This paper aims at identifying which countries and regions in the world might face structural
overcapacities or capacity shortfalls in the automobile industry in the near future. It discusses the main
forces that are likely to shape car demand over the next several years, including GDP growth, oil prices
and competitiveness. It also presents projections for car sales and production in 56 OECD and non-OECD
countries, distinguishing between temporary developments related to the cycle and more persistent
patterns. The paper shows that most countries might need to build capacity in the medium run, with major
differences across regions though. A comparison of projected production levels in 2020 (between 125 and
130 million cars worldwide) with actual capacity in 2012 indicates that additional production capacity of
around 35 to 40 million cars needs to be built over the next eight years. The countries with the biggest
projected need to expand capacity over the projection period are India and China. While car demand may
be sufficient to clear excess capacities in Europe as a whole in the medium run, overcapacity may persist in
a few countries, in particular Italy and France. Reducing overcapacity in these countries might be difficult
without substantial improvements in competitiveness.
