Light vehicle production is growing after the pandemics and supply shortages, say analysts with S&P Global Mobility.
Production revisions continue to reflect the dynamic environment impacting the auto industry. In the months following the start of Russia/Ukraine conflict, S&P Global Mobility has done some “fine tuning” with this month’s forecast update, which includes some more meaningful adjustments than others as COVID lockdowns in China impact the domestic market as well as some surrounding markets, and ongoing semiconductor supply conditions remain challenging for most automakers globally.
As COVID lockdowns in China are lifting and the government looks to stimulate auto demand, the profile for that market shifts to one of nascent recovery while other surrounding markets still cope with lingering supply chain dislocations due to the lockdowns in the near-term.
On the semiconductor front, mixed signals are apparent with some automakers reporting an improved supply of chips while other players still struggle with consistent supply of critical components.
“We remain watchful for potential demand destruction caused by slower economic growth forecasts for 2024 and beyond. The S&P Global Mobility June 2022 forecast update reflects a near-term increase for Greater China due to COVID lockdowns expiring and demand stimulus taking effect. Conversely, lingering supply chain impacts from the lockdowns in China result in downward revisions for Japan/Korea and South Asia and supply chain pressures continue to impact the near-term outlook for Europe and North America,” said the analysis.
In June is is calculated about 80.36 Million vehicles will be made, up just 8,000 over May’s total, but 3 Million above June 2021.
Lisa Watson, Director of Sales at Close Brothers Motor Finance, said, “Ongoing challenges continue to stall any progress towards recovery for the automotive industry, with persistent hurdles causing headaches for manufacturers.
“In the face of uncertainty and issues caused by Russia’s invasion of Ukraine, the well-documented semiconductor issue continues. Stellantis is pulling the handbrake on production in several Citroen and Peugeot factories in France, and Ford has recently closed its order book for the new Fiesta due to production difficulties.
“The chip shortage is showing no signs of easing for the foreseeable future. Intel’s CEO Pat Gelsinger warned earlier this month that he expects the issue to run into 2024.
“Though demand may begin to cool due to the soaring cost of living, dealers are working hard to navigate the challenges and ensure that forecourts are well stocked. Using all available insight and market data is key to ensuring that prices are optimal, and stock is suited to consumer trends.”