Global sales of new light vehicles are likely to be weighed down by “demand destruction” next year due to macroeconomic factors such as higher interest rates, tight supply chains and increased prices, according to a report from S&P Global Mobility.
“Demand destruction is expected to take a more fundamental role in 2023, impacting production and the inventory restocking cycle,” the auto forecaster said on Tuesday, and expects 5.6% sales growth for 2023.
The report also sees 2022 light vehicle sales down 1.3% from 2021, at 79.2 million units.
“Two trailing years of pent-up demand remains, but headwinds risk an orderly release,” said S&P Global Mobility.
The report expects production of global light vehicles to rise 6% in 2022 compared to a year ago.
“While we entered 2022 imagining a return to pre-pandemic levels of production would be achieved in 2023, this optimism is now postponed until 2025 at the earliest,” it said.
S&P Global Mobility expects demand in Europe to be 13.9 million units in 2023, with a mild recession looming over Western Europe.
US sales volumes are expected to touch 14.8 million units in 2023, up 7% from the projected level in 2022, according to the report.
It also expects domestic sales of vehicles in Mainland China to be aided by the 100 billion Chinese yuan ($14.36 billion) extension of new-energy vehicles incentives and recovering local vehicle production. ($1 = 6.9657 Chinese yuan renminbi) (Reporting in Nathan Gomes Bengaluru; Editing by Shilpi Majumdar)