Carmakers indulge in sales pipe dreams again

July 11, 2011

By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

NEW YORK — The world’s carmakers are indulging in pipe dreams again. Carlos Ghosn, Nissan’s chief executive, last week predicted the company would sell 82 percent more vehicles globally in 2016 than last year. Ford boss Alan Mulally earlier targeted a 50 percent bump, while Volkswagen’s Ferdinand Piech is shooting for just a tad less growth than that. If the rest of the industry is as optimistic, in about five years’ time manufacturers will be producing almost 20 million more cars between them than market forecasters currently expect to be sold.

In plans unveiled last month, Ford and its Japanese rival both pegged their numbers to 2016 worldwide car sales of around 95 million vehicles, in line with estimates from the likes of IHS Global Insight. Even that is already around a third more than last year’s 72 million, which set a new record for global sales.

But Ford and Nissan are both suggesting they can grow faster than the market — as is VW, which is probably hoping to hit its 10 million sales goal a couple of years before its official 2018 target. Aside from believing a subdued U.S. market will recover, Ford and Nissan are both targeting emerging markets — particularly China — for most of their growth. The latter wants to boost its China market share by almost two-thirds to 10 percent in the next five years. Ford also has great expectations of the Middle Kingdom.

The trouble is, so do most other manufacturers. General Motors, VW and Hyundai won’t want to give up their leading positions as foreign carmakers in China. Other western rivals like Fiat-Chrysler want to bulk up, too. And thanks to crisis restructuring, many now have healthier balance sheets and plenty of cash to put to work. Meanwhile, Chinese domestic carmakers are flexing their muscles.

Suppose other carmakers cook up similar predictions to the three that have made their hopes public. That would mean cranking out 114 million vehicles a year in five years time, a fifth more than predictions for the total market by 2016. A couple of manufacturers are likely to outperform the pack, but only at the expense of others. Disappointment awaits for some and for their investors.

How overexuberant are manufacturers’ forecasts for global sales in 2016/17? Run the numbers based on what they have said so far:

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