Global vehicle sales will continue to grow in 2024 but at a slower pace, due to weaker economic conditions and higher interest rates, says Fitch Ratings. Nevertheless, the agency expects robust balance sheets to support most APAC automakers’ credit profiles.
Vehicle demand in the US and Europe remained robust in 2023 despite higher interest rates and supply constraints have eased but inventory levels remain relatively low. The supply/demand balance remained favourable despite higher incentive levels in 2023, especially in the US market. Fitch forecasts a mild US recession in early 2024 that could pressure demand. However, our forecast of 16 million units, a 5% growth from 2023, will still be well below pre-pandemic levels of 17 million. We also expect growth to slow in Europe and demand to grow by 4%-5% in 2024.
Meanwhile, sales growth of passenger vehicles in China was weaker in 2023, with high growth in new-energy vehicle (NEV) sales offsetting the decline in internal combustion engine vehicle sales. We expect the trend to continue in 2024 with passenger-vehicle sales seeing flat to low-single-digit growth.
Electric vehicle (EV) sales continued to outpace overall sales in major markets, by varying amounts. We believe NEV sales and penetration in China should show robust growth in 2024, but EV sales should grow at a lower pace in other markets, such as the US.
Vehicle prices remained relatively resilient in US and Europe in 2023 but could weaken in 2024 due to mix normalisation and higher incentives, amid moderating sales growth. We believe the severe price competition in the Chinese EV market is likely to continue, considering local EV brands’ aggressive pricing and the efforts of global automakers’ joint-venture brands to catch up in EV sales.
