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October Forecast: As supply chain challenges ease, demand headwinds could impact global light vehicle production


S&P Global Mobility experts have issued the latest global
light vehicle production forecast update, with further reductions
across several regions given ongoing supply chain challenges.

As ongoing supply chain challenges continue to gradually
improve, markets are increasingly reckoning with the destructive
forces of high inflation, rising interest rates and the specter of
economic stagnation or outright contraction in key markets such as
the US and West Europe pressuring fragile pent-up demand, according
to the latest baseline light vehicle production forecast update
from S&P Global Mobility.

While the immediate near-term outlook is supported by continued
strong performance in Greater China and South Asia through the
balance of 2022, perhaps more significant are the downward
revisions for North America, Europe and other markets to reflect
the impacts of heightened demand destruction.

In the longer term, vehicle pricing will remain a key
consideration and a potential headwind to demand, particularly as
many markets shift to much higher levels of electrification,

The October 2022 forecast update reflects near-term upgrades for
Greater China on the strength of demand stimulus and South Asia as
the region benefits from a stabilized supply chain supporting
efforts to clear order backlogs.

“Greater China is rebounding strongly since the lockdowns of
Q2 while OEMs in Europe and North America are still constrained by
difficulty in securing component supplies,”
said Mark
Fulthorpe, executive director, light vehicle production forecasting
at S&P Global Mobility.

However, perhaps more important are the near-to-intermediate
term downward revisions particularly focused on Europe, North
America and Japan and eventually other regions.

While semiconductor availability remains an important
consideration, demand destruction is expected to play a more
fundamental role and accelerate in 2023 in several key markets,
impacting production through the intermediate term and the
magnitude/need for inventory restocking.



This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.



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