Global auto sales could gain 1.5 percent from plunge in oil prices image

The recent drop in worldwide oil prices – which in term lowered the gasoline price at the pump in certain regions – should give a 1.5 percent boost to global auto sales through 2019, with the largest gains in North America, predicts a new forecast from IHS Automotive.

If the outlook pans out it would translate to roughly seven million autos more than the overall total if oil prices would have remained just as high and stable. “There is an upside opportunity with lower oil prices,” commented Mark Fulthorpe, director of light-vehicle forecasts. “There are 5 million to 7 million units that could be directly affected.” The sudden dive of crude oil prices – which was hovering at prices above $100 a barrel last year – will improve consumer confidence mostly in the markets where the end fuel is not artificially lifted by fuel taxes and regulations. For example, if the gasoline price drops $1, the fuel priced at $3 a gallon would go down by 33 percent, whereas it would only slide 17 percent if the price stays at $5 a gallon. From that calculation, North America – which has low taxes on fuel – will get around 39 percent of the higher demand yielded by the lower oil prices. Europe and the world’s largest single market, China, will get 21 percent of the mix and other markets trail the forecast.

IHS also forecasts the oil prices will hit rock bottom during the second quarter of the year, with high crude oil prices set to make another comeback during the next decade. Fulthorpe added that the forecast previews 680,000 units more each year through 2019 in North America – with SUVs and crossovers being the primary beneficials.

Via Automotive News Europe