Forecast sees slowing global automobile sales

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Forecast sees slowing global automobile sales

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Global auto sales in the second half of the year are likely to be more sluggish than in the first half, a troubling forecast for local automakers that rely on exports and production in foreign markets, the Korea Automobile Research Institute (KARI) said yesterday.

The think tank under Hyundai Motor Group released a report estimating auto sales worldwide in the second half at 39.43 million vehicles, down 3.3 percent, or 1.34 million units, from first-half sales.

From January through June, 40.77 million vehicles were sold, up 3.5 percent from a year ago, but year-on-year growth in the second half will slow to 2.6 percent, according to KARI.

The institute predicted a total of 80.2 million vehicles will be sold this year, 3.1 percent more than in 2012. KARI said the expected growth rate would be the lowest figure since negative growth after the global financial crisis.

KARI said that possible reduction of quantitative easing in the United States and slower growth in China will affect Europe and other emerging economies. It said global growth in 2013 is expected to be 2.9 percent, 0.3 percentage point less than last year.

China, the world’s largest auto market, saw 8.38 million vehicles sold in the January-June period, up 13.4 percent from a year ago, but KARI predicted second-half sales will be 1.8 percent lower at 8.23 million. The institute warned that sales in China could be worse if the government expands its policy to limit car purchases in its move to curb traffic congestion and pollution.

For the U.S. auto market, KARI said second-half sales are estimated to be 7.74 million units, down 1.1 percent from 7.83 million in the first half. In Europe, sales have declined since 2007 and KARI predicts only 6.38 million vehicles will be sold there from July through December, a 10.8 percent decrease from the first half of the year.

“For local companies, they need to have a breakthrough with exports because of the slowdown in the domestic market,” KARI said. “But frequent production disruption would make it more difficult for them to do well in foreign countries.”

As of last month, overseas sales accounted for 85 percent of Hyundai’s total 2013 sales. For Kia, 83 percent of sales are in foreign countries.

KARI said that the domestic auto sales in the second half are expected to reach 790,000 units, a 0.1 percent on-year decrease. As a result, the institute said that 1.53 million units will be sold in 2013, which is 0.4 percent down from a year ago. It will be the second straight year that the local auto industry marks negative growth, according to KARI.

Meanwhile, KARI said the situation is also grim in emerging markets. Second-half sales in India are expected to reach 2.56 million units, down 3.6 percent from the first half of the year after a tax increase on sport utility vehicles and rising diesel prices, according to KARI.

KARI said Brazil is expected to see a 2.3 percent year-on-year increase in the second half to 3.72 million units, as the South American country has extended a deduction on industrial products taxes until the end of this year.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]

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