Global Car Market Remains 'Supplier's Advantage' This Year... Recovery to Pre-COVID Levels Expected Next Year

Demand Surge - Concerns Over 'Carflation' Amid Semiconductor Supply Shortage

On the 17th, one day before the Chuseok holiday, export vehicles are waiting to be loaded at Pyeongtaek Port in Gyeonggi. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Yu Je-hoon] The global automotive market this year is expected to maintain a 'supplier's market' following last year due to the influx of pent-up demand. However, the impact of the vehicle semiconductor supply shortage means that a sales recovery to pre-COVID-19 levels is likely to be possible only by next year at the earliest.

Lee Dong-heon, Executive Director and Head of the Automotive Industry Research Division at Hyundai Motor Group's Economic and Industrial Research Center, stated this on the afternoon of the 13th during an online seminar titled '2021 Global Automotive Market Review and 2022 Outlook,' hosted by the Korea Automotive Journalists Association (KAJA).

According to Lee, the global economy this year will gradually stabilize from the crisis phase caused by COVID-19, but recovery is expected to slow due to expanded financial tightening such as the US tapering. Global vehicle sales are also expected to grow steadily as the variant virus situation eases and semiconductor supply issues are gradually resolved. Hyundai Motor Group has forecasted global vehicle sales this year to increase by 7.5% year-on-year to 82.09 million units.

By market, the US is expected to sell 16 million units, up 6.3%, as semiconductor supply shortages are gradually resolved despite a slowdown in economic recovery due to financial tightening. Europe and China are also projected to increase by 10.0% and 5.5% to 15.1 million and 21.1 million units, respectively, for similar reasons. In Europe and China, battery electric vehicles (BEV) and new energy vehicles (NEV) are expected to lead the market, respectively.

In Korea, although parts supply shortages are expected to gradually improve, interest rate hikes remain, and with fewer new volume model launches, sales are projected to increase slightly by 1.8% to around 1.72 million units, according to Lee.

This year, similar to last year, the automotive industry is expected to experience a supplier's market where demand exceeds supply. Trends such as growth in the electric and luxury vehicle markets, prolonged used car supply shortages due to fewer new cars, and the full-scale recovery of mobility markets driven by increased travel demand are emerging. Consequently, Lee explained that this year could see a so-called 'Car + Inflation' phenomenon, where new car prices rise sharply due to excess demand combined with inflationary pressures across the global economy. Additionally, major automakers are expected to simultaneously improve sales and profitability and strengthen electrification strategies.

Lee stated, "Even if the spread of COVID-19 subsides this year, incomplete resolution of semiconductor supply issues means that sales recovery to 2019 levels, before COVID-19, is expected only by 2023."

This content was produced with the assistance of AI translation services.