Key automotive trends for 2021
The Economist published its “Industries in 2021”(i) trends and predictions for 2021 – including for the automotive industry. Here’s the top four trends we see for the year ahead.
1. Growth in electric vehicles
The most promising growth market we see will be for EVs. Aided by government incentives, the enforcement of stricter emissions targets and the launch of new EV models. The Economist expects global EV sales to increase by 37% in 2021, to 3.4m units, although they will account for just 4% of global car sales. (ii)
In China, EV subsidies are slowly being cut, particularly for more expensive cars, while delays to emission standards will reduce the pressure on automakers. US might see plans to restore full tax credits and provide an additional rebate on EV purchases come to fruition after the election of President Biden.
Sales of diesel vehicles will slump further, with governments desperate for revenue likely to raise fuel and emissions taxes further.(iii)
2. Increase in commercial vehicle sales
Boosted by government-led infrastructure spending, commercial vehicle growth will outpace that of passenger vehicles. Commercial vehicle sales are set to increase by 16% this year (passenger cars will rise by 15%). (iv) Low interest rates and attractive financing deals will also fuel some of the rebound in China and other major markets.
The increase in delivery & last mile delivery will drive the demand for electric commercial vehicles.
3. Trade barriers and import tariffs will define global trade
The United States is prepared to impose heavy tariffs on auto parts imported from China in order to encourage to source supplies closer to home. Tariffs aren’t the only contentious area but also the fight over technology, including the high-tech components vital for the development of EVs and autonomous vehicles. Brexit is likely to roil the UK automotive industry, with the EU unlikely to grant zero-tariff access for UK-made cars with too many foreign components.
4. Digitalisation will offer new ways to buy cars
In 2020 nearly everything went online. From the way we work and socialise to the way we shop. With motorists likely to remain wary of visiting dealerships in 2021, car companies and dealers will make it more convenient to purchase vehicles from home. Although the process began in 2020, after COVID-19 hit the sector, it will gather pace this year. The Economist forecasts that “the share of online sales in the overall new car market will rise to 10% in 2021, up from a pre-pandemic estimate of 5%.”(v)
You can download the Economists full “Industries in 2021” report here.
At LeasePlan we will continue to monitor the supply of new vehicles and changes in the automotive and mobility landscapes. In conjunction with LeasePlan's team of experts who are specialised in the challenging dynamics of today's and tomorrow's mobility market, we are committed to ensuring we can adapt to the ever-changing situation in order to keep our customers as mobile as possible. Ask your LeasePlan contact person for more information or support.
(ii) The Economist – Industries in 2021 – page 5
(iii) ACEA: 2020 new passenger diesel car registrations in EU+EFTA decline of 4.8m to 3.1m or -35.2%
(iv) The Economist – Industries in 2021 – page 3
(v) The Economist – Industries in 2021 – page 7*