- ECONOMIC IMPACT -

Latest update: 17 March

Worldwide GDP forecast looks positive. After downturn for several months, positive GDP is forecast in all countries; 2021 consensus forecast for GDP growth is currently 5.6%.

Unemployment continues to be high. According to the OECD, the unemployment rate in OECD nations stood at 6.8% in December 2020.

- SECTOR IMPACT-

Latest update: 21 March

Sales review: January’s promise has given way to a disappointing February

Despite a stronger YoY performance in February than in January the decline in the global light vehicle market selling rate does not augur well for the rest of the year as headwinds mount.


Declining market conditions were most prevalent in the US, where the monthly SAAR fell to 13.9m from January’s 14.9m as the market continued to be constrained by supply. While the key Asian markets of Japan and China both had slower selling rates in February with Japan impacted by the acceleration of omicron infections and inventory shortages.

  

China’s market was disrupted by the Chinese New Year with the selling rate down by 1m units month on month. Elsewhere, selling rates were broadly in line with January, with Europe led by West Europe improving the selling rate from 15.4m to 15.8m in the month.


However, with Europe expected to bear the brunt of the ramifications of the Russia Ukraine conflict hopes are not high for the remainder of the year. 

Sales outlook for 2022

The forecast for 2022 has been cut to 80.4m units with weight on the downside. 

 

Pressures are mounting in automotive markets. Supply constraints are ongoing and further complicated by the Russia-Ukraine conflict limiting supplies of vital components. The conflict, the terrible human cost aside, threatens wider macroeconomic contagion.

 

The prior forecast was contingent on inventory flowing to dealers again as chip supplies stabilize and improve. However, the downside risk of mounting inflation is proving to be more than transitory and looks like it will come to pass thanks to the oil price shock and commodity price pressures due to the Russia-Ukraine conflict.


Given the long lead times for vehicles already sold it could be that direct effects of the conflict will be most acutely felt in 2023. That said, sanctions will have an immediate bearing on the Russian market’s prospects with a 50% decline baked in presently with more downside to that initial take.