Automotive Industry Trends May 2024

A marked slowdown in global car production  in 2024 and 2025

• We expect global automotive output to slow down to 0.8% this year, after an 11% increase in 2023. Main reason are tight credit conditions in Western countries and a subdued Chinese economy.
• The US has decided to impose high tariffs on Chinese EV imports.
• Emerging Asian markets will lead global car production growth in the long-term.

US automotive: High interest rates weigh on demand

• US car sales to slow down to 2.5% in 2024 and 2025 after growing 14.6% in 2023.
• Electric vehicle (EV) sales are below expectations as higher costs remain a barrier, but the long-term outlook is good.

Fierce competition in the Chinese electric vehicles market

• Lower consumer confidence weighs on domestic car sales, but local electric vehicle brands expand their market share.
•  However, EV producers´ margins suffer from a price war. Smaller EV businesses could quickly fail without continuous capital flow. 

Higher credit risk for smaller automotive suppliers in Europe

• We expect insolvencies and payment defaults among suppliers to increase this year, as car sales shrink, and discounts weigh on margins.
• Competitive pressure from Chinese electric vehicle producers is a major challenge for European firms. Following the US, the EU could impose punitive tariffs on Chinese EV car imports soon.

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