World Markets Rebound From Supply Shortages

The light vehicle market is getting bigger worldwide. Supply shortages related to the semiconductor crisis are starting to improve. This is what the latest market analysis from GlobalData shows.

In April, the global selling rate for light vehicles was 86 million/year, up from 84 million/year in March as estimated by GlobalData. Many markets have seen growth of 25% due to fewer supply issues.

US raw sales went up by 1.4 million units month-on-month. The end of April was good for the market, and more vehicles were available. China saw similar growth, with a selling rate of 26.3 million units per year. Both Western and Eastern Europe's sales increased YoY, as supply constraints improved and deliveries increased.

The market to improve as supply shortages ease. Supply shortages are getting better. The market will benefit from this. Shortages lifting, good news for the market. Improvement in supply shortages causing market to rise.

The car industry is expected to increase by 6% in 2021, according to GlobalData. However, it still hasn't reached pre-COVID levels. Manufacturers are catching up on orders and replenishing supplies as shortages ease, which helps. But, there may be a problem with weak demand in the future.

Chips or semiconductors have caused the biggest disruption in global light vehicle output since 2020. The pandemic has led to a shortage of these supplies.

Justin Cox, a senior analyst at GlobalData, states that there is improvement in the global supply shortage situation. However, he warns that the problem is not completely solved yet.

The "chip" issue is getting better due to improved supply chain management and more resources at semiconductor suppliers. However, it won't be fixed completely this year because the crisis was serious.

According to GD analysis, North America and Europe have been hit hard by supply-side disruption. Additionally, Europe's situation has been worsened by the aftermath of the conflict in Ukraine. Cox predicts that this will continue to harm the region, and will impact the growth prospects of Central and Eastern Europe, in particular.

Here are the latest market updates from around the world.

Sales of US LVs went up by 10.5% YoY to 1.4 million units in April. The selling rate also grew to 16.2 million units/year in April. The inventory stock reduced by 46k units MoM due to a strong closing to the month and better vehicle availability to meet pent-up demand. The average transaction price in April rose to $46,266, while incentives remained steady at US$1,678 MoM after a decline since December 2022.

In April, Canadian LV sales went down 5.2% from last year to 141k units. This may be due to economic uncertainty, meaning they sold less cars per year. Mexican LV sales went up 17.2% to 97.2k units in April. In 2023, they plan on selling just under 1.4 million units/year, a bit more than in March.

In April, selling rate for West European stayed at 12.3 units/year as March. But they registered 992k units, which is a YoY growth of 16.2%. This growth happened because supply constraints got better and delivery rates improved.

In April, sales of East European units rose to 3.8 million from 3.6 million in March. There were 300,000 sales, which is almost 43% higher than last year. Russian LVs had a big impact, with sales up 103.5% YoY to 68,000 units. This was due to more people buying and showing interest because last year wasn't good. Unfortunately, the Ukraine War is still affecting the market in the region.

New information shows that the Chinese market did well in April. They sold 26.3 million units/year, which is the same as what they sold in March. Compared to last year, sales went up by 85% because last year was bad due to the Shanghai lockdown. The sale of NEVs is still the main reason for growth, with a 113% increase compared to last year. At the Shanghai Auto Show, over 80% of new models were NEVs.

Governments and dealers have extended tax breaks and discounts. This is because many vehicles do not meet the State VI-B emission standard. These incentives were originally supposed to end in March or April. But now they are going beyond that time. After July 1st, the sale of vehicles that don't meet the new standard will be banned. This means that the price war will continue. It will also affect OEMs' earnings. However, even with big price reductions, sales haven't gone up much.

Japan's sales improved in May due to a better supply of semiconductors. The April selling rate went up 23% from March to 5.3 million units/year. This is higher than the Q1 average of 4.6 million units/year. Many big companies raised salaries in April, which, together with slowing inflation and decreasing fear of the pandemic, boosted consumer confidence. Though sales have been strong, delivery times for most popular models are long – from a few months up to a few years.

Sales of cars in Korea slowed down in April to 1.7 million units/year, which is 7% lower than March. Although the supply problems have resolved, demand is slower due to high interest rates and an economy slump. Domestic brands are doing better than imports because of higher financing rates. Popular German brands are also experiencing shortages in supply. Sales are expected to increase in May and June before the temporary excise tax reduction expires at the end of June.

In April, sales of Brazilian LV went up by 10.8% YoY, reaching 152k units. However, the selling rate decreased compared to March, at 2.0 million units/year. While inventory levels increased in April, it was at a lower rate, with stocks reaching 206k units (compared to 204k in March). In April, days' supply stayed the same MoM at 38 days which could mean that there is weakening demand - production was disrupted by stoppages in March and April.

LV sales in Argentina went up to 32.4k units in April, rising 9.8% YoY. The selling rate didn't change from March at 422k units/year. This is the second month in a row that sales went over 400k units/year. The market seems to be strong despite economic troubles.