According to data compiled by five industry consulting groups, new car production in China will surpass new car production in Europe for the first time in 2013. As the Financial Times
reports, China is poised to build 19.6 million cars and light trucks this year, compared to a projected 18.3 million in Europe.
In 2012, Europe (including Russia and Turkey) produced some 18.9 million vehicles, compared to output of 17.8 million in China. The production forecast for Europe is lower in 2013, as the current regional economic crisis has dampened demand for new vehicles
That’s not expected to change significantly in 2013. Norbert Reithofer, BMW’s CEO, calls market conditions in Europe
“very challenging,” while Volvo’s CEO, Håkan Samuelsson, paints an even darker picture.
“As for the European market,” Samuelsson is on record as saying, “you can only pray.”
The decline in European production is even more dramatic when framed by history; in 2001, Europe produced 35 percent of the world’s cars, but in 2013 it’s expected to build slightly more than 20 percent. China, on the other hand, supplied 3.5 percent of the world’s cars in 2000, but is projected to build 23.8 percent in 2013.
The irony is that more vehicles are being built in China, but manufacturers (especially foreign manufacturers
) aren’t making much money in the process. Blame it on stiff competition and demand for compact cars, which traditionally deliver thin margins even in other markets.
Overall, global demand for new cars is expected to climb by 2.2 percent in 2013, which is a noticeable drop from the 4.9 percent growth experienced in 2012. That’s hardly good news for manufacturers, regardless of where their cars are produced.