The Auto World Championship: The Race for Sales, Electric Cars, Profitability and Innovation

The Sales Cup. Worldwide vehicle sales are forecast to reach 95.8 million in 2017 (+2.1% annual growth rate) and 98.2 million in 2018 (+2.5%), boosted by sales growth in China and India. The auto market is on course to reach a milestone in 2019, when 100 million units are expected to be delivered to clients. Yet, compared to 2016, the rate of growth is lower due to the decline in sales in the US and the UK.

The Electric Cup. Electric Vehicles (EV) enjoy a strong growth momentum: the worldwide stock could exceed 3 million cars in 2017 after crossing the 2 million unit threshold in 2016. China, the US, the UK, France, and Germany are in pole position. The magnitude of government subsidies, the expansion of the charging network, and battery prices will drive the growth of the electric car market.

The Profitability Cup. The industry enjoys strong profitability with an average EBIT margin of 6.0 % in 2016, up from 5.5.% in 2015. Japanese manufacturers and Italian suppliers take the lead. With the exception of American and Italian car makers, the debt burden of manufacturers is now lower than their pre-crisis levels. Working capital requirements and capital expenditures are stable.

The Innovation Cup. Innovation will rely on R&D expenditure, patentable technology, and M&A. Traditional manufacturers in Germany, Japan and the US lead the first two.

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The Auto World Championship 77 KB

Authors

Ludovic Subran

Chief Economist

Ludovic joined Euler Hermes as Chief Economist in 2011. He also heads macroeconomic and thematic research for Allianz SE globally since 2017. Ludovic sits on the Board of Directors of Solunion, Euler Hermes’ joint venture company for Spain and Latin America.

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