S&P Global Mobility forecasts 83.6M units in 2023 as light vehicle market cautiously recovers

Global new light vehicle sales will reach nearly 83.6 million units in 2023, a 5.6% increase year-over-year, according to a new forecast by S&P Global Mobility.

The auto industry continues to navigate supply chain challenges while confronted by several markets facing deteriorating economic conditions and fading pent-up demand. As semiconductor availability plays out, demand destruction is expected to take a more fundamental role in 2023, impacting production and the inventory restocking cycle.

S&P Global Mobility remains wary on recovery prospects. Destroyed demand is a key feature of the tepid forecast outlook – impacted by a blend of general economic impacts, higher interest rates, tight supply chains, an intensifying affordability squeeze, higher new-car prices, weakening consumer confidence, and heightened energy price/supply concerns. Two trailing years of pent-up demand remains, but headwinds risk an orderly release—including patchy recovery patterns for semiconductor supply, energy risks (especially through a European winter), and logistics log jams. With the auto industry already operating at, or near, recessionary levels, the forecast outlook remains mixed at best.

"2023 is expected to be a year of recovery, but likely a cautious one as the world approaches a gloomy trio of anniversaries – three years of COVID, two years of semiconductor disruption, and one year of Russia-Ukraine war impacts," said Colin Couchman, executive director, global light vehicle forecasting, S&P Global Mobility. "The rapid zero-COVID policy exit in mainland China provides further food for thought as we approach the New Year."

Market-by-market forecasts

Europe: The European auto industry is suffering supply frictions, stalling economics, energy concerns, higher raw material/component prices, and wider security unease. Western/Central European 2022 vehicle sales should post 12.9 million units (-6.7% y/y). Order fulfilment remains a struggle, with long waiting lists, stretched lead times and challenging logistics. For 2023, the narrative shifts from supply constraints to demand destruction. With a mild recession looming for Western Europe, 2023 demand is forecasted at 13.9 million units (+7.4% y/y), according to S&P Global Mobility.

"For Europe, the evolving electrification transition adds further uncertainty, especially for vehicle prices, model availability, wait-and-see customers, and lurking Chinese OEMs," Couchman said.

United States: US sales volumes are expected to reach 14.8 million units in 2023, an estimated increase of 7.0% from the projected 2022 level of 13.8 million units. "The US auto market is struggling, impacted by supply chain, labor, logistics, inflation, and wider economic concerns," said Chris Hopson, manager, North American light vehicle sales forecast, S&P Global Mobility.

"Ongoing supply chain challenges and recessionary fears will result in a cautious build-back for the market. US consumers are hunkering down, and recovery towards pre-pandemic vehicle demand levels feels like a hard sell. Inventory and incentive activity will be key barometers to gauge potential demand destruction."

Mainland China:  S&P Global Mobility analysts have rebalanced the outlook on the rapid zero-COVID policy exit, a still-weak economy, and ongoing stimulus. With 2022 set at 24.8 million units (+3.6% y/y), some demand fulfilment has been effectively delayed into 2023-24. For 2023, the CNY100 billion extension of NEV incentives and recovering local vehicle production should support domestic sales –2023 should see a recovery to 25.9 million units (+4.5% y/y), according to S&P Global Mobility. The market faces significant uncertainty as COVID infection levels could potentially surge following the ease in COVID rules.

Read the full analysis here.