PwC Forecasts Positive 2012 for Global Automotive Industry

The global automotive industry is poised for continued growth in 2012, provided the European Union gets a handle on the debt crisis there.

In an announcement last week, PwC's automotive analyst group, Autofacts, said that it expects 2012 global light vehicle assembly will exceed 79 million units, an increase of 6.8 percent from 2011's total.

According to Autofacts, there are many factors contributing to the positive outlook. For instance:

Local demand in the BRIC marketplace is on the rise. Monetary tightening and other policy shifts in Brazil, India and China caused slower growth in 2011. But, as PwC points out, inflationary fears in these markets are subsiding prompting correspondingly looser monetary policy and these markets could be poised for substantial growth once again. Russia is positioned for another year of strong local demand. Autofacts forecasts BRIC growth is likely to reach double digits (12 percent) in 2012 following only five percent growth in 2011.

Japan and Thailand are poised for output recovery. Potential exists for strong output recovery in Japan and Thailand as the auto sectors in both countries work to satisfy pent-up demand, clear product backlogs and rebuild inventory in the wake of 2011's natural disasters. Thailand's eco-car program is also likely to provide assembly upside in 2012.

North American industry outlook remains positive, too. Although volumes are not expected to achieve prior peaks, Autofacts predicts an 860,000 year-over-year increase in North America production predicated on healthier inventory, export growth, and US light vehicle sales of 13.6 million units in 2012.

"The US region's automotive sector is poised for continued growth in 2012," said Rick Hanna, global automotive leader, PwC. "Automotive companies have ramped up vehicle inventories and growth markets are easing monetary policy. Although uncertainty persists, we anticipate the global automotive industry will run on all cylinders toward another record year as long as Europe's issues don't spill over to other regions."

That's a rather sizeable "if," of course. Economic uncertainty in Europe continues to be a dark cloud around every silver lining. As I mentioned last week, recent research from MFGWatch found that European manufacturers are scaling-back operations, investment projections . . . and optimism.

TAGS: Finance
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