Published on: November 22, 2019
A motor vehicle with at least four wheels and is designed to seat no more than nine persons are categorized under car or passenger car. We have categorized the car market as a part of the overall automobile manufacturers market. The automobile manufacturers market covers companies that produce mainly passenger automobiles and light trucks and excludes companies producing heavy-duty trucks which are classified under Construction Machinery & Heavy Trucks Sub-Industry.
The global car market recorded sales of around 70.5 million units in 2018 which is expected to reach around 81.5 million units by 2023 growing at a CAGR of approximately 3%. The growing disposable income of consumers, availability of different products in a wide range of prices, and the rising popularity of electric vehicles is driving the growth of the global car market. In addition to this, the growing market for ride-hailing services like Uber has also increased significantly which has increased the sales of passenger cars. Based on vehicle type, SUVs segment registered the highest growth owing to the increased consumer preference for SUVs in APAC and European countries. The global SUV market witnessed a sales growth of approximately 7% in 2018 compared to 2017. Based on engine type, ICE segment dominated the car market with almost 85%-88% of the global market share. However, due to growing concern over rising carbon emission, entry of new players in EV market, and support of government for EV market, the demand for EV has increased significantly. The EV segment in the global car market registered approximately 32% increase in sales in first half of 2019, in contrast to ICE segment which witnessed a fall of around 4.5%.
Moreover, based on geography, APAC region has the dominant market share in the global car market. The growing demand for passenger cars in APAC is driven by multiple factors including increased consumers’ disposable income, high demand for SUVs in China and India, growing market for ride hailing services, rising demand for EV and hybrid, and expansion of automobile manufacturers in the region. Moreover, the highest growth rate in global car market was recorded in Latin American market. Low interest rates, supporting government incentives and policies, and rising investment by automotive manufacturers are few of the prominent factors driving the car market in Latin America.
The global car market can be segmented into the following:
Many factors are expected to drive growth in the car market during the forecast period. Our analysis identifies the following factors to be driving the growth in the car market:
The global automotive industry is witnessing tremendous growth in the crossover segment as they offer better money value compared to sedans and SUVs. Crossovers offer the driving pleasure, safety, reliability, and comfort of an SUV, and owing to their unibody design, they are lightweight and hence offer better fuel efficiency than sedans. Ergonomically too crossovers are better than SUVs or sedans. More fleet owners are shifting from sedans to crossovers and SUV crossovers, as they offer more room both for passengers and cargo. Also, the running and maintenance cost of crossovers is lower than SUVs, which is an important aspect for customers. Crossovers offer all-wheel drive, which is particularly important in areas prone to inclement weather conditions. Luxury OEMs too are adding crossovers to their product line. For instance, Porsche has Cayenne and Macan crossovers, Audi has Audi Q5 and Q7 luxury crossovers, and Honda's subsidiary Acura and Toyota Motor's luxury arm Lexus are also offering luxury crossovers, such as Acura MDX, Acura RDX, Lexus RX, and Lexus NX. The latest technology innovations offered by these OEMs particularly interest the tech-savvy millennials. To meet the potential demand from consumers, OEMs have been working on introducing new crossovers and adding new vehicles to their product line.
Many countries such as Japan, Germany, France, and the UK are participating in the Electric Vehicle Initiative (EVI), a multi-governmental forum organized by the International Energy Agency (IEA) to accelerate electric vehicle manufacturing and adoption. Some of the developing countries, such as India, provide subsidies both for buyers and manufacturers for the growth of the electric vehicle market to reduce the carbon footprint on the environment. Vendors are also increasingly focusing on developing new variants of electric vehicles to increase the adoption rate in key countries in APAC.
Autonomous vehicles require the integration of multiple advanced technologies for effective functioning. Automobile manufacturers are increasingly focusing on investing in autonomous concept vehicles to understand the criticality and the functional efficiency of the vehicles on the road. The growing electronic assistance introduced in the vehicles has driven the market toward implementation of automated driver assistance systems (ADAS), which is the key to deliver driver-less cars. Automobile OEMs have increased the investments in development-related technology governing the implementation of autonomous vehicles.
As a result of a continuous increase in the price of gasoline, more end-users are attracted to hybrid automobiles. Hybrid automobiles provide numerous benefits to the end-users, runs on a combination of fuel and battery, and emits less pollution than single-fuelled automobiles. The increasing affinity toward hybrid vehicles has directed the vendors to focus on expanding their hybrid cars portfolio. For instance, in June 2019, BMW announced its plan to have around 25 hybrid car models by 2023.
Meanwhile, the vendors operating in the market face numerous challenges in increasing their sales and improving profitability. Some of those challenges are:
With growing functionalities being added to new vehicles, the manufacturing sophistication and design complexity for cars have increased significantly. As a result, the probability of defective products has also increased leading to recalls from multiple prominent players. For instance, Toyota recalled the vehicle models from 2018 and 2019 as the airbags in these vehicles were prone to potential failure due to faulty/inappropriate programming in the airbag electronic control unit (ECU).
The biggest challenge that is hindering the growth of the electric passenger cars is the lack of availability of EV charging infrastructure. Charging infrastructures have remained to be a persistent barrier to the rapid uptake of EVs. Multiple long-range affordable BEVs have been launched in the automotive market such as Tesla Model 3 and Chevrolet Chevy Bolt EV, but the popularity of EVs is being stalled by the lack of charging facilities.
The automobile rental services industry is witnessing continuous growth globally. The rental facilities are convenient options for tours and other pleasure trips. Automobile rental also provides the opportunity of increased mobility, without the concern of paying the costs associated with automobile ownership. Therefore, increasing dependence on automobile rental services is expected to restrict the growth of automobile sales for individual customers.
Our reports on the global car market cover several large and small vendors active in the market including General Motors Co., Tesla Inc., Volkswagen, Toyota Motor Corp., Hyundai Motor Co., Ford Motor Co., and BMW AG.
Following are few of the major developments in the market:
Backed with competitive intelligence and benchmarking, our car market research report is designed to provide entry support, customer and M&A assessment, as well as go-to-market strategy support.
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