Record auto sales behind rapidly growing oil consumption, estimated to reach 101 million b/d by 2019
As final light vehicle sales figures for the month of Dec. are now fully reported from major markets, 2017 remained on track to achieve record auto sales on a global level for the 8th year in a row, according to IHS Markit.
For Dec. 2017, global auto sales did not finish as strong as expected. With 8.65 million units sold in Dec., global sales volume is down 1.7 per cent over last year.
Total 2017 global light vehicle sales are expected to post around 94.5 million units, a new record – up 2.4 per cent compared with 2016, according to IHS Markit forecasts.
After the strong performance of 2017, 2018 is forecast to see a slowdown in global light vehicle sales growth, yet IHS Markit forecasts a positive year to come, with global light vehicle sales estimated to reach 95.9 million units.
“While this forecast reflects a slight moderation, it is concerning to us. We expect 2018 will be yet another record-setting year for the global auto industry, up 1.5 percent from 2017,” said Henner Lehne, executive director, global vehicle forecasting for IHS Markit.
Growing demand for automobiles boosts petroleum consumption
Global consumption of petroleum and other liquid fuels grew by 1.4 million b/d in 2017, reaching an average of 98.4 million b/d for the year, according to the US Energy Information Administration.
EIA expects consumption growth will average 1.7 million b/d in 2018 and 1.6 million b/d in 2019, driven by the countries outside of the Organization for Economic Cooperation and Development (OECD).
Non-OECD consumption growth is expected to account for 1.2 million b/d and 1.3 million b/d of the growth in 2018 and 2019, respectively.
Regional outlooks influenced by economics, incentives and geopolitical concerns
Regional forecasts will be influenced by a number of factors, depending on each region’s economic and political climate, IHS Markit says.
For the United States, the strong fourth quarter 2017 results could impact early 2018 industry sales, but full-year sales volume in 2018 is expected to achieve 16.9 million units, down 1.7 per cent from 2017.
Demand remains healthy, supported by positive economic conditions and welcoming credit conditions, but an incoming flow of used vehicles and continued slowdown in passenger car sales as more consumers opt for utility vehicles are expected to lead to decline for the second year in a row.
Western Europe continues to recover, aided by lingering pent-up demand in key recovery markets, however at a much lower pace than last year.
Some markets have OEM diesel incentives, which are expected to generate mild pulled-forward demand, although buyers are not exactly queuing around the block at local dealerships—IHS Markit forecasts 16.3 million units for 2018, up about 0.7 per cent in Western Europe.
Factoring in tax payback effects, Chinese demand will post 28.1 million units, up 0.2 per cent from 2017, according to the forecast.
As in 2016, confirmation of 2018 vehicle tax levels will obviously have a bearing on the near-term outlook for the year.
The South Asian outlook has improved dramatically and should further recover in 2018 as IHS Markit estimates this market will be up 7.3 per cent from 2017, with India accelerating after tax reforms (up 11 per cent).
The forecast also indicates a decent 2018 outlook for ASEAN car markets, estimating 7 per cent growth over last year.
Japan and South Korea remain similarly impacted by regional geopolitical concerns and are expected to moderate in 2018—Japan slows 2.4 per cent, while Korea will likely grow 2 per cent.
Russia and Brazil turned the corner in 2017, and 2018 represents the sustainability test for both recoveries.
Russia is expected to grow by 15.9 per cent, helped by a stronger rouble and some recovery in oil prices, but sanctions remain a key negative driver.
Ongoing political troubles remain an issue, but Brazil is expected to see 12.5 per cent growth for 2018, driven by pent-up demand and improving auto-financing conditions.
Last, there are the core Middle Eastern car markets. Most countries are forecast to show strong growth percentage gains, in light of solid economic outlooks, fueled by rising oil prices.
However, the recent developments in Iran need to be monitored closely. At the moment, the region is forecast to grow at around 5 per cent to about 3.4 million new vehicles sales in 2018.