Global automotive sales are expected to stabilize this year as growth slows in the world’s largest car markets, China and the U.S. The South Koeran market is likely to remain flat compared to last year, despite an expanded lineup of new vehicles, due to the burden of household debt.
Yang Jin-soo, head of the Mobility Industry Research Lab at Hyundai Motor Group’s HMG Management Research Institute, presented this outlook for the global automotive market through 2026 at the Korean Automobile Journalists Association’s New Year seminar held in Seoul on Friday.
Yang reported that while recovery slowed in advanced markets like the U.S. and Western Europe last year, the global automotive market grew by 3.6% year-over-year to 87.76 million units. This growth was driven by China’s consumer stimulus policies and improved consumption conditions in India.
For this year, Yang forecasts global vehicle sales to reach 87.93 million units, a mere 0.2% increase from last year. This modest growth is attributed to the slowdown in China and the U.S., despite expansion in markets like India and Western Europe.
Regional sales projections for the year are: U.S. at 15.93 million units (down 2.3% year-over-year), Western Europe at 15.14 million units (up 1.5%), China at 24.47 million units (up 0.5%), India at 4.82 million units (up 5.6%), and Association of Southeast Asian Nations (ASEAN) at 3.19 million units (up 3.8%).
This outlook represents a significant market contraction, especially considering China and the U.S. posted growth rates of 7.8% and 1.6% respectively last year. The U.S. market’s return to around 15 million units annually is a first since 2023. Key factors constraining growth include tariff-induced price hikes for vehicles and parts in the U.S., leading to higher insurance costs, while China faces economic uncertainties and depleted local government subsidy funds.
The Korean domestic market is expected to see a slight decline of 0.6% to 1.64 million units this year. Despite last year’s 3.5% rebound driven by interest rate cuts and recovering electric vehicle (EV) demand, HMG Management Research Institute analysts believe that accumulated household debt will fundamentally limit high-end product consumption, even with the introduction of various new models including EVs and hybrids.
The global market for battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) is projected to grow by 10.1% year-over-year to 23.59 million units in 2024. This growth is expected despite a base effect from last year’s high growth rate (24.0%) and weakened momentum in China and the U.S. The expansion will be supported by stricter emissions regulations in Western Europe and a wave of new BEV launches in India and Korea.
Yang highlighted the strategic dilemma of legacy automakers as a key issue for the automotive market this year. These companies are caught between defending short-term profits and investing for the future, amidst entrenched low growth in the global automotive market and slowing electrification.
Other major trends Yang foresees for the automotive industry this year include intensified global expansion by Chinese automakers, renewed competition in the hybrid vehicle market, accelerated commercialization of robotaxis, and the proliferation of smart car technologies.