Falling oil prices affect markets in different ways, according a recent report.
IHS Automotive reports that rising US consumer confidence as a result of the drop in oil prices may cause a shift to larger vehicles, while developing markets such as India and the ASEAN region will see new buyers attracted by lower ownership costs.
Globally, cumulative sales could be five to seven million units higher over the period (2014 through to 2021) with a surge in US vehicle production, as previously reported by OATS.
Elsewhere, OEMs will see little or no market change due to taxes, subsidies and regulatory influences, the latter forcing OEMs to offer increasingly fuel-efficient fleets regardless of fuel price and market preference.
“The unexpected decline in fuel price has been too fast and is expected to be too short for any major changes in investment strategy and technology rollout timing,” said Phil Gott, of IHS Automotive. “These changes will impact short-term production plans in locations around the world, and at first glance, may be counterintuitive.”
By 2025, when the latest fuel-efficiency and emissions standards must be met, fuel prices are expected to have returned to higher levels, causing problems for OEMs with the likelihood of an increase in alternative powertrains, downsized and boosted gasoline engines in the next few years, according to the report.
Diesel demand is unlikely to change as a result of oil price fluctuation, although some European politicians are discouraging the use of diesel.
“Regardless of the outcome, the timing of the current price decline injects an additional level of uncertainty into the auto industry’s planning cycle,” Gott said. “As we start this year, we are just 10 years or one platform cycle away from the most stringent fuel efficiency standards. To plan for profitable manufacturing of vehicles and components in this era is perhaps one of the greatest business challenges the industry has seen in a long time.”