Industry Insights | Global Automotive Market Q2 2023 Review and Outlook

Compared with the same period last year, in the first half of 2023, global light vehicle sales increased by 9.8%, reaching 38.58 million units. This indicates that the global supply shortage of chips and semiconductors is gradually being alleviated.

Major regional markets around the world all showed significant growth compared to the same period last year:

Among them, the Asia-Pacific region remains the world's largest light vehicle market, accounting for 49.5% of global market share. The year-on-year growth rate of sales reached 9.8%. Leading OEMs includeToyotaandpublic, in terms of vehicle modelsTesla Model YandBYD Song DMThe best-selling model.

North America follows closely behind, accounting for 23.1% of the global market. Compared with the first half of 2022, sales increased by 9.4%. Leading OEMsgeneralandToyotaOutstanding performance, with the best-selling model beingFord F-SeriesandChevrolet Colorado.

Due to further recovery of the supply chain and normalization of manufacturers' production, the European market achieved a strong recovery in the first half of 2023, with a year-on-year growth rate of 17.3%, accounting for 14.8% of global markets. Among thempublicandstranthiasPossesses a leading market share locally,Tesla Model YandRenault Dacia SanderoThe model is the best-selling in Europe.

In addition to Asia-Pacific, North America, and Europe, South America is also a region worthy of attention. In the first half of 2023, this region accounted for 3.6% of the global light vehicle market, with sales increasing by 0.7% year-on-year.stranthiasandgeneralTwo major automakers rank among the top in the market, andFiat StradaandChevrolet OnixThe model stood out in local sales.

From the perspective of the OEMs, Toyota's position in the global light vehicle market remains solid, with sales reaching 4.68 million units in the first half of 2023, an increase of 3.3% compared to the same period last year. Following closely are brands such as Volkswagen, Hyundai Kia, Stellantis, Renault-Nissan, and General Motors. Among them, Volkswagen has performed excellently in terms of year-on-year growth, achieving 8.6%, ranking first among major competing automakers. The performance of Renault-Nissan, Stellantis, and Hyundai Kia is also outstanding, with growth rates exceeding 5%.

Frost & Sullivan has compiled a list of highlights in the market performance of some OEMs during the first half of the year:

Toyota Motor has maintained its leading position in global automobile sales for three consecutive years and is expected to continue this position in 2023. With the continuous advancement of its electrification strategy and the implementation of the 'produce locally' policy, Toyota is making significant investments in the production of pure electric vehicles in the United States and Japan. In Tianjin, China, its new energy factory with an investment of 130 billion yen started production in 2022.

Facing fierce competition from Tesla, Volkswagen's ID. series saw a significant year-on-year increase of 42% in the delivery of pure electric vehicles in the first quarter of 2023.

Modern cars have seen their best first quarter performance ever driven by the sales of their pure electric vehicles. However, Hyundai is facing challenges in the US market, with a class-action lawsuit claiming that Hyundai cars are prone to theft.

Strandtiz's layout of the South American market will enable it to better acquire and control the raw materials for its global pure electric vehicle supply chain, especially the lithium ore resources essential for power batteries.

In the first half of 2023, the global light vehicle market was mainly dominated by five countries: China, the United States, India, Japan, and Germany. Among these five major markets, China's light vehicle sales reached 12.44 million units, ranking first, followed by the United States, India, and Japan. In terms of year-on-year growth rate, India, Germany, and Japan ranked in the top three, with rates of 14.9%, 14.3%, and 13.4% respectively.

Highlights of major global country markets:

China will continue to firmly hold the largest automotive market, accounting for 32.3% of the global share. China's electric vehicle market is far ahead globally, and Chinese companies and Tesla dominate this sector.

The United States maintains its position as the world's second-largest automotive market, with General Motors, Toyota, and Ford accounting for a combined 41% of automobile sales. Despite challenges such as semiconductor chip shortages and rising interest rates in 2022, the U.S. market is expected to continue growing momentum in 2023.

In the first half of 2023, India's new car sales exceeded those of Japan, thanks to a strong recovery in market demand after the pandemic. Considering India's population growth and lower per capita ownership of passenger vehicles, the Indian automotive market has significant growth potential.

Meanwhile, Japan is also recovering from the setback it suffered in 2022 due to a shortage of chips.

Despite facing unfavorable macroeconomic factors such as inflation and economic slowdown, Germany's light vehicle sales still achieved a growth of 14.3% in the first half of 2023.

In the first half of 2023, the global light vehicle market showed the following development trends:

• "The future of 'electrification'" has arrived

The sales of electric vehicles have boosted the sales performance of all OEMs in the first half of the year globally. This explosive transformation trend of electric vehicles is driving regulatory authorities to establish strict battery handling and management control measures.

• Tesla sets an industry benchmark

Tesla is gradually becoming a global leader in pure electric vehicles, and as more automakers adopt its charging standards, its market position will be further consolidated.

• Made in China Goes Global

Chinese OEMs such as BYD are engaging in fierce head-to-head competition with established European and American OEMs, even in their home markets.

• The competition in the supply chain has become extremely fierce

In view of the lessons learned from the chip shortage crisis, OEMs are now placing greater emphasis on protecting their battery supply chains by ensuring the sourcing of raw materials.

• AI-powered voice assistant

With the emergence of conversational AI such as ChatGPT, the automotive industry is trying to integrate its capabilities into connected autonomous vehicles.

Before the New Year, Frost & Sullivan predicted the development trends of the global automotive industry over the next three years, including: 1) sustainable development of the supply chain; 2) vertical integration in electric vehicle manufacturing; 3) the automotive industry's 'New Four Modernizations' (electrification, intelligence, connectivity, sharing); 4) next-generation battery management solutions for electric vehicles; 5) the rise of smart factories. Looking back at the development trends in the first half of the year, we have seen substantial progress in directions such as sustainable development of the supply chain, the rise of smart factories, vertical integration in electric vehicle manufacturing, and the automotive industry's 'New Four Modernizations':

Sustainable development of the supply chain:In April, Stratis announced the establishment of a circular economy center at its factory in Mirafiori, Italy.

The Rise of Smart Factories:In June, Mercedes-Benz announced the integration of ChatGPT into its MO360 manufacturing platform to enhance its production process.

Vertical integration in electric vehicle manufacturing:In April, General Motors and Samsung SDI established a joint venture for electric vehicle battery manufacturing in the United States.

Automobile industry 'New Four Modernizations':In June, Porsche established a software department dedicated to developing 'software-defined vehicles'. Also in June, Mercedes-Benz integrated ChatGPT into its MBUX voice assistant as part of an enhanced HMI beta program.

Chinese enterprises are showing increasing interest in sodium-ion battery production. However, the significant drop in lithium prices may hinder the development momentum of sodium-ion batteries in the second half of 2023.

Southeast Asian countries are becoming electric vehicle production centers for global OEMs. Governments provide supportive policies, tax incentives, and purchase subsidies to attract investment.

Tesla's price cut is expected to trigger a price war among electric vehicle competitors. Currently, it remains to be seen whether automakers will sacrifice profit margins in order to reduce manufacturing costs.

The United States plans to increase investment to strengthen its domestic semiconductor supply chain. However, the shortage of skilled labor will pose challenges to the formation of the entire industrial chain.

European automakers are taking various measures to reduce carbon emissions, including exploring alternative clean fuels and methods for steel decarbonization. Driven by government incentives, more such initiatives are expected to be introduced in the second half of 2023.

The region is paying increasing attention to battery management throughout the entire lifecycle. Europe is prioritizing the implementation of a battery identity system to track batteries used in electric vehicles.

Brazil is actively developing hybrid vehicles using ethanol as fuel in order to reduce emissions, and major automakers have announced plans to produce such vehicles in Brazil.

Chile, due to its rich lithium resources, is planning to increase investment in local electric vehicle battery production by automakers and related suppliers.