Global car production is set to exceed 100 million units a year by 2017, according to a new survey by leading trade credit insurer Euler Hermes. Published on the eve of the prestigious Paris Motor Show, the report paints a positive outlook for the sector with global output returning to its medium-term growth rate of 4 percent.
“The global automotive market appears to be back on track after veering off course during the financial crisis,” said Ludovic Subran, chief economist at Euler Hermes. “In that time, production has transferred to new economies, where ownership rates remain very low – as little as 2 percent in India and 5 percent in China – resulting in good prospects for long-term growth as these figures are set to increase.”
The report predicts that the main driver of overall global growth will continue to be China, which overtook the US as the world’s largest vehicle manufacturer in 2009. The country is set to extend its global dominance, producing almost 20 million units this year.
The bullish forecast for the motor industry comes despite continued sluggishness in major European markets such as France and Italy – where output is set to remain at less than half its pre-crisis peak – and falling car production levels in countries such as Brazil and Russia.
Elsewhere, Germany remains solid with forecast growth of 6 percent this year. Spain is set for double-digit expansion, albeit starting from a lower point than most of its European counterparts. Euler Hermes’ report also reconfirms the “reindustrialization” of both the United Kingdom and United States, where structural changes have contributed to production figures returning to levels last seen before the 2008crisis.
“This shift in production has impacted some economies more than others,” said Yann Lacroix, lead author of the report. “For example, Germany now produces more than four times as many vehicles as France – a decade ago the difference was less than twice as much. The US automotive industry has regained the competitiveness it had previously lost. The workforce has been reduced by a fifth, many production lines shut down and the product range was completely restructured. As for the UK, thanks to a flexible labor market and an increasingly attractive corporate tax regime, it has once again become a world-class car producer.”