Global Auto Industry Grapples With Headwinds, Chip Shortages: Report

(MENAFN- AsiaNet News)

The global automobile industry is facing structural headwinds, including tariff-related pressures, elevated raw material costs, and persistent supply chain disruptions. A recent report by Elara Securities noted that shortages of memory chips have emerged as the latest challenge impacting production.

Global Demand Headwinds and Market Performance

According to the report alongside these challenges, global automobile demand is also facing macroeconomic headwinds, with the start of calendar year 2026 (CY26) remaining muted despite moderate growth recorded in the previous year. It noted that global passenger vehicle (PV) sales grew by around 4.5 per cent year-on-year in calendar year 2025 (CY25). Among major markets, China posted the strongest growth at 9.1 per cent, while the United States and Europe recorded modest increases of 1.9 per cent and 0.5 per cent, respectively. “Macro headwinds weigh on global demand… OEMs continue to see muted demand in CY26,” the report stated.

Major Markets See Downturn in Early 2026

However, early data for CY26 indicates a slowdown. As per provisional figures, global growth declined by 1.2 per cent in January 2026. China, the United States and Europe all reported a drop in vehicle sales during the month, declining by 6.8 per cent, 0.8 per cent and 3.9 per cent, respectively.

According to the report, the fall in China was largely due to the roll-off of subsidies that had earlier triggered strong pre-buying activity in the fourth quarter of CY25. Consequently, the share of new energy vehicles (NEVs) dropped sharply to 40.3 per cent in January from 52.3 per cent in December 2025. In the United States, vehicle sales were affected by rising prices and affordability concerns. The report also noted that the expiration of the USD 7,500 federal electric vehicle (EV) tax credit added further pressure on demand.

OEM Outlook and EV Strategy Shifts

Elara Securities said that several global original equipment manufacturers (OEMs), based on their recent results and conference calls, expect demand conditions to remain subdued through CY26. Automakers are guiding for flat to marginal growth in the United States and Europe, while the Chinese market continues to remain challenging. For instance, Mercedes-Benz has projected global sales growth in the range of -2 per cent to +2 per cent. The report also noted that the industry is witnessing increasing EV-related write-offs as companies recalibrate their electric vehicle strategies in response to changing market dynamics.

Brighter Outlook for Commercial Vehicles

On the commercial vehicle (CV) front, however, the outlook appears relatively more positive. The report highlighted that Volvo has upgraded its demand outlook for Class 8 trucks and now expects CY26 growth of 2.9 per cent in Europe and 2.7 per cent in the United States. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)

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