[Global Network Report reporter Wang Huan] According to “Japan Economic News” reported on October 9, the world auto market is welcoming the turning point. The average annual growth rate of new car sales in 2018-2025 is about 2%, which will be reduced by half compared with the maintenance of about 4%. There are two main reasons. That is, the digital trend of car sharing and the rapid slowdown of China and the United States in the two major markets. The slowdown in the new car market will have a huge impact on the economy, such as employment, and will also induce trade protectionism from neighboring countries for production. The automotive industry, which has always been based on growth, will enter an era of uncertainty.
“Strict industrial investment project management standards, strengthen post-event supervision, prevent blind investment and low-level redundant construction”, Tianjin, China held an international conference on the automotive industry last month. The Director of the Industry Coordination Department of the National Development and Reform Commission (NDRC) stressed the policy of restraining automakers from increasing production in a severe tone.
The National Development and Reform Commission holds the approval authority for industrial projects in China. What is behind the speech of the relevant person in charge is that the trend of “the rise of new car sales in China” has been swaying for the last ten years.
According to the British survey company IHSMarkit, the average annual growth rate of China’s new car market is 2.6% from 2018 to 2025, a sharp drop from 8% in 2011-2017. Although China has surpassed the United States to become the world’s largest auto market, growth will be put on the brakes due to market saturation in the urban areas and the stagnation of the local economy. If you don’t curb your investment, you may incur overcapacity like steel and shipbuilding.
Not only China. Global car sales in 2025 are expected to be around 110 million units, an increase of about 16 million units from 2017. The average annual growth rate in 2018-2025 is only 2.0%. Compared with 3.7% in 2011-2017, it is almost halved.
One of the reasons for this huge shift is the structural change brought about by digitization. World IT giants such as Google and Apple launched an offensive through autonomous driving technology. In the future, the popularity of shared car sharing without the ownership of a car is likely to become a reality.
According to PwCconsulting, by 2030, up to 37% of people’s travel distance will depend on car sharing and self-driving cars. IHS believes that due to the popularity of car sharing, after 2023, the annual demand for new cars will be reduced by about 2 million units, which will lower the world market by about 2%.
Especially in developed countries, the impact is huge. Japan’s annual rate will fall from 3.7% in 2011-2017 to 1.5% in 2018-2025. North America is also expected to slow down from a 5.3% increase to 0%.
“The North American Free Trade Agreement (NAFTA) has always taken jobs from the United States.” US President Trump has obtained a new agreement with Canada and Mexico to promote the return of production to the United States through the revision of NAFTA.
The automotive industry has a wide range of peripheral areas and has created more than 7 million jobs in the United States. If no response is taken, the auto industry will move into a hollowing out, falling into employment and consumption. And this sense of crisis is inducing trade protectionism.
The trade war provoked by the United States has not shown signs of dying. Higher tariffs will lead to higher trade costs. There is a view that global gross domestic product (GDP) will be pulled down by 1.4%. As the growth potential of automobiles declines, the risk of trade protectionism expanding to other countries is hard to deny.
“Unable to make investment judgments in this situation,” a senior executive of a Japanese-owned company was confused.
All car companies have long established new factories on the premise of expanding the world market. As the growth rate slows down, the adjustment of the production system has become a top priority, but the risk of investing in production bases has intensified due to the rise of trade protectionism.
World automakers are also turning to investment services. US General Motors (GM) will sell European operations such as Opel, and on the other hand, it will expand its investment in autonomous driving subsidiaries. In addition, Toyota also decided to form a joint venture with Softbank Group.
The slowdown in growth rates will result in limited contention for the cake, which will make the survival of the fittest more visible. Various automakers are standing on the turning point in determining the competitiveness of the next 5-10 years.
Post time: Oct-11-2018