Revving Up for 2024: Total Automotive Sales to Cross 96 million units in 2024, post strong recovery in the year 2023

According to a research report, “Global Automotive Industry Outlook 2024 ” published by MarketsandMarkets, the global automotive sales is estimated to grow from over 91 million units in 2023 to cross 96 million units by 2024 at a steady Y-o-Y growth rate of 5-7% backed by strong recovery in commercial vehicles and electrification trend in passenger cars.

According to a research report, “Global Automotive Industry Outlook 2024 ” published by MarketsandMarkets, the global automotive sales is estimated to grow from over 91 million units in 2023 to cross 96 million units by 2024 at a steady Y-o-Y growth rate of 5-7% backed by strong recovery in commercial vehicles and electrification trend in passenger cars. The new research report discusses range of ongoing trends ranging from China’s EV Dominance to the ‘Amazonification’ of Vehicle Sales and Smart

Despite persistent geopolitical tensions and economic uncertainties, the global automotive industry has exhibited robust growth throughout 2023. Overall, sales volumes within the automotive sector expanded by 10-15% during this period to cross 91 million units, with both the passenger vehicle and commercial vehicle segments experiencing commendable growth. The commercial vehicles segment demonstrated a growth of 18-20% in 2023 over the previous year. Strong economic growth and increase in infrastructure projects led the commercial vehicle sales growth in Asia Pacific, particularly China and India. The electric passenger cars segment registered a growth of over 35% in 2023 as compared to the previous year.

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Challenges such as geopolitical tensions, escalating commodity prices, and increasing interest rates are expected to impede markets in North America and Europe. Nonetheless, the Asia Pacific region is anticipated to surge forward, driven by the presence of major growing economies and sizable automotive markets, particularly in China and India.

Within the passenger vehicle segment, SUVs have consistently demonstrated substantial growth across various regions in recent years, a trend that has persisted into 2023 and is expected to continue in 2024. Notably, China stands out as the dominant market in the passenger vehicle segment, with other significant markets including the USA, India, Japan, and Germany.

Some of the key developments witnessed by automotive industry in 2023:

1. In 2023, the electric Vehicles market was impacted by the price cuts, increase in labor costs, production cuts and rise in interest rates.

2. While the industry talks about electrification, the fossil fuel powertrains i.e., the ICE vehicles continued to maintain healthy sales volumes.

3. Chinese OEMs and EV models are making significant inroads in the European EV market. Chinese automakers’ share of the Western European EV market has risen to 8-10%, a growth from 5-7% in the previous year

4. Collaborations between OEMs and Tech Companies: More collaborations between OEMs and tech companies is likely to drive innovation and growth in the automotive industry. For instance, in September 2023, Qualcomm Technologies, Inc. (US) collaborated with Mercedes-Benz AG to power vehicles with snapdragon digital chassis solutions.

Key Market Players

Within the realm of passenger vehicles, prominent original equipment manufacturers (OEMs) include Toyota, GM, Stellantis, Honda, Volkswagen, Nissan, BMW, Daimler, Tesla, and Ford. Notably, Tesla, BYD, Volkswagen, SAIC, and Stellantis stand out as key players in the electric passenger vehicle sector. Shifting the focus to commercial vehicles in 2023, the leading OEMs encompass Mercedes-Benz, Tata Motors, Traton, Paccar, Volvo, IVECO, Ashok Leyland, and Hino.

EV Sales Growth Hit the Brakes in 2024

While electric vehicle (EV) sales are on the rise across most markets, the pace of growth is decelerating. Although global sales volumes are projected to increase from 12-14 million units in 2023 to 15-17 million units in 2024, the surge is showing signs of plateauing. China is anticipated to contribute the largest share, reaching approximately 9-10 million units in 2024. However, the overall growth trajectory is slowing down. For instance, in the United States, the year-on-year growth of EV sales is expected to be a modest 15-20%, a notable decrease from the 55-60% observed in 2023. In China, the growth is also anticipated to be impacted by a reduction in incentives.

The slowdown in EV sales has prompted original equipment manufacturers (OEMs) to make strategic adjustments, including production cuts (e.g., GM, VW), delayed model launches (e.g., Audi, Ford), and the temporary halt of plans for new EV plants (e.g., Ford). In contrast to battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) are experiencing stronger sales growth. With reduced upfront costs, a lower total cost of ownership compared to internal combustion engine (ICE) vehicles, and the added benefit of flexibility (addressing range anxiety), PHEVs are emerging as a more compelling choice for consumers.

Some of the other key trends that the automotive industry is likely to witness in 2024:

1. China Continues to Dominate EV Market: China’s colossal domestic EV market, robust supply chain, innovations by OEMs as well as battery manufacturers and expansion in international markets (especially Europe) solidifies its role as a pivotal global EV player. China would continue to have a dominant share (over 50%) of the global EV market.

2. Amazonification’ of Vehicle Sales:  The evolving consumer demographics are driving a shift in the automotive industry, prompting OEMs to adopt new approaches, particularly emphasizing online sales, with the Asia Pacific region, being the youngest, poised for substantial volume growth. In key regions, the penetration of online sales would reach 10-20% in 2024.

3. Gigacasting & Smart Manufacturing Drive Innovation: Smart manufacturing approaches will permeate entire automotive value chain, enhancing overall efficiency and providing a seamless experience. More OEMs would operationalize Giga Casting in 2024. Digital tool integration will boost profitability and sustainability, transforming the manufacturing landscape significantly.

4. Level 3 Autonomous Vehicles: Level 3 vehicle segment to gain share in the market owing to the approvals received by Mercedes-Benz in US and Germany for L3 autonomy.

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