World 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 business – from the macroeconomic panorama to shoppers’ financial pressures, and the most recent areas of innovation-led transformation which might be unlocking pockets of progress. 

Final yr noticed consumers across the world shopping for 68 million new vehicles, a vital leap in yr–on–yr progress that brings the business nearer to the pre-pandemic benchmark of 73 million purchased in 2019. For 2024, the common 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 happy, together with the continued financial challenges confronted by shoppers throughout totally different areas.   

For instance, APAC is a high-potential region with very low automobile penetration. Final yr, gross sales of recent vehicles 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 appears to be like to be the area offering biggest progress alternatives, adopted by North America – however, even in these two markets, the speed of progress for brand spanking new automobile gross sales is depressed. 

Globally, we anticipate to see 36.2 million used automobile gross sales this yr, simply up from 35.9 million in 2023. 

In Europe and North America, the common age of vehicles in operation has elevated from 7.4 years outdated (Europe) and 11.4 years outdated (USA) ten years in the past to 12 years outdated now.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

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

Tempering that potential income pot for aftermarket gross sales, nevertheless, is the truth that, as soon as their vehicles attain 5 or 6 years’ outdated, folks develop into much less inclined to splash out on their upkeep, and extra doubtless to decide on funds–friendly moderately than premium components.  

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 In these areas, the common age of vehicles sits at round 4 to 5 years outdated.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

Moreover, the truth that folks listed below are exchanging their vehicles after solely 4 or 5 years currents opportunity for the second–hand automobile market. Not solely is it capable of provide youthful, higher high quality vehicles which ought to drive sturdy gross sales potential, however we anticipate a enhance to after-market gross sales too, as rising middle-class patrons who might not have felt capable of afford a brand new automobile look to improve their second-hand buy with premium components, tires, and automobile chemical compounds.     

The world automotive aftermarket is constant 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 automobile chemical compounds (15% of aftermarket income) have been up +6% and spare components up +10%.  

This progress is pushed partly by an enhance in premium purchases throughout phases – however that’s not the one issue.  

Over the final couple of years, we’ve seen polarization between worth and quantity progress, as the common worth 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 business. their gross sales of automobile tires final yr, each markets proceed to develop steadily, though at a slower fee than earlier than, with 2023 delivering +5% progress in Europe and +2% in US.  

The 2 quickest rising areas for automobile 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 recuperateed to its pre-pandemic 2019 ranges. The Center East & Africa area can be one of many excessive potential progress markets, continuing to register sturdy 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 sturdy headwinds, nevertheless, as a result of excessive progress charges witnessed in 2022 setting difficult baselines.  

Globally, the unit share of automobile tires offered by smaller manufacturers has elevated from 29% to 33%. It’s honest 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 worth between premium, medium or funds model tires, funds choices stay a really economical alternative for the shoppers – particularly as the common value of funds model tires decreased very barely final yr, whereas medium and premium model tires rose.

This growth of funds manufacturers when it comes to market share is not confined to lower cost segments. Funds manufacturers are additionally providing an increasing number of SKUs even in higher-finish tire segments, however at higher costs than the large manufacturers. instance – tires with 18-inch-plus rims value an common 137 US {dollars} for a funds model, versus 237 {dollars} for a premium model.  

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

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 pattern we see of European drivers maintaining their vehicles longer and being much less inclined to spend cash on premium components as soon as they cross 5 or 6 years outdated.  

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

In the US market, nevertheless, we’re seeing clear premiumization, due to 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 scenario between the 2 international locations.  

World income from gross sales of engine oils for each bikes and vehicles grew +6% final yr, led by China (+25%), Western Europe (+12%) and Growing 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 foreign money volatility (in native foreign money, progress there may be optimistic), and the ambition of some international locations on this area to have a lot greater deal with E-mobility.  

dditional issue impacting these areas consists of the native evolution of mobility, with cheaper choices resembling “journey hailing” being significantly widespread 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 entire class gross sales income has elevated, those positive factors 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% enhance in the gross sales worth of entry manufacturers in comparison with +9% of normal manufacturers, whereas premium model gross sales declined by –2%. That affordability pattern is seen throughout all areas. with the entry–degree manufacturers doing significantly better than the remainder.  

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

Our forecast is that this pattern with continue by 2024, with shoppers looking for inexpensive choices for all upkeep merchandise – particularly as they maintain their vehicles longer in markets resembling Europe and the USA. The chance for market leading manufacturers comes when shoppers buy a brand new automobile or face a vital concern with the present product they’ve used. 

For the automotive business, 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 business, AI continues to be the excitement phrase. Immersive expertise is enabling enhancements in shopper expertise and cdangleing the way in which shoppers work together with their vehicles. 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 international locations 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 vehicles that permits them to do extra than simply drive. This focus means we’re seeing conventional tech manufacturers changing into more and more and influential within the automotive sector.  

, then, will probably be related, autonomous, shared and electrical. It would, nevertheless, take a very long time to succeed in that future, as a result of challenges resembling market readiness, sluggish 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 limitations. 

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