The passenger car market in China could fall by 5% in 2020 but should return to strong levels in the medium term
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The passenger car market in China could fall by 5% in 2020 but should return to strong levels in the medium term
- In 2019, the market for passenger cars (PC) produced and sold in China decreased by -9.6% compared to 2018, for a volume of 21.4 million units. The light utility vehicle (LUV) market experienced a slight decrease of -1.1% for a volume of 4.3 million units. The Chinese PC market therefore fell even more sharply in 2019 than in 2018, when the market had fallen by 4% compared to 2017.
- The downturn in the global economy with an effect on the Chinese economy and trade tensions with the United States are the main reasons cited to explain this decline. However, we should not put aside the fact that demand (which remains very strong for new vehicles) is also controlled by the government,which aim to regulate vehicle registrations in mega-cities (Shanghai, Beijing, Shenzhen, Wuhan…) in order to control its effects (traffic congestion, environment, public health).
- At a short term, for the year 2020, Inovev forecasts that the market will register a less marked fall in the market, with an order of magnitude of -5%. Trade tensions with the United States should ease and, despite an expected slowdown, the country's economic growth should remain strong, around 5.7% (source OECD), thanks to the growth of investments and a policy to support household consumption. This scenario was built before the emergence of the Coronavirus, which duration and effects still uncertain, cannot allow us to measure its impact on the automotive industry.
- In the medium term, the passenger car market in China should return to known levels during the 2015 - 2017 period. Indeed, with a motorisation rate of around 120 vehicles per 1,000 inhabitants (six times less than in Europe), the market potential remains strong. Without however reaching European, American or Japanese rates, the motorization rate in China could be at a level of between 300 and 350 vehicles per inhabitant in 2030, taking into account the growth scenarios of the Chinese economy, which should become the world's largest economy to date (source IMF). In addition, investments in road infrastructure as well as the establishment of a financialisation of car purchases (by the use of credits instead of cash payments) go in the direction of a support to the automobile market.
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The US passenger and light commercial vehicle market should be stable in 2020 after a slight drop of 2% in 2019
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The US passenger and light commercial vehicle market should be stable in 2020 after a slight drop of 2% in 2019
- In 2019, the US market for passenger cars and light utility vehicles (PC + LUV) is down 2% compared to 2018, for a volume of 17 million units. The Inovev classification of private vehicles (PC) takes into account sedans, MPVs and SUVs while light utility vehicles (LUV) are mainly light trucks and pick-ups that have a hybrid vocation, both utility and passenger transportation. This differentiation is important in understanding the evolution of the market because, while the passenger car market is down 4% (to 13.4 million units), the pick-up market is up 6% (to 3.1 million units).
- In 2019, the economic expansion phase which continued, a very low unemployment rate, rising average incomes, as well as access to very low and numerous credits, were factors of growth of consumption and helped maintain a relatively stable automotive market at a high level for almost 5 years now.
- However, the trade tensions initiated with neighbouring countries (Canada and Mexico), China and very soon Europe and the uncertainty linked to these tensions will have an impact on American growth. As a result, in 2020, Inovev forecasts that the American market should remain stable at +/- 1% change.
- In the medium term, current US policy does not go in the direction of a paradigm shift. The car remains a strong and traditional element of American culture. However, the nature of the US economy and its auto market has historically been cyclical (with strong upward or downward variations). The period of stability in the automotive market could therefore not last and could experience some strong movements in the next 10 years.
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In Europe, the A segment might switch to Battery Electric Vehicles
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In Europe, the A segment might switch to Battery Electric Vehicles
- Toyota has announced that the next generation of the Aygo(A segment/sedan) scheduled for 2021 will shift from thermal to Battery Electric Vehicle (BEV).
- At the same time, Renault has announced that the future generation of the Twingo (A segment/sedan) planned for 2021 will also switch from thermal to BEV, using the Smart EQ Forfourplatform. which has been on the market since June 2017. We know that the Smart Forfour will be phased out in Europe in 2021, following the agreement between Daimler and Geely, which leaves the market open to Twingo. Since last September, the Smart range has only consisted of 100% electric versions. The thermal versions are no longer produced and their sales are only made using stocks. In addition, Renault plans to market the electric K-ZE in Europe under the Dacia brand from 2021.
- The PSA group plans to replace its Peugeot 108 and Citroën C1 A segment with small sedans or even small SUVs in BEV versions. Thus, a possible 1008 could succeed the 108.
- As for the Volkswagen group, we know that its small sedans of segment A (VW Up, Seat Mii, Skoda Citigo) are all recently switched to electric, and it will be the same for the new ID 1 (and rebranded versions of Seat and Skoda) planned for the beginning of the years 2020.
- The whole A segment thus switches to electric, which is logical since these models are mainly used in cities.
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The European passenger and light utility vehicle market could fall by 3 to 4% in 2020
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The European passenger and light utility vehicle market could fall by 3 to 4% in 2020
- The European market (European Union + UK, Switzerland and Norway) of passenger cars and light utility vehicles (PC + LUV) experienced relative stability in 2019 compared to 2018 (+ 1.4%) at almost 18 million units. The PC market remained stable (+ 1% / 15.8 million units) while the LUV market experienced a growth (+ 3% / 2.19 million units).
- This stability of the European market in 2019 was not necessarily acquired at the end of the year, as in the first 3 quarters of the year, registrations of PC & LUV were down 2%. It was in fact the 4th quarter with a growth of almost 10%, which helped to contain the market decline. But this growth is just an epiphenomenon. The inclusion of the WLTP cycle in the calculation of the CO2 targets from March 2020 has indeed resulted in significant PC registrations at the end of 2019 (+ 21% in December 2019 compared to December 2018), except for UK, which experienced weak growth in December (+ 3%). Inovev estimates that anticipated PC registrations will be in the order of 500,000 units in 2019.
- It is precisely this anticipated volume that could be lacking in 2020, in an expected context of slowing consumption (source OECD). Added to this, the uncertain effects of UK confirmed departure from the European Union on one hand, and the trade tensions between the European Union and the United States which are expected to dawn on the other.
- For 2020, Inovev therefore forecasts a fall in the PC & LUV market of around 3% in a median scenario and by 4% in a low scenario. The PC market could drop by 5% while the LUV market would continue to grow by 2 to 3%.
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PSA stopped the production of Opel Mokka
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PSA stopped the production of Opel Mokka
- Following the agreement between PSA and GM that defined the date of Opel Mokka cessation of production by GM Korea, the assembly of this model stopped at the end of 2019.
- The model that will succeed this B segment compact SUV should be unveiled during the year 2020 with a production which should be located now on the French site of Poissy (at the planned rate of 150,000 units per year).
- This arrival of this model will allow the Poissy plant to operate at full capacity. Today this site has stopped the production of the DS3 and Peugeot 208, and only produce at low level the DS3 Crossback in its thermal and BEV versions. The new Peugeot 208 is indeed produced only in Slovakia and Morocco.
- The future Opel Mokka will no longer use the GM platform but will be based on the CMP platform, already used by the new Peugeot 208, Opel Corsa, the all-new Peugeot 2008 and the DS3 Crossback.
- The Mokka is therefore the fifth model removed from the Opel range this year, after the removal of Opel Adam, Opel Karl, Opel Cascada and Opel Zafira. All of these models were designed by GM and the two remaining Opel marketed and still designed by GM are the Opel Astra and Opel Insignia, whose replacement is expected in 2021 for the first and 2023 for the second.
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