Automotive output is falling but innovation is rising

Significance

Inflation will weaken disposable income, but pent-up demand will remain strong, pushing prices and profits to record levels. Meanwhile, auto makers will continue to invest heavily in new technologies to meet changing customer preferences, stricter regulation and climate targets.

Impacts

• Production forecasts have been cut by close to 3 million vehicles because of the invasion of Ukraine.
• Prolonged COVID-19 shutdowns in China could reduce automotive output by another 1 million vehicles.
• Global light vehicle production is likely to remain below 79 million in 2022 -- approximately 10% below the 2019 level.
• Electric vehicle are expected to contribute 10% of global vehicle sales in 2022, up from 2.5% in 2019.
• New constraints are emerging in the supply of critical materials for semiconductor and battery production.