Global Driving Forces

Several unforeseen events strained the world economy in 2011, including the Arab Spring, the disasters in Japan, and the floods in Australia and Thailand. At the same time, the Eurozone debt crisis continues to be a concrete threat to both Europe and the global economy.

The image of a divided world economy was reinforced during the year. Global economic growth slowed, while the growth economies expanded by around 6 percent. While Japan’s economy grew strongly at the end of the year after the disasters that struck the country, the US was recovering from a very low level. At the same time, Europe is preparing for a lost decade of no growth and a recession.

Macroeconomic factors were also the driving force behind raw material prices, which were governed more by external shocks than industrial factors. The strongest price trend involved raw materials that were linked to the price of oil. In general, however, the prices of most raw materials fell – in part as a result of less demand, but also as a consequence of the USD strengthening as the Eurozone crisis worsened.

Interest-rate policy and availability of credit in various economies governed the readiness and capacity to lend funds for car purchases. The European and US central banks maintained their very low interest rates, while the central banks in the BRIC economies* raised their key interest rates to fight inflation.

International environmental issues without incentives
There was still a lack of political consensus in the form of regulations and legislation with regard to the world’s environmental issues. The climate summit in Durban ended in a compromise where the Kyoto Protocol continues to apply while awaiting a new agreement that encompasses all countries. That the decision regarding a crucial climate agreement was further postponed to the future, was also negative for the automotive industry. The development of environmentally adapted cars demands sustainable, long-term and robust political decisions.

Despite the slowdown in the global economy, demand for cars remained positive in 2011. During the year, more than 63 million cars were registered globally, which was an increase of 2.6 percent compared with 2010 and slightly higher than the previous record from 2007.

Stronger exports of premium cars supported the European auto industry, which was characterised by strong sales in Northern Europe and very weak sales in Southern Europe. The US witnessed a strong recovery with 12.8 million registered cars, an increase of 11.6 percent. Sales declined somewhat in China and instead Russia (+39%) emerged as the largest growth market in 2011 with 2.5 million new cars sold.

Global economic factors
Some factors included in the risk assessment of a serious global recession are the Eurozone crisis, a still vulnerable United States, the situation in Iran and a threatening economic instability in the Chinese housing market and the banking sector. The economy of the Eurozone is expected to decline by 0.7 percent and, if the debt problems are not resolved quickly, the ongoing recession will worsen.

The global economic growth is expected to decline from 3.0 percent in 2011 to 2.7 percent in 2012. In Asia, a positive growth of around 5.5 percent (China +7.5-8%) is expected although the region would not be immune to a severe European recession. An anticipated GDP growth in the US of nearly 2 percent means that the country will likely avoid ending up in a recession. At the same time, the country’s weak real estate and labour market continues to be a concern.

Raw material prices are expected to rise slowly, but weak economic growth and demand are indicators against strong price increases.

Between 2011 and 2015, the percentage growth of car sales in emerging markets such as India, South Korea, Indonesia and Russia (11.3%, 8.8%, 8.1% and 8.0%, respectively) is expected to exceed the corresponding figure for China (7.5%). The US, Brazil, Thailand and some African countries are also expected to contribute to this growth.

* Brazil, Russia, India and China