The fast-changing automobile sector is set to exceed 100 million in annual sales in 2019, with China and India boosting worldwide sales growth this year and next, according to a new economic outlook on the industry from credit insurer Euler Hermes. The report assessed the auto industry in China, France, Germany, India, Italy, Japan, the U.K. and the United States, focusing on sales, electric cars, profitability and innovation.
The debt burden of manufacturers is lower than before the financial crisis, with the exception of those in the U.S. and Italy. Liquidity and capital expenditures remain stable, Euler Hermes said. Profitability is strong across the sector, with an average EBIT margin of 6% in 2016, up from its 5.5% level in 2015.
“The report identified three levers for innovation: R&D expenditure, patentable technology and external growth,” said Maxime Lemerle, head of sector research at Euler Hermes. “Traditional manufacturers in Germany, Japan and the U.S. lead the first two categories, while China and India exhibit aggressive growth.”
The number of electric vehicles could exceed 3 million worldwide in 2017. China, France, Germany, the U.K. and the U.S. are market leaders for battery-powered cars. China and the U.S. are expected to represent two-thirds of global electric vehicle sales by year end.
China is expected to be at the forefront of sales growth, with India in second place, which will offset declines in sales in the U.S. and U.K.
“New vehicle registrations are expected to grow globally 2.1% this year, as Europe is on the mend and manufacturers worldwide are making cars ‘cool’ again,” said Ludovic Subran, chief economist at Euler Hermes. “However, this is only half the growth of 2016, as new registrations in the U.S. and U.K. decline while used-car sales boom, and as China stopped tax breaks for car sales earlier this year.”
– Adam Fusco, associate editor