By: Brad Neal, Published on May 4, 2017 03:29 PM, Last Update on May 4, 2017 12:31 PM
More people will buy a new vehicle in 2017 compared to 2016, according to Fitch Ratings. The firm has released its latest U.S. Automotive Handbook, showing the demand from consumers will increase 1% to 2%.
Published on Wednesday, the handbook shows that customer growth in Europe, Brazil, and China will spur the growth. It will also offset a decline in demand through the United States, Japan, and South Korea. Fitch says sales of automobiles will decrease half a million in the US, down to 17 million from 17.5 million in 2016.
China continues to be a rapidly expanding market for new vehicle purchases. However, Fitch explains that growth will slow in 2017. The firm points out that market demand will see sales fall to the mid-single-digit growth rate during the year.
This is down to the Chinese government partially withdrawing tax incentives for customers who buy small-engine vehicles. The incentive was introduced two years ago. The roll back will see purchase tax increase to 7.5% from 5%.
In Europe, sales have remained consistent around 10% away from a peak a decade ago. That high was around 13%, but in 2017 growth is likely to be around 2% to 3% according to Fitch. This will be due to “pent-up demand, continued favourable economic conditions in several countries and low interest rates supporting vehicle purchasing.”
The push towards electric and hybrid vehicles continues around the globe and the further development of autonomous vehicles is bringing dramatic changes.
“Although the effect of these changes will not be a near-term threat to traditional auto manufacturers and suppliers, the potential long-term effects could be substantial,” Fitch said. “Auto manufacturers and suppliers are competing with numerous start-ups and technology companies to dictate the terms of the coming disruption in personal mobility. Traditional auto manufacturers risk losing relevance as the mobility landscape changes.”