28 percentage points) and 5.2% (a decrease of 164 percentage points), respectively, accompanied by accelerated consolidation. Expected increases in the R&D ratio (4.5%, up by 14 percentage points) and CapEx-to-sales ratios (5.4%, up by 33 percentage points) suggest that automakers are likely to diversify their investments and maintain agility. Collaboration within regions among automakers and supply chain stakeholders is anticipated to rise, aiming to gain a competitive advantage amidst the industry’s restructuring.
Significantly, the global auto industry is undergoing a profound shift towards electric vehicles (EVs), albeit amid turbulent conditions influenced by geopolitical tensions, slowing demand, and regulatory ambiguities. Regionally, this transformative process is already underway. China has emerged as a disruptive force, challenging traditional auto leaders. In response, Europe and the US, wary of their reliance on Chinese components and the potential impact on local industries, have implemented heightened trade barriers and scrutiny. The recent deceleration in EV demand, coupled with uncertainties in regulation and the economic landscape, adds further complexity to the industry’s short-term outlook. Click here to find out about region-specific dynamics:
