French manufacturer Renault SA took advantage of market leader Volkswagen AG’s diesel emissions scandal to leap from third place to second. Deliveries at Renault grew 12 percent, almost twice the market rate, as the company drew buyers with an updated line-up, including a new Megane hatchback.

The positive trend has proved that despite Brexit and the Italian referendum, consumer confidence remains and demand is pushed up by a recovering economy.In 2016, new passenger car registrations showed a consistent increase. Italy (+15.8%) and Spain (+10.9%) had the strongest growth in demand during the year, followed by France (+5.1%), Germany (+4.5%) and the UK (+2.3%).

Demand for passenger cars in Europe improved noticeably during the first nine months of 2016 (+4.9%), accounting for 23.6% of the global market. The EU region contributed significantly to the positive global picture, mainly thanks to better macroeconomic conditions, which directly improved internal demand. With 11.2 million passenger cars sold in the EU, results were 8.0% higher than in the same period last year. European passenger car production increased (+3.4%) in the first three quarters of 2016, this was mainly the result of high domestic demand.

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January 12, 2017: General Motors Co. (NYSE: GM) said it expects its 2017 earnings per share (EPS) diluted-adjusted to increase to $6.00-$6.50, up from its 2016 calendar-year outlook of $5.50-$6.00. In 2017, the company also expects to maintain or improve EBIT-adjusted and EBIT-adjusted margin on higher revenues, compared to 2016, and generate about $6 billion of automotive-adjusted free cash flow.

Based on this strong outlook, the GM Board of Directors approved an additional $5 billion in common stock repurchases under its existing share repurchase program, which was announced on March 9, 2015. The new authorisation, which has no expiration date, brings the total under the program to $14 billion.

Share buybacks for the program’s initial authorisation of $5 billion were completed in the third quarter of 2016, one quarter earlier than planned. In the fourth quarter of 2016, the company also completed $1 billion of the next $4 billion authorisation declared in January 2016. The company expects to meet its prior commitment to repurchase $9 billion of common stock by the end of 2017.

GM also announced a $1 billion increase to its cost efficiency target, raising it to $6.5 billion through 2018, of which about $4 billion has already been achieved through 2016. The increased estimate is based on expected additional savings in material, logistics, manufacturing and general administrative costs.

Chairman and CEO Mary Barra, President Dan Ammann and Executive Vice President and CFO Chuck Stevens shared this outlook with the investors and analysts attending the Deutsche Bank 2017 Global Auto Industry Conference in Detroit.

“We’ve generated consistently strong results the last few years by delivering great vehicles, growing the topline and driving efficiencies while at the same time establishing a leading position in shaping the future of transportation,” Barra said. “We’ll stay focused on executing our strategic plan and generating the profitable growth needed to create long-term value for our shareholders.”

GM’s 2017 outlook is based on expected strong performance in North America and China, growth of GM Financial, continued cost efficiencies, improvement in South America and an ongoing strong vehicle launch cadence.

Specifically, the company anticipates the proportion of its global volume from new or refreshed vehicles – those in production less than 18 months – to grow to 38 percent in the 2017-2020 timeframe, up from 26 percent during the 2011-2016 period. Crossovers, trucks and SUVs as a proportion of GM’s global volume of new or refreshed vehicles in the 2017-2020 period are expected to increase significantly, to 52 percent – up from 38 percent the prior six years.

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Research firm AutoData said that US sales hit an all-time high of 17.55 million vehicles in 2016. The firm also said that December sales came in much stronger than expected, at a pace of 18.4 million vehicles. That figure is well above estimates for about 17.7 million.

Shares of General Motors Co (GM.N) rose 5.5 percent and Ford Motor Co (F.N) stock rose 4.6 percent, far outpacing the wider Dow Jones Industrial Average, which was up only 0.3 percent.

For 2016 sales, Ford reported its best year in a decade while Nissan and Honda said they sold a record number of cars in the US. Toyota and GM bucked the trend, with their total sales in 2016 down from the year earlier.

Light trucks and sport utility vehicles were up 8.3 percent compared to the year-ago period while passenger cars were down 4.7 percent.

The positive increase in auto sales is mainly attributed to strong consumer confidence coupled with low fuel prices. In December, US consumer confidence reached levels not seen in 15 years. Auto sales are an early indicator of consumer spending.

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December 7, 2016: “Iran stands at the heart of the PSA Group’s development strategy in the Middle East and Africa, and is one of the pillars of our international growth,” says a spokesperson of PSA Group, a French multinational manufacturer of automobile and motorcycles sold under the Peugeot, Citroën and DS Automobiles brands.

The statement probably explains how Iran stands as an important cog in the wheel for most auto companies in the world. Its importance can also be explained by the fact that it happens to be the first automotive industry in the Middle East and Africa region.

To give a little background, just before the sanctions were imposed in 2011, Iran had reached a peak of around 1.5 million units of vehicles annually — 11th largest in the world according to data by Atieh Bahar Consulting, a member of Atieh Group. However, after sanctions were imposed, foreign auto partners like Peugeot left Iran. This forced Iran to import. In 2012, the sedan car import rate, for example, showed 75% increase in comparison with the previous year.

According to data by International Organization of Motor Vehicle Manufacturers (OICA), in 2014, the total sales, including that of commercial vehicles, put Iran as the 14th largest market in the world. This probably explains the renewed interest in the region for automakers of the world.

The lifting of sanctions has prompted talk of a market worth anywhere between two and three million units of vehicles annually. Hence, not surprisingly rival French car makers — the PSA Groupe and Renault, German automaker Volkswagen, Thai Summit group from Thailand and Bentley from the UK are stepping into the market. PSA Groupe and Renault have already announced some details of their plan for the Iran market, while rest are in negotiations and reaching agreements in the form of MOUs.

For instance, Peugeot has announced joint venture with Iran Khodro Group — Iran Khodro Automobiles Peugeot. It will invest up to €400 million within the next five years in industrial capacities as well as R&D. Last generation Peugeot vehicles will be produced (starting 2017) on a platform which Iran Khodro will also use to develop its own vehicles. Iran Khodro is an Iranian multinational automaker headquartered in Tehran.

“We have also got into a joint venture with the SAIPA group for the Citroen brand and commercial agreement with ARIAN Group for the commercialisation of the DS brand in the country,” says the spokesperson for PSA Groupe.

Maryam S. Taghavi Ahrami, manager of strategic intelligence unit, Atieh Bahar Consulting, says the industry is looking for an even development of value chain from part production to after sale services. “The government has put an emphasis to upgrade technological capabilities, changing management practices, and encouraging exports by strengthening cooperation with the world’s leading companies and finally aims at extending localisation of the auto industry,” says Ahrami.

Iran’s Ministry of Industry, Mining and Trade requires foreign firms to start their production with 40% of localisation. The ministry also looks for export of 30% of the cars produced by Iran and foreign side ventures to the target export markets.

The local companies are upbeat about the developments. One auto industrialist said, “Iran auto market enjoys undeniable potential and in case of the financial limitations termination, more top-tier companies from around the world would be willing for cooperation and the auto industry growth and development would accelerate. Furthermore, I believe the car demand is expected to increase to over 3.2 million units per year by 2035.”

Though the sanctions did put brakes to the otherwise growing industry, it has been a blessing in disguise for auto part makers. According to another auto industrialist, “Sanctions had paradoxical effects on the Iran auto industry. On the bright side, it led to self-sufficiency in auto parts making, which caused the engineering empowerment and boosted the learning spirit as well.”

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