Despite the economic woes besetting parts of the world, the appetite for cars continues to rise.

Economic barometer

As might be expected with a product which requires sizeable outlay, the fortunes of the car market largely mirror the state of global financial well-being. In 2008 the number of new registrations in 20 leading global economies shrunk by almost 10%. They rebounded some two years later and have continued to grow since. However, in the last two years the rate has slowed to just over 4% in 2014.

Recession prone – even if delayed

In the recession of 6-7 years ago very few car markets escaped the downturn. Those countries which ploughed on in 2008, such as Canada and Russia, fell foul the following year and the recession even caught up with the nascent Vietnamese market a year later than that. Just two countries escaped this global crisis: Brazil and China.

However, Brazil finally succumbed in 2013 when consumers found the easy supply of credit drying up. It is only China which has recorded growth in every year since 2008. Not surprising, then, that its representation among the total of the 20 car markets covered by Mintel doubled to almost a third in 2014. In terms of sales, China overtook the US way back in 2009.

Small is beautiful

Any segmentation in this market does raise difficulties: what is regarded as a small “run-around” in one country, can be regarded as a bus in another. However, the general global uniformity of models, despite some notable exceptions, allows some comparisons and, thereby, to the conclusion that cars are becoming larger. Nevertheless, as the chart shows, four out of ten global car sales can still be designated as small.

Market segmentation and growth 2014-03 (2)
Source: Mintel Market Sizes

Heading off the beaten track

While sales of small cars topped 30 million for the first time in 2014, growth was slower (marginally) than for large cars and for multiple use vehicles. However, the star performer is sports utilities (SUVs), which accounted for one in five new registrations in 2014, compared with one in six just two years earlier. Clearly a more rugged car is useful in some of the terrain of Australia or South Africa and the roads in many countries are certainly testing. Nevertheless, much of the growth in car sales has not occurred in the Australian outback, but in the growing metropolises of Asia, where manoeuvrability is more of an asset than mountain climbing. The main reason for the expansion of SUVs can be traced to the proliferation of models and sub-genres; many of which have a certain caché especially targeted at the affluent consumer behind much of the developing world’s expansion.


While the growth in the SUV segment accounted for over a half of the total market expansion between 2012 and 2014, this love for 4x4s was not ubiquitous: there were some countries which recorded falls in sales. In Germany they only account for around 1% of sales and are declining; presumably the ostentatiousness of some models which so appeal to some aspiring consumers in Asia, has the opposite effect. Latin America is not enamoured either: in Colombia and Brazil SUVs have a small and dwindling share, while in Mexico they account for under 1% of sales.


Even in this day of greater flexibility in production and even though past industry forecasts have proved somewhat off track at times, car makers still have to look ahead to the future. Despite the severity of the economic meltdown of 2008/9, sales had more than recovered within two years. In the developed world the whole infrastructure is geared to the automobile. True, in certain countries policies are being geared to promote alternatives to the private car, but consumers will use these options in addition to the car – not as a replacement.

In the developing world the aspirations of the growing middle class cannot now be quashed without considerable fallout.

…but not forever

And yet there are some limiters: the environmental impact cannot be ignored. In China, the authorities have now removed incentives for new car purchase and introduced disincentives, such as decreasing the subsidies for fuel. The world’s largest market is by no means alone: in Brazil taxes have been raised and easy credit is no longer available. As ownership increases so the second hand market comes into play; while this may attract previous car-less individuals to become owners, in a less dynamic economy the price differential between new and used may deter some. Double digit growth is now off the navigation system.

For more information on the US automotive industry, check out US SUVs and Crossovers market report.