Auto Laundry News - February 2013

More Cars Globally

By Stefan Budricks, Editor

In January this year, WardsAuto and AutomotiveCompass, two highly regarded sources of automotive data and analysis, released a joint report titled “Global Light Vehicle and Powertrain Forecast,” which projects growth through 2018. According to the report, China will remain the number one driver of global automobile production growth over the next four years, while the United States will maintain its number-two position.

The numbers for China are really quite astounding: The report expects automobile production there to reach 26 million units in 2016 — a 7.5 million unit increase over 2012. The comparative increase in the United States is projected to be 1.3 million units. While that number pales next to China’s anticipated performance, it looks a lot better when viewed alongside the expected production decline of 875,000 in the world’s current number-three producer, Japan. Besides, an increase is an increase, and it sure beats the reversals the US auto industry had to deal with only a few years ago. Further evidence of Asia’s growing dominance is the report’s projection that India will surpass South Korea and Germany by 2016 to rank fourth among automobile producing countries.

In North America we’re still enamored of larger engines, but we’re coming around, and doing so at an increasing rapid pace. The powertrain forecast shows that North America will actually lead the growth in smaller engines (that is, engines with four or fewer cylinders), with production increasing from 47 percent of the region’s total in 2012 to 55 percent in 2018. Worldwide, smaller engines are expected to power 85 percent of automobiles produced in 2018.

This forecast finds an echo in the KPMG 2013 Automotive Executive Survey, conducted by KPMG LLP, the audit, tax, and advisory firm. Twenty-six percent of the executives polled said their companies would direct the most investment over the next five years toward downsizing and optimizing the internal combustion engine. This will not be their sole focus, though. While many are investing in battery electric vehicles and hybrid and fuel-cell technology, 87 percent of executives agree that battery electric vehicles won’t be able to match the range of gasoline-powered cars for at least another five years, and two thirds don’t see electric vehicles exceeding 15 percent of annual global auto sales before 2025.

For now, then, we can expect vehicles coming through the wash tunnel to look pretty much as they have for years. Can we expect car dimensions to trend smaller in sympathy with the smaller engines? Perhaps. But in North America fully 45 percent of new cars in 2018 are expected to still have engines with more than four cylinders.

What we can reasonably look forward to are more new cars. TransUnion’s 2013 Auto Loan Forecast sees auto debt per borrower continue its upward trend, a sign, it says, that auto financing will continue to grow as new and used car sales increase. Further, low national auto loan delinquency rates have been maintained even with more non-prime consumers carrying auto loan balances, indicating that the automobile market is on a solid footing, according to the information and risk management company. Consumers are certainly showing interest. The North American International Auto Show, held mid-January in Detroit, reported its strongest first-day attendance in eight years.

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