World Vehicle Sales Grew 2.7% in 2017

Global vehicle sales totaled 96.04 million in 2017, rising 2.7% above 2016’s record 93.57 million.

Though the growth was steady overall, many countries cited pulled-ahead volume in 2016 and consumer mistrust of regulatory changes as negatively affecting growth, while developing nations continued to attract a high mix of first-time buyers. Governments incentivized electrified vehicles, but high sticker prices and lack of charging infrastructure kept penetration in the low single digits across the globe.

All eyes were on China after 2016’s soaring 14.4% growth. Sales rose a modest 3.0% in 2017 to 28.88 million, a 30.1% share of the world. Within the market, SUV sales swelled 13.3% while cars and CUVs declined. Consumers rushed to purchase new vehicles in 2016 to take advantage of tax incentives scheduled to end in the New Year, leaving fewer potential buyers in 2017.

Alternative-fuel vehicles in China enjoyed a 53% boost thanks to generous government incentives, which were the second-highest in the world after Norway’s, according a Fitch Ratings report. To cut down pollution and traffic in major cities, the Chinese government limits the number of license plates available for gas-powered cars through a lottery system with high fees. However buyers of electrified cars are guaranteed a plate free of charge.

Other large markets in the Asia-Pacific region also saw increased demand, including Japan with 5.3% improvement on 5.23 million units. The growth came after two years of weak sales amid flat wages, an aging population and high unemployment among young people.

Sales in India jumped 9.5% to 4.06 million after growing 7.1% in prior-year. Major tax reform known as the Goods and Services Tax was implemented in July to consolidate taxes to the central government. Though it is expected to benefit economic growth in the long term, it may have disruptive effects in the first few years. Still, India saw its new-vehicle tally top 4 million for the first time ever.

The Asia-Pacific region as a whole delivered 45.42 million vehicles, up 3.8% from prior-year. Improvement in many smaller markets also contributed to the growth, including Philippines, up 15.7% to 468,000, and Thailand, up 13.4% to 872,000.

South Korea was one of the few Asian countries to witness a downturn. Sales dipped 1.8% to 1.79 million as the country prepared to host the 2018 Winter Olympics in PyeongChang.

In Europe, though many analysts were watching for a plateau or decline after several years of growth, sales improved 3.6% to 20.82 million vehicles. While progress has been steady, after 10 years the region still did not reach pre-recession levels of over 22 million.

Russia sales saw huge improvement, jumping 12.1% to 1.71 million, though still well below peak levels of 2 million to 3 million. President Vladimir Putin spread positive economic messages ahead of the election in 2018, though wages were stagnant.  

U.K. sales fell for the first time since 2011, dropping 5.3% to 2.96 million vehicles in the same year the terms for Brexit were being negotiated. Business and consumer confidence was weak, though the total still was higher than pre-recession levels. Diesel car sales tumbled 17.1%, while alternative-fuel vehicles jumped 34.8%.

Germany held on to 4.0% of the world market, as in 2016, with 2.7% growth to 3.81 million vehicles. France stayed in third place in Europe with 2.61 million units, up 5.1% year-over-year.

Across the EU, Volkswagen Group held the biggest market share at 23.7%, though PSA, which acquired Opel/Vauxhall in August, saw 28.2% growth and held 12.2% of the market. Demand for SUVs climbed an estimated 20% while diesel sales dipped 8%, as regulations on emissions are yet unclear to consumers.

Slipping 1.4% to 21.20 million, North America was the only region to fall behind year-ago. Sales in the U.S. fell 1.8% from 2016’s record year to 17.55 million cars and trucks. After a strong first half, demand in Mexico slowed 4.6% to 1.57 million for the year. Outpacing the region, Canada sales rose 4.7% to break 2 million for the first time ever.  

Sales improved in South America, rising 12.7% above 2016’s 10-year low to just under 4 million units. After the region posted a long-time low in 2016, most countries reported growth last year.  

In a year with two votes for presidential impeachment over corruption charges, Brazil’s gain of 9.2% to 2.24 million exceeded forecasts as demand picked up in the fourth quarter. Lower borrowing costs helped ease pent-up demand after years of slow sales.

Demand in Argentina soared 27.0% to 889,000 units, thanks to rising GDP boosted by strong industrial production. Similarly, Chile sales improved 17.9% to 377,000, catalyzed by favorable exchange rates and competition between brands.

Conversely, demand in Colombia fell 6.1% to 238,000 and sales in Venezuela all but stopped amid economic crisis.

The global vehicle market is expected to see continued growth as technologies change rapidly and governments push new, more environmentally friendly vehicles. Most manufacturers deliver vehicles across multiple continents, and though SUVs are gaining popularity outside the U.S., automakers have the tough job of pleasing a wide variety of markets.

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