As final light vehicle sales figures for the month of December 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. However, for December 2017, global auto sales did not finish as strong as expected. With 8.65 million units sold in December, global sales volume is down 1.7 percent over last year, according to the newest forecast from business information provider IHS Markit.

Total 2017 global light vehicle sales are expected to post around 94.5 million units, a new record – up 2.4 percent 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,” said Henner Lehne, executive director, global vehicle forecasting for IHS Markit. “We expect 2018 will be yet another record-setting year for the global auto industry, up 1.5 percent from 2017.”  

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, according to IHS Markit. 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 percent 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 percent in Western Europe.

Factoring in tax payback effects, Chinese demand will post 28.1 million units, up 0.2 percent 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 percent from 2017, with India accelerating after tax reforms (up 11 percent). The forecast also indicates a decent 2018 outlook for ASEAN car markets, estimating 7 percent 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 percent, while Korea will likely grow 2 percent. 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 percent, 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 percent 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 percent to about 3.4 million new vehicles sales in 2018.