AEs automotives growth to speed up despite 2023 recession

Despite sluggish demand growth prospects, advanced economies (AEs) automotives production growth is forecast to accelerate in 2023 as easing supply chain disruptions allow producers to meet large order backlogs and bring inventories at dealerships back up to normal levels.

What you will learn:

• Better semiconductor supply and a shift in consumer spending trends away from high-price gadgets will provide much needed respite for the automotive industry as it frees up chip capacity. However, demand for relatively old technology chips from the automotive industry continues to outstrip supply, meaning that disruptions will not completely fade next year.
• The ongoing easing of supply chain disruptions will allow firms to raise production to meet the large number of unfilled orders that have stacked up since the start of the pandemic. US order backlogs are 30% higher than average levels between 2015 and 2019 while the level in Germany is more than double the average seen over the same period. The need to increase inventory levels back to historical norms further supports our narrative that automotive production, particularly in the advanced economies (AEs), will increase in 2023 despite recessionary conditions.
• Solid growth in the automotive industry can also have important repercussions for the wider manufacturing sector and GDP outlook depending on its size. This is one of the reasons why total German manufacturing is forecast to decline by 2.3% in 2023, similar to the projected 2.1% decline in US manufacturing, despite a number of energy-intensive German industries facing output cuts to save gas amid high energy prices.