Global Car Manufacturing Market Outlook to 2028

Global Car Manufacturing Market Overview

In 2023, the global car manufacturing market was valued at USD 3,175 billion in 2023, driven primarily by the increasing demand for passenger vehicles, especially in emerging economies such as China, India, and Brazil. The rise in disposable income, urbanization, and changing consumer preferences towards private vehicle ownership are contributing significantly to market growth. Additionally, the ongoing innovations in electric and autonomous vehicles have spurred market expansion, with an emphasis on sustainability and technological advancements.

The global car manufacturing market is dominated by key players such as Toyota Motor Corporation, Volkswagen Group, General Motors, Ford Motor Company, and Honda Motor Co., Ltd. These companies have established a significant presence across various geographies with robust production capacities, extensive distribution networks, and strategic partnerships. They continue to invest heavily in research and development (R&D) to maintain their competitive edge, particularly in the rapidly evolving segments of electric and autonomous vehicles.

In 2023, government initiatives like the Production-Linked Incentive (PLI) scheme in the global car manufacturing market attracted significant investments, exceeding USD 5.33 Bn over five years. Policies like Make in India and export promotion programs have boosted local manufacturing and exports, supporting the automotive sector's growth worldwide.

Cities such as Shanghai, Detroit, Tokyo, and Munich dominate the car manufacturing market due to their established automotive clusters. Detroit, often regarded as the heart of the American auto industry, continues to be a central hub due to its historical significance, robust supply chain network, and concentration of major auto manufacturers like Ford and General Motors.

Global Car Manufacturing Market Segmentation

By Vehicle Type: The global car manufacturing market is segmented by vehicle type into passenger cars, commercial vehicles, and electric vehicles (EVs). In 2023, passenger cars held the dominant market share, driven by rising demand in both developed and emerging markets. This dominance is attributed to the affordability, wide range, and continued popularity of passenger cars, which cater to diverse consumer preferences. Brands like Toyota, Volkswagen, and Ford continue to lead this segment, capitalizing on their extensive product portfolios and strong market presence.

By Region: The global car manufacturing market is segmented by region into North America, Europe, APAC, MEA and Latin America. The Asia-Pacific (APAC) region dominates the global car manufacturing market in 2023. This is largely driven by the presence of major automotive hubs in countries like China, Japan, and South Korea. China, in particular, leads in both production and consumption of vehicles, supported by a robust supply chain, large consumer base, and government policies favoring automotive growth.

By Fuel Type: The car manufacturing market is segmented by fuel type into petrol, diesel, and electric/hybrid vehicles. In 2023, petrol vehicles retained the largest market share due to their widespread availability and established refueling infrastructure. However, the electric/hybrid segment is rapidly growing, driven by environmental regulations and consumer preference for sustainable options. Companies such as Tesla and BYD have been instrumental in expanding the electric vehicle market, offering competitive pricing and innovative features.

Global Car Manufacturing Market Competitive Landscape

Company Name

Establishment Year

Headquarters

Toyota Motor Corporation

1937

Toyota City, Japan

Volkswagen Group

1937

Wolfsburg, Germany

General Motors

1908

Detroit, USA

Ford Motor Company

1903

Dearborn, USA

Honda Motor Co., Ltd.

1948

Tokyo, Japan

Toyota Motor Corporation: In March 2024, Toyotas Lexus brand launched a new business and technical center aimed at accelerating the development of next-generation electric vehicles. This facility will unite teams from design, production, and planning to foster collaboration and innovation, supporting Lexus' mission to offer electric variants of all models by 2025 and achieve carbon neutrality by 2050.

Volkswagen Group: The ID.7 joins the existing all-electric ID family as its flagship. Also built on Volkswagen's MEB platform, the sedan is powered by the companys new APP 500 drive system, which offers higher efficiency and performance. This module is integrated into the rear axle, fitted with a pulse inverter, and linked to a dual-stage one-speed gearbox.

Global Car Manufacturing Market Analysis

Growth Drivers

Increasing EV Sales: Electric vehicle (EV) sales are projected to reach 17 million units in 2024, significantly impacting the global car manufacturing market. This surge is driven by reduced battery costs, making EVs more affordable, along with strong government policy support worldwide. The shift towards EV production is reshaping the car manufacturing landscape as companies invest heavily in EV technology to meet growing consumer demand and regulatory standards.

Impact of Urbanization on Car Manufacturing: Rapid urbanization and rising mobility needs are reshaping the global car manufacturing market. As more people move to cities, the demand for personal vehicles increases, especially where public transportation is insufficient. In response, manufacturers are prioritizing the development of compact, eco-friendly cars suited for urban environments, adapting their designs and strategies to meet these evolving demands.

Expansion of Car Manufacturing Facilities in Emerging Markets: The global car manufacturing market is witnessing substantial growth due to the expansion of manufacturing facilities in emerging markets such as India, Brazil, and Southeast Asia. These expansions are aimed at tapping into the rising demand for vehicles in these regions. The strategic location of these plants also offers cost advantages in terms of labor and raw materials, enhancing the overall profitability and competitiveness of car manufacturers.

Challenges

Supply Chain Disruptions: The global car manufacturing market continues to face challenges due to supply chain disruptions. In 2024, the semiconductor shortage persisted, impacting the production schedules of major car manufacturers. Moreover, geopolitical tensions and trade restrictions, such as those between the United States and China, have further strained supply chains, affecting the timely availability of essential automotive components like batteries and electronic parts.

Rising Raw Material Costs: Increasing costs of raw materials, particularly steel, aluminum, and lithium, are a significant challenge for the car manufacturing industry. These escalating costs are squeezing the profit margins of car manufacturers, prompting them to reconsider pricing strategies and operational efficiencies to maintain profitability.

Government Initiatives

U.S. Electric Vehicle Infrastructure Investment: In 2023, the U.S. government launched a $7.5 billion initiative to expand the national network of electric vehicle charging stations, aiming to install 500,000 chargers by 2030. This program, under the Bipartisan Infrastructure Law, is expected to facilitate the widespread adoption of EVs by providing necessary infrastructure support. The funding is targeted at high-traffic areas, highways, and underserved regions, significantly impacting EV manufacturers by enhancing consumer confidence in switching from conventional vehicles to electric models.

UK Government's Automotive Investment Initiative: The UK government has launched a 4.5 billion ($5.68 billion) initiative, with over 2 billion directed toward the automotive sector. This investment aims to strengthen the manufacturing and supply chain of zero-emission vehicles, emphasizing the industry's role in sustainable development and economic growth. The initiative is part of a broader strategy to advance green technology and position the UK as a leader in the global car manufacturing market.

Global Car Manufacturing Market Future Outlook

The Global car manufacturing market is projected to grow exponentially in coming years. This growth will be driven by the increasing EV sales, policy support and investment and expansion of car manufacturing facilities in emerging markets.

Future Trends

Shift Towards Full Electrification: Over the next five years, the car manufacturing market is expected to experience a substantial shift towards full electrification, driven by continued government mandates and consumer demand for cleaner vehicles. Countries like Norway, Germany, and China are anticipated to lead this transition, having already set ambitious targets to phase out internal combustion engine vehicles in next few years.

Expansion of Smart and Connected Vehicle Features: The integration of smart and connected vehicle features is expected to become a key differentiator in the car manufacturing market by 2028. With advancements in 5G technology and Io T, vehicles will increasingly offer enhanced connectivity, enabling features like remote diagnostics, over-the-air updates, and advanced driver-assistance systems (ADAS). This trend will not only enhance the driving experience but also provide new revenue streams for manufacturers through software and service-based offerings.
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