2021 Global Auto Sales on the Rise With Europe Taking the Lead
By Space Coast Daily // May 13, 2021
Global auto sales have been on the decline since 2017 with leading causes pointing to shrinking economic activities and tough lending norms.
The situation took a turn for the worse with the emergence of the coronavirus pandemic in 2020. As countries struggled to contain the virus and retain some semblance of an economy, car sales and car hire rates around the world hit an all-time historic low.
But, according to IHS Markit, (a leader in information analytics and forecasts), there might be some light at the end of this long tunnel. The company forecasts a rise in global car sales by up to 9% from the 2020 sales as major markets recover from the Covid-19 pandemic.
This cautious forecast is based on the assumption that effective vaccines will be available by mid-2021. A vaccine will help boost consumer confidence facilitating a surge in private vehicle purchases.
That and the fact that more consumers now prefer personal mobility over shared public transport.
Circumstances surrounding the spread of the coronavirus rebounded in favor of private cars.
This outcome was almost expected as people sought private cars for their privacy and immunity from contact with other members of the public.
Fitch Solution, another world leader in data and analytics, agrees with IHS Markit’s forecast.
It further indicates that Europe’s car sales will be the strongest in the world.
Not only will the European market perform well in 2021, but the recovery will see an increase in sales from the previous weak 2019 and 2020 sales.
Much of the recovery is attributed to the strong coordinated efforts by EU member states towards regional recovery from the Covid-19 after effects.
These efforts include the EU Recovery Fund the EU Green Deal aimed at economic sustainability and improving the wellbeing of the people.
The Chinese auto market is a close second with vehicle sales and hires steadily rising as the country’s automobile industry leads recovery from the Covid-19 pandemic.
Interestingly, the bounce-back has been witnessed largely in the commercial vehicles segment.
This follows improved infrastructure and the need to comply with tough emission rules.
The Chinese government has in the recent past promoted “greener” cars to minimize air pollution.
As such consumers are upgrading to new energy vehicles (NEVs).
The Latin American car market hasn’t been left behind.
Fitch Solutions estimates that the Latin American region will expand in 2021 following a steep decline in its 2020 sales.
Mexico will perform better than other countries in that region as economic activities resume leading to increased demand for new vehicles. However, full recovery may not occur until 2025 resulting from Mexico’s low GDP. Chile trails Mexico.
The country is experiencing an increase in auto sales that have been fueled by the low-interest rates set by the Banco Central de Chile.
More consumers will likely take advantage of the low interest rates to take auto loans for private vehicle purchases.
The North American market may not see remarkable growth in 2021 with Fitch solutions forecasting a 5.8% growth.
However, the volume may be pushed up slightly if the country adopts the production of electric vehicles (EVs).
Where does this leave the Kenyan auto market?
According to reuters.com, the motor industry sold 11,086 new units in 2020 with sales plummeting as a result of the pandemic.
Data from Ceic Data states that passenger car purchases in the country stood at over 2.3M as of December 2019.
These numbers took a nosedive in 2020 as the pandemic entered our borders bringing with it travel restrictions, job losses, and reduced purchasing power.
Subsequently, the Kenyan government gave a cash boost of $5.45M to prop up demand for locally assembled vehicles as well as tax breaks.
These incentives helped companies sustain their operations during the tough 2020 season.
Not much help was provided to used vehicle dealers with many companies bearing the full brunt of the pandemic.
Most companies had to come up with their incentives to stay afloat.
Yet all is not doom and gloom.
A report by Focus2move shows that car sales in Kenya have grown by +69.7% in the first quarter of 2021.
While the numbers are low compared to the pre-pandemic sales volumes, they are a step in the right direction.
While the forecasts are positive and welcome, the industry is still far from full recovery and volumes remain below pre-pandemic levels. We believe the market is slowly reinventing itself in preparation for better days ahead.