...Pricing conditions are softening in key regional car markets as higher supply hits sluggish demand. We expect that muted economic growth prospects and consumer sentiment, paired with tighter financing conditions, will curb vehicle demand by consumers in 2024-2025, accompanied by a normalization of demand from corporate customers that was a key engine behind the post-pandemic auto market recovery. At the same time, supply chain bottlenecks that plagued most of the industry over 2021 and 2022 have eased, leading to a more normalized vehicle supply balance. As a result, price growth for new and used cars has come down (see chart for the eurozone), and we expect a deterioration of net pricing for most OEMs in 2024, and to some extent in 2025. More specifically, we assume a 10% decline in average transaction prices in the U.S. in the next two years (also including a mix component), a somewhat more moderate decline in Europe, and a continuation of fierce price competition in China. Fierce competition...
