March 2025 Light Vehicle Production Forecast

The global auto industry is navigating potential tariff actions from the US, with vehicle demand recovering in some markets but remaining vulnerable. While the threat of 25% tariffs on imports from Canada and Mexico looms, the deadline has been extended to April 2, allowing for further negotiations. The March forecast reflects mixed adjustments in production outlooks, with significant regional variations.

Europe: In Europe, the light vehicle production outlook has been upgraded by 63,000 units for 2025 and 26,000 units for 2026, largely due to revisions in EU CAFE regulations that boost the volume of ICE vehicles and enhance compliance pathways. Additionally, there has been a notable upgrade in light vehicle demand in Turkey, which supports production forecasts.

Greater China: In Greater China, the production outlook has increased by 76,000 units for 2025 and 24,000 units for 2026, driven by the extension of scrappage policies. The NEV market is experiencing substantial growth, with production rising 85% year-on-year, supported by government policies that foster consumption. However, concerns for the long term arise as significant reductions in the production forecast for 2027 and beyond are attributed to revised population growth estimates.

Japan and Korea: Japan's production outlook has seen upgrades of 93,000 units for 2025 and 90,000 units for 2026, primarily due to strong export demand. Conversely, South Korea's outlook has been downgraded by 7,000 units for 2025, as political uncertainty dampens domestic consumer sentiment.

North America: In North America, the production outlook has been reduced by 155,000 units for 2025 and 78,000 units for 2026, influenced by trade risks. Select vehicles with higher risk associated with USMCA content compliance or Canadian and Mexican sourcing were targeted in the reduced outlook. Trade risk will determine future revisions to the forecast, up or down, either directly or indirectly through the broader economy.

South America: In South America, the production outlook has increased by 2,000 units for 2025 and 51,000 units for 2026, with Argentina's demand being buoyed by imports. Overall, the production outlook remains stable.

South Asia: In South Asia the production forecast has been reduced by 65,000 units for 2025, reflecting the deepening struggles of the ASEAN market. However, the outlook for India remains largely unchanged for 2025 and 2026, although inventory levels will continue to be monitored. These highlights illustrate the complexities and regional dynamics that are currently influencing the global auto industry as it adapts to ongoing challenges and opportunities.

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