International automotive tendencies to observe 2024

A deep evaluation of the present state of automotive and aftermarket gross sales, along with the main tendencies impacting the trade – from the macroeconomic panorama to shoppers’ financial pressures, and the newest areas of innovation-led transformation which might be unlocking pockets of progress. 

Final yr noticed consumers across the world shopping for 68 million new automobiles, a important soar in yr–on–yr progress that brings the trade nearer to the pre-pandemic benchmark of 73 million purchased in 2019. For 2024, the normal view is that gross sales will attain round 70 million.  

This yr’s extra muted progress forecast is as a result of a lot of the pent-up demand from the low-production years of 2020-2022 having now largely been glad, together with the continued financial challenges confronted by shoppers throughout completely different areas.   

For instance, APAC is a high-potential region with very low automotive penetration. Final yr, gross sales of latest automobiles there grew by +9%, in response to Statista, however expectation for this yr runs at simply +2%, largely as a result of low efficiency forecast for China.  

For this yr, then, Europe seems to be the area offering best progress alternatives, adopted by North America – however, even in these two markets, the speed of progress for brand spanking new automotive gross sales is depressed. 

Globally, we count on to see 36.2 million used automotive gross sales this yr, simply up from 35.9 million in 2023. 

In Europe and North America, the common age of automobiles in operation has elevated from 7.4 years previous (Europe) and 11.4 years previous (USA) ten years in the past to 12 years previous now. That is in response to newest knowledge from OICA, the Worldwide Group of Motor Automobile Producers.  

With over 750 million passenger automobiles in operation on those two continents, we count on to see growing demand for aftermarket merchandise as the upkeep necessities of these older automobiles grows.  

Tempering that potential income pot for aftermarket gross sales, nevertheless, is the truth that, as soon as their automobiles attain 5 or 6 years’ previous, folks develop into much less inclined to splash out on their upkeep, and extra doubtless to decide on price range–friendly quite than premium elements.  

In Asia Pacific and the Center East, we see a special image and set of alternatives. In these areas, the common age of automobiles sits at round 4 to 5 years previous. With a rising center class throughout a lot of these areas, and comparatively low automotive penetration, this currents potential for a spike in new automotive gross sales from shoppers wishing to improve their lifestyle and show their elevated wealth.  

Moreover, the truth that folks listed here are exchanging their automobiles after solely 4 or 5 years currents opportunity for the second–hand automotive market. Not solely is it capable of supply youthful, higher high quality automobiles which ought to drive robust gross sales potential, however we count on a increase to after-market gross sales too, as rising middle-class patrons who could not have felt capable of afford a brand new automotive look to improve their second-hand buy with premium elements, tires, and automotive chemical compounds.     

The world automotive aftermarket is continuous to develop with gross sales income up +4% final yr, reaching $71 billion. That is on high of a +3% progress already seen in 2022 versus 2021.  

Tires, which account for three in each 4 {dollars} spent on aftermarket purchases, grew +4% in comparison with 2022 income, whereas automotive chemical compounds (15% of aftermarket income) have been up +6% and spare elements up +10%.  

This progress is pushed partially by an improve in premium purchases throughout sections – however that isn’t the one issue.  

Over the final couple of years, we’ve seen polarization between worth and quantity progress, as the common value of things soared, pushed by worldwide high inflation and elevated prices in manufacture and supply. That hole is now closing as costs begin to stabilize, though at excessive ranges.  

From a regional share perspective, Europe and US are the largest areas in income inside the automotive aftermarket trade. their gross sales of automotive tires final yr, each markets proceed to develop steadily, though at a slower charge than earlier than, with 2023 delivering +5% progress in Europe and +2% in US.  

The 2 quickest rising areas for automotive tires are China and the Center East and Africa. China recorded an superb +25% progress, yr on yr, with potential to develop nonetheless additional this yr, because the market has not but get bettered to its pre-pandemic 2019 ranges. The Center East & Africa area can be one of many excessive potential progress markets, continuing to register robust progress yr on yr. 

Developing Asia was simply forward of Europe when it comes to progress – standing at +6%, whereas the Developed Asia and LATAM areas each confirmed a slight decline in income. These final two markets have robust headwinds, nevertheless, because of the excessive progress charges witnessed in 2022 setting difficult baselines.  

Globally, the unit share of automotive tires bought by smaller manufacturers has elevated from 29% to 33%. It’s truthful to imagine that that is pushed by shoppers shifting to decrease priced manufacturers as their family budgets have been squeezed final yr.  

Given the numerous distinction within the value between premium, medium or price range model tires, price range choices stay a really economical selection for the shoppers – particularly as the common value of price range model tires decreased very barely final yr, whereas medium and premium model tires rose.

This growth of price range manufacturers when it comes to market share is not confined to cheaper price segments. Price range manufacturers are additionally providing increasingly more SKUs even in higher-finish tire segments, however at higher costs than the massive manufacturers. instance – tires with 18-inch-plus rims value an common 137 US {dollars} for a price range model, versus 237 {dollars} for a premium model.  

Globally, tire gross sales for price range manufacturers grew +6% final yr, whereas premium and medium manufacturers noticed round 3% progress. Nevertheless, there are regional variations on this development. 

In Europe, medium manufacturers noticed the strongest progress, adopted by budget manufacturers, and with premium manufacturers showing significantly weaker efficiency. This circles again to the development we see of European drivers preserveing their automobiles longer and being much less inclined to spend cash on premium elements as soon as they cross 5 or 6 years previous.  

LATAM, price range manufacturers grew an enormous +19%, whereas premium declined by –7% and medium manufacturers additionally noticed important decline. This polarization in gross sales can be seen in the MEA and APAC areas, the place premium and price range each grew extra than medium manufacturers.  

In the US market, nevertheless, we’re seeing clear premiumization, because of two key components. The primary is an economic system that is doing higher, and the second is the import restrictions positioned on (typically cheaper) Chinese language manufacturers as a result of the geopolitical state of affairs between the 2 nations.  

International income from gross sales of engine oils for each bikes and automobiles grew +6% final yr, led by China (+25%), Western Europe (+12%) and Creating Asia (+10%). Japanese Europe and Center East and Africa each confirmed declining income for engine oils.  

In the Center East and Africa, the decline additionally represents the excessive baseline from final yr, in addition to the forex volatility (in native forex, progress there’s optimistic), and the ambition of some nations on this area to have a lot larger concentrate on E-mobility.  

dditional issue impacting these areas contains the native evolution of mobility, with cheaper choices resembling “experience hailing” being significantly well-liked in areas resembling Southeast Asia and India.   

Smaller manufacturers have significantly elevated their share of each income and quantity of engine oil gross sales, rising from 42% market worth in 2022 to 48% now. So, whereas the overall class gross sales income has elevated, those beneficial properties are largely being seen in the lengthy tail, or manufacturers with smaller market shares in comparison with the market leaders.  

Globally, engine oils noticed a +16% improve in the gross sales worth of entry manufacturers in comparison with +9% of ordinary manufacturers, whereas premium model gross sales declined by –2%. That affordability development is seen throughout all areas. with the entry–stage manufacturers doing a lot better than the remainder.  

APAC is the one area displaying optimistic progress for engine oils, and this is pushed by the growing markets resembling Developed Asia, the place price range manufacturers have been the one part that grew.

Our forecast is that this development with continue by 2024, with shoppers looking for reasonably priced choices for all upkeep merchandise – particularly as they preserve their automobiles longer in markets resembling Europe and the USA. The chance for market leading manufacturers comes when shoppers buy a brand new automotive or face a important problem with the present product they’ve used. 

For the automotive trade, like others, there are three forces that drive innovation: consumer demand, legislation / regulation, and manufacturer push. 

During the last couple of years, we’ve seen automotive innovation specializing in 6 themes:  

Trying on the applied sciences that can affect or allow improvements within the automotive trade, AI remains to be the excitement phrase. Immersive expertise is enabling enhancements in shopper expertise and cgrasping the way in which shoppers work together with their automobiles. The Web of Issues, for instance, is being built-in into automobile expertise to drive transformation throughout design, manufacturing, operations and upkeep, whereas cloud computing is enabling automakers to remotely monitor automobile efficiency and predict upkeep wants. 

Electrical autos additionally proceed to develop in each the patron and business spheres. In 2021, EVs accounted for 12% of all gross sales in 2021, rising to 21% in 2023 and are expected to hit 25% this yr. Three markets dominate these gross sales – China (over 50% of share of world gross sales final yr), Europe and the US – with different nations tailing fairly far behind. From a shopper perspective, EVs are extra of an aspirational or standing image product, with the key attraction being much less about their eco-positioning and extra about the extent of tech included in these automobiles that allows them to do extra than simply drive. This focus means we’re seeing conventional tech manufacturers turning into more and more and influential within the automotive sector.  

, then, can be related, autonomous, shared and electrical. It should, nevertheless, take a very long time to succeed in that future, as a result of challenges resembling market readiness, gradual implementation to develop into mainstream, and excessive manufacturing prices resulting in excessive promoting costs.

To optimize the success of their innovation technique, producers should preserve a laser-sharp monitoring of their viewerss, and align exactly with their evolving lifestyles, wants, aspirations and boundaries. 

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