Global economy and automotive outlook for 2021

The Covid-19 pandemic undoubtedly threw a curveball, not only for the automotive industry but the global economy. Yet as we enter 2021, it is right to be modestly optimistic about the sector’s potential to bounce back, says Erik Solum, senior analyst at Wallenius Wilhelmsen.

MG SAIC vehicles in Zeebrugge

Global indicators offer glimmers of hope and optimism for 2021. Forecasters expect the macro economy to pick up during the year with an upturn in activity leading to better job figures, increased GDP, higher growth in consumer spending and a rise in investment – all of which are positive indicators for the global automotive industry.

What is the outlook for automotive sales?

There’s no escaping the harsh reality that global car sales are expected to decline 16% in 2020 compared to 2019 levels. However, after peak lockdown in the second quarter and the low-water mark for sales in April, sales have increased due to a combination of factors including pent-up-demand, incentives and ‘better-than-feared’ sentiment among consumers.

Going into 2021, we expect the Chinese automotive market to continue the positive momentum we have seen in the past three quarters. As economies around the world emerge from the shadow cast by the pandemic, the recovery will be patchy as local outbreaks and lockdowns come and go, and governments pivot from keeping companies on life-support to helping workers who have lost their jobs. The gap between strong and weak companies will widen.

In Europe and North America, the rollout of a vaccine and the intensity of the virus will play a part in determining what sales will look like.

Quick forecasts

  • Global LV sales in 2020: 75 million units
  • Global LV sales growth from 2020 to 2021: 9.2%
  • Stable global deep sea share of global sales: 16.1% in 2021

Trends driving the future of mobility

With 18 EU member states committed to emitting no net carbon by 2050, incentives focused on low emission vehicles, including battery electric vehicles, might continue, supporting the shift to green transportation. Meanwhile, in the US, the government’s proposed $2-5 trillion support package to boost the economy could influence how quickly automotive sales recover.

In 2020, the pandemic accelerated the adoption of many technological behaviours, from video conferencing and online shopping to remote working and distance learning. In 2021 the extent to which these changes will stick, or snap back, will become clearer, and, with it, their influence on demand for vehicles.

How all these factors will translate into sales remains to be seen, but several analysts in the automotive sector maintain that global growth of 9% is achievable. After a tough 2020, carmakers across the world can look forward to better times ahead.

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