May 2026 light vehicle production forecast

Europe

Europe’s light vehicle production outlook was reduced by 67,000 units for 2026 and 183,000 units for 2027. The downgrade reflects worsening macroeconomic conditions tied to higher-than-expected oil prices from the prolonged Iran conflict, with demand destruction expected to emerge in the second half of 2026. While production should remain broadly stable through Q2-2026 following a strong March backfill, most brands face weaker outlooks into H2 and 2027. A few exceptions stand out, including Tesla, Nissan, and Xpeng, which saw improved model-level expectations.

Greater China

Greater China’s light vehicle production outlook was reduced by 197,000 units for 2026 and 146,000 units for 2027. Mainland China’s market is showing clearer signs of softness, with weakening demand, fading policy stimulus, and diminishing returns from ongoing price competition. The Middle East conflict is adding further economic pressure, contributing to weaker consumer confidence and rising stock levels. The revisions also reflect structural headwinds as the market transitions from a high-growth phase to a more mature and highly competitive environment.

Japan / Korea

Japan’s production outlook was reduced by 93,000 units for 2026 and 143,000 units for 2027, while South Korea was lowered by 16,000 units for 2026 and 64,000 units for 2027. These cuts reflect expectations that normalization of the Strait of Hormuz will be delayed beyond June, extending inflationary pressure and softening demand. South Korea’s near-term outlook has weakened despite stronger-than-expected March production, as global demand is expected to contract under higher oil prices. Longer term, South Korea’s outlook improves modestly with the addition of Kia’s new EV1 beginning in late 2028.

Middle East/ Africa

The Middle East and Africa production outlook was reduced by 32,000 units for 2026 and 54,000 units for 2027. The revisions are driven primarily by the continuing impact of the Iran war on regional demand, production, logistics, and supply chain capabilities. This month’s near-term downgrade is focused particularly on Iran, where disruption remains most acute. Broader regional conditions remain fragile as conflict-related constraints persist.

North America

North America’s vehicle production outlook was reduced by 13,000 units for 2026 and 339,000 units for 2027. Near-term production remains relatively steady as automakers continue building key high-volume vehicles to meet demand and support lean inventory levels, especially in pickups and core utility segments. However, the forecast assumes manufacturers will not cut output preemptively unless demand weakness or supply disruptions become more visible. As a result, the brunt of the downside risk shifts into 2027, especially for vehicles and segments more exposed to high fuel costs and softer consumer spending.

South America

South America’s production outlook was reduced by 12,000 units for 2026 and 45,000 units for 2027. The near-term downgrade reflects a more cautious view tied to the Iran war, even as Brazil’s April performance continued to exceed expectations. Argentina, by contrast, came in below forecast and remains more vulnerable to worsening macro conditions. The broader regional outlook for 2027 and 2028 was also revised lower due to the prospect of prolonged conflict-related pressure on input costs and economic expectations.

South Asia

South Asia’s production outlook was reduced by 70,000 units for 2026 and 228,000 units for 2027. Although ASEAN production rebounded in April, the gain appears to have been driven more by fiscal year-end production timing than by underlying market strength. OEMs have so far managed through the disruption by drawing down pre-secured inventories, but those buffers are expected to diminish soon. India remains especially vulnerable given its heavy reliance on Gulf energy imports, leading to specific cuts of 38,000 units for 2026 and 134,000 units for 2027.