TOKYO -- Falling oil prices could support 1.5 percent of global auto sales through 2019, with the biggest windfalls coming in North America, IHS Automotive said in a new forecast.
The outlook, offered during a conference here today, translates to as many as 7 million more cars sold than would have been if oil prices had remained high and stable, and all other factors remained constant.
“There is an upside opportunity with lower oil prices,” said Mark Fulthorpe, director of light-vehicle forecasts. “There are 5 million to 7 million units that could be directly affected.”
The low-gasoline price scenario does not represent an additional boost over IHS’s current forecast. Rather it is baked into the consultancy’s January forecast as a way of accounting for the expected positive impact of falling prices.
The sudden plunge of crude prices, from levels above $100 a barrel last year, will bolster consumer confidence most in markets with low fuel taxes and less burdensome regulation, IHS said.
Taxes trim savings
For example, a $1 reduction in gasoline prices delivers a 33 percent discount on fuel at $3 a gallon, vs. a 17 percent discount in markets where taxes push pump prices to $5 a gallon.
As a result, low-tax North America could scoop up to 39 percent of the oil-driven bonus demand. Europe and China could each account for 21 percent of that pie, while other markets trail, IHS said.
IHS predicts falling oil prices will bottom out in the second quarter of this year. But crude prices will rebound only gradually, returning to the $100 a barrel level after 2020.
For North America, oil-influenced windfall sales could average 680,000 units a year through 2019, Fulthorpe said. SUVs and crossovers will account for more than half the mix. The uptick could spur North American factories to crank out a half million more cars a year.
IHS says cheaper oil should slow demand growth for alternative-drivetrain vehicles such as hybrids and electric cars. Lower gasoline prices mean it will take longer for consumers to recoup the premium they pay for those costly green technologies.
A customer who pays $20,000 extra for an EV, for example, has to wait 10.1 years to recoup that amount when gasoline is $4 a gallon, but 27 years when it falls to $2 a gallon, IHS said.
Likewise, it takes a hybrid driver 6.1 years to pay off the $3,000 premium on a gasoline-electric car with fuel at $4 a gallon. The payback period grows to 12.3 years at $2 a gallon.
At $2 a gallon, however, the buyer of a direct-injection, turbocharged gasoline car equipped with start-stop technology can pay off that technology’s $1,000 premium in just 8.1 years.