Passenger cars account for the largest share of global car sales, accounting for approximately 70.4% of sales. China and the United States will become the largest markets for this segment in 2022, due in part to the mass electrification culture prevalent in the United States. China is one of the markets where passenger car sales have recovered from the decline in 2020, with the country’s 2022 sales exceeding 2019 sales by about 9.9%. As China focuses on becoming a manufacturing export hub, scrutiny of Chinese exports is also increasing, with the European Union (EU) anti-subsidy investigation into Chinese electric vehicles starting in 2023.
Although these trends do not signal a recession, the auto industry must contend with these changes.
Production increases slowly
The auto manufacturing industry generated approximately USD 2.52 trillion in revenue in 2022, down from 2021. However, this market size is expected to expand in 2023. Global sales began to recover in 2021, but global auto production was slow to recover. Due to chip shortages and rising raw material prices, heavy commercial vehicles were the most affected as the only segment to report a production decline in 2022, but most segments such as passenger cars and light commercial vehicles also experienced growth. However, it is still below the production recorded in 2019. China is the world’s largest automobile producer, with more than 23.8 million vehicles produced in 2022. This was more than three times the production volume of Japan, which ranked second in the ranking.
Japan has lagged behind China in car production, but Japan’s Toyota became the world’s best-selling car brand in 2022, accounting for about 11.5% of the global market. Germany-based Volkswagen followed with 6.7% of the market share. Volkswagen Group and Toyota Motor Corporation are in fierce competition to lead the market. The best-selling brand in 2022 was Toyota, while the Volkswagen Group reported the highest sales of approximately USD 293.5 billion that year. The Volkswagen Group was also the manufacturer that invested the most in research and development in 2022, with approximately 18.9 billion euros. Most of these costs were research into alternative drive systems, lifecycle engineering, and recycling.
Innovation brings new challenges to the market
Prompted by global initiatives such as the Paris Agreement, several countries are beginning to enact stricter emissions regulations for new vehicle models. For this reason, automakers are starting to expand into the electric mobility field. Global automotive R&D spending has steadily increased from 2020 to 2022, driven by the rapid growth of the plug-in electric light vehicle (PEV) market, increasing by 56.9% in 2022 compared to the previous year. China and the United States are among them. It is the market leader in this field, and the number of new electric vehicle registrations in China is expected to increase by 82% in 2022 compared to the previous year.
At the automaker level, Volkswagen ranks among the top five best-selling PEV brands in the first half of 2023 due to investments in research and development. However, the market leaders are the Chinese brand BYD and the American Tesla, with BYD overtaking Tesla. In terms of sales volume in 2022.
Electric vehicles are one of the many market developments in the automotive industry. Increasing environmental awareness is causing consumers to rethink their mobility options. In 2022, cars and vans accounted for around 48% of carbon emissions from the transportation sector worldwide. With the addition of buses, medium and heavy trucks, this share increases to 79%. This growing awareness is contributing to a growing interest in mobility services, but self-driving cars are also a new addition to the automotive sector, especially given the growing interest in artificial intelligence among manufacturers and consumers. It will cause a revolution.
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