[Asia Economy Reporter Choi Dae-yeol] The global finished car market, which had stalled due to COVID-19 and war, is improving this year, but it is expected to be difficult to recover to pre-pandemic levels due to weak demand caused by the economic recession.
On the 18th, Lee Dong-heon, head of the Automotive Industry Research Office at Hyundai Motor Group, said at the Automobile Journalists Association seminar, "Since last year, the impact of COVID-19 has somewhat eased, and the semiconductor supply situation is also improving," but added, "This year, the spread of variant viruses continues, and in major countries, household debt is expanding due to recession and high inflation, and economic downturn is expected to worsen."
He continued, "Global automotive industry demand this year is expected to fall short of 80 million units, delaying recovery to the 2019 level (86 million units)."
Lee predicted that the supplier-dominant market, which has continued from the year after COVID-19 broke out until recently, will change as the 'post-COVID' era begins in earnest this year. Semiconductor and other parts shortages caused production disruptions, and accumulated pent-up demand over two years made it difficult for consumers to buy cars. On the other hand, finished car manufacturers, as suppliers, increased profitability by reducing promotional expenses. This year, as pent-up demand is resolved and supply recovers, supply and demand are expected to reach some balance.
Lee also forecast that supply chain restructuring will continue steadily this year. This is because strategies maximizing benefits at the regional and allied country level, such as the U.S. Inflation Reduction Act, the Indo-Pacific Economic Framework, and the European Carbon Border Adjustment Mechanism, are being maintained.
Additionally, a key point to watch this year is the accelerated overseas expansion of China, which has built competitiveness based on domestic electric vehicle demand. The pure electric vehicle market, centered on Tesla, some global finished car companies, and Chinese makers like BYD, is expected to become fiercely competitive as traditional internal combustion engine leaders actively increase new models.
Lee also predicted that companies will become more active in revising or supplementing their strategies around future automotive technologies, such as Toyota completely reorganizing its electrification lineup. He said, "Toyota failed to create an initial boom due to recalls of electric vehicle-only models, and Volkswagen is expected to delay the launch of its electric vehicle platform by about two years," adding, "Ford is discontinuing its artificial intelligence business, and companies are expected to differentiate their autonomous driving development strategies."
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