Meeting new challenges

Above image: Ford F-150 Lightning (image credit: Ford).

We highlight seismic shifts, challenges and opportunities in global automotive markets for manufacturers in the February 2025 issue of ISMR.

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According to analyst Business Research Insights, the global automotive market size was valued at US$ 2085.78 billion in 2022 and is projected to reach US$ 2746.49 billion by 2032, at a CAGR of 2.79% during the forecast period.

“Asia-Pacific held a leading position in automotive market share in 2023. Europe is estimated to show the second-highest growth in the global market, attributable to the rising disposable income of the population. The rising disposable income is leading to higher demand for cars in the region. North America is expected to show sizable growth in the global market owing to the rising adoption of electric vehicles in the region,” outlined the analyst in December 2024.

However, global automotive markets have seen seismic shifts in recent years which are having a huge impact on manufacturers. The European automotive supply industry, for example, is facing its most severe job losses since the COVID-19 crisis. These losses are driven by declining demand, rising production costs and delayed investments in new technologies.

“Today, our industry is undergoing the most transformative shift in its history: the transition from conventional combustion engines to zero-emission powertrains, such as battery-electric and hydrogen-powered models. This is a monumental challenge—one that requires the complete reimagination of an entire ecosystem. From suppliers and customers to energy providers, grid operators, and policymakers—every stakeholder must move in sync toward a common goal,” commented Christian Levin (President and CEO of Scania, and newly elected chair of the Commercial Vehicles Board of ACEA (European Automobile Manufacturers’ Association), which represents the 16 major Europe-based car, van, truck and bus makers, on 14 January 2025.

“For this transition to succeed, policies and regulations must be forward-thinking, pragmatic and relevant. Bold, visionary targets are essential to lead the way, but they must be paired with enabling conditions and predictable, long-term incentives to create stability and drive investment,” he added.

Global automotive market trends

According to research published by analyst MarketsandMarkets, global light vehicle sales were 84.0 million units in 2024 and are projected to reach 85.1 million units in 2025, witnessing a YoY growth of 1.3% from 2024 to 2025.

“The growth of light vehicle sales is influenced by various factors such as the adoption of electric vehicles (especially hybrid vehicles); the development and manufacturing of long-range batteries; the introduction of autonomous vehicles and initiatives being taken by OEMs to commercialise such vehicles; the deployment of 5G connectivity; trends related to used cars and online sales of used and new cars,” it said.

“Countries such as China, Brazil, South Korea and India have increased their investments in the development of the automotive industry due to their growing urban population and economies. Due to such investments, the demand for the automotive market will be higher during the forecast period,” it added.

According to the analyst, the growth in sales of hybrid electric cars with enhanced ranges is shifting trends in the automotive market. Numerous OEMs have announced to expand their hybrid vehicle portfolio including Toyota(Japan), Honda (Japan), Volkswagen (Germany), Ford(U.S.) and General Motors (Germany). OEMs such as General Motors and Ford have revived plans for introducing new HEV and PHEV models from 2026-27 onwards.

“The Asia-Pacific region holds the major share in the sales volume of PV combined. The major factor is the intensive manufacturing and export of cars in China. The Chinese market is the world's largest market in terms of vehicle sales as well as production. In 2024, China’s sales volume for light vehicles was over 26 million units, with a share of around 50% globally. China is the most dominant nation in the automotive industry re supply of raw materials, manufacturing and sales. It has the most potent supply chain of EV batteries. Over 50% of EV batteries are manufactured in China and around 75% of the components of EV batteries are manufactured in China. These Chinese manufacturers want to expand their services and acquire additional market share worldwide. The Asia region has seen growth in automobile production in 2023 and 2024. Continuing this trend, the Asia region will dominate the market in 2025,” confirmed the analyst.

It confirmed that there has been a constant increase in sales of luxury and ultra-luxury cars in regions such as Asia-Pacific. OEMs are developing and trying to incorporate more ultra-luxury features and are monetising many such features as a service model. The rise in sales of such cars is due to the increasing number of high-net-worth individuals in this region. This trend is expected to continue and flourish in 2025.

Analyst S&P Global Mobility forecasts 89.6 million new vehicle sales worldwide in 2025, reflecting cautious recovery growth.

“Automotive forecasts have been downgraded across the board, reflecting expected post-election U.S. policy shifts. Resulting impacts to vehicle demand will be significant especially interest rates, trade flows, sourcing and BEV adoption rates. The global automotive sector remains focused on managing production and inventory levels in response to regional demand patterns, which include slower growth in key markets (in some cases, related to slower electric vehicle adoption rates),” it confirmed.

The forecast outlook incorporates several factors including improved supply; tariff impacts; still-high interest rates; affordability challenges; elevated new vehicle prices; uneven consumer confidence; energy price and supply concerns; risks in auto lending and the challenges of electrification. In the U.S., it expects new President Donald Trump to “hit the ground running” in 2025 with a range of policy priorities including universal tariffs, deregulation and wavering BEV support.

"2025 is shaping up to be ultra-challenging for the auto industry, as key regional demand factors limit demand potential and the new U.S. administration adds fresh uncertainty from day one," said Colin Couchman, executive director of global light vehicle forecasting for S&P Global Mobility. " A key concern is how ‘natural’ EV demand fares as governments rethink policy support, especially incentives and subsidies, industrial policy, tariffs and fast evolving OEM target setting,” concluded the analyst.

Global light vehicle production in 2024 was expected to finish at 89.1 million units, it said, a 1.6% deterioration compared to 2023 levels with all regions (except mainland China and South America) experiencing decline.

“Despite the gloom, electric vehicles remain an important automotive growth sector, and we project global sales for battery electric passenger vehicles to post 15.1 million units for 2025, up by 30% compared to 2024 levels, accounting for an estimated 16.7% of global light vehicle sales. For reference, 2024 posted an estimated 11.6 million BEVs globally, for 13.2% market share,” explained S&P Global Mobility.

Looking beyond 2025, many uncertainties persist regarding the pace of electrification, especially regarding charging infrastructure; grid power; battery supply chains; global sourcing trends; tariff trade barriers; the rate of technological advancements and the necessary level of support from policymakers to facilitate the shift from fossil fuels to electric alternatives. Currently, China's NEV programme and Europe's "Fit for 55" initiative remain intact to support a sustainable mobility future. Less clear are President-elect Trump's intentions for U.S. electric vehicle support.

Forecasts by region

To read the rest of this article in the February 2025 issue of ISMR, see https://joom.ag/AbMd/p18