In this article, we will be taking a look at the 12 countries that produce the most cars in the world. To skip our detailed analysis, you can go directly to see the 5 countries that produce the most cars in the world.
The automotive industry is one of the biggest industries in the world, with the total revenue of the industry easily exceeding $2 trillion with the biggest car companies by revenue primarily driving this growth. While global economic uncertainty persists, according to ING Groep N.V. (NYSE:ING), global car sales will continue to increase in 2023 at a healthy rate of 4%. There are various reasons behind this positive outlook, including more consistent production volumes, delayed demand as a result of accumulated order books and despite global economic uncertainty, there is a certain momentum in several emerging economies which are also among the countries that produce the most cars in the world.
Another reason for higher growth is that the base for the previous two to three years has been quite low as a result of the Covid-19 pandemic, which saw reduced demand for automobiles not to mention global supply chain issues which affected production across the world. While 2022 saw a rebound which was well above the record 2020 lows, global passenger sales volumes in the last year are still around 10-15% below what they were in their pre-pandemic peak in 2018-2019. The expectation right now, as data for 2022 is consolidated, is that FY22 passenger car sales will finish 1.1% below 2021.
Currently, car trends across different geographical markets have been quite varied and uneven, with emerging markets having a better year as compared to the U.S. while many European markets have a negative year with some major exceptions. Currently, for 2023, the expectation for the three biggest markets in China, the U.S. and Europe is that growth will be consistent in the low single digits as the semiconductor supply bottleneck is expected to clear up, though that doesn't mean that shortages will completely end and could impact some car manufacturers more than others.
12 countries that produce the most cars in the world
It is clear to anyone following the automotive industry even tangentially, that electric is the future. Most major car companies in the world have already committed to a future with electric cars in a bid to be carbon neutral, including the biggest car company in the world in Volkswagen, which was the first vehicle manufacturer in the world to join the Paris Agreement in 2018, with the company aiming to become completely carbon neutral by 2050. In the last year, the company delivered more than 212,000 cars which was an increase of 158% as compared to 2019 and of these, 134,000 cars were electric battery vehicles. Overall, at the start of 2022, the global electric vehicle fleet amounted to around 16 million cars and accounted for only 1% of the total vehicle fleet globally. In financial year 2022 alone, 10 million additional EV vehicles were registered and this trend is expected to continue in 2023, as markets and governments continue to provide incentives and grants to encourage electric vehicle production, as these countries aim to reduce their contribution to global climate change, one of the biggest issues facing the world right now.
Even though European countries are particularly focused on electric vehicles, according to ING Groep N.V. (NYSE:ING), the U.S. is catching up to Europe and China in this regard. Global registration of battery-powered electric vehicles and plug-in hybrid electric vehicles were 13% of all new registrations in 2022, while this is expected to jump to 15% in 2023. While subsidies and grants have been widely available in many countries, including European nations such as Norway, Sweden and the Netherlands in addition to some of the countries that produce the most cars in the world, many countries are either reducing or phasing out such subsidies which is expected to have a direct impact on the growth rate of electric vehicles.
Tesla, Inc. (NASDAQ:TSLA) is the most valuable car company in the world even after a disastrous 2022 where its stock value fell by more than 60%. Tesla, Inc. (NASDAQ:TSLA) is considered to be the pioneer of electric vehicles because of which it was able to build in incredibly valuable brand despite its car production levels being significantly below other major car producers. In 2022, weak deliveries were one of the reasons why Tesla, Inc. (NASDAQ:TSLA) saw its market cap plummet with supply chain issues in China and lower demand by car buyers not helping the case either. Right now, many major automotive manufacturers have made major investments in electric vehicles and are providing stiff competition to Tesla, Inc. (NASDAQ:TSLA).
To determine the countries that produce the most cars in the world, we headed over to the International Organization of Motor Vehicle Manufacturers and only selected car production numbers for 2021 and 2020. We then assigned 70% weightage to 2021 and 30% weightage to 2020, as 2021 is the more relevant year. The 12 biggest car producers in the world account for more than 80% of the total global car production of 55.9 million vehicles in 2021. So, without further ado, let's take a look at the countries dominating one of the biggest industries in the world, starting with:
12. France
Total car production in 2021: 917,907
Total car production in 2020: 927,718
Two of the biggest car companies in the world are French in Stellantis N.V. (NYSE:STLA) and Renault Group, both of which own really popular car brands. In the first month of 2023, France posted year-on-year growth by 8.8%.
11. Slovakia
Total car production in 2021: 990,598
Total car production in 2020: 1,000,000
While Slovakia established itself as a major hub for car manufacturers with help from German manufacturers. However, the country is facing difficulty in transitioning to electric vehicles even as such cars become more common. The Slovakian government is subsidizing purchases of all-electric vehicles while millions are being invested in developing charging infrastructure, which is a boon to the biggest EV charging companies in the world. Despite all of this, the nation's movement towards e-mobility is still at a very early stage.
10. Czech Republic
Total car production in 2021: 1,105,223
Total car production in 2020: 1,152,901
The automotive industry is one of the most important industries in the Czech Republic, providing employment to over 100,000 people and is also a major contributor to Czech Republic's export sector. Toyota Motor Corporation (NYSE:TM) announced that it would halt production in the Czech Republic in February 2023 because of a parts shortage even as the company increased output in the plant after spending over 180 million euros.
9. Russia
Total car production in 2021: 1,352,740
Total car production in 2020: 1,260,518
In 2022, Russia's car production plummeted to its lowest level since Soviet times directly as a result of its invasion of Ukraine. Car production in the country fell by 67% because of Western sanctions as global car companies closed operations in the country. There is a strong chance that Russia could entirely drop off our list because of continued sanctions as production will continue to suffer. In December 2022, production was just 40,300 units.
8. United States
Total car production in 2021: 1,563,060
Total car production in 2020: 1,924,398
Surprisingly, the United States does not feature very highly in our list of countries that produce the most cars in the world, especially after a major fall in production in 2021 as compared to 2020. Even though the overall number of cars produced by the U.S. is already low, it has fallen considerably in 2021, mainly because of the shortage of microchips, which affect not just electric or hybrid vehicles, but internal combustion engine cars as well, which still make up the majority of vehicles. Further, there is a strong focus in the U.S. on trucks and SUVs as opposed to passenger cars, which is also why the U.S. lags so far behind other countries in this respect. U.S. car production has been on a downwards spiral for around half a century now as many of its biggest companies have moved factories to other countries such as Mexico to take advantage of lower labor cost and taxes.
However, because it is the most populated developed country in the world, where the average disposable income is quite high, its influence in the automotive industry is quite high. In fact, Ford Motor Company (NYSE:F), one of the oldest car manufacturers in the world, is credited for introducing large-scale manufacturing plants and methods which were used by companies in countries across the world. Another major car company in the U.S. is General Motors Company (NYSE:GM) which currently has a market cap of over $57 billion. The U.S. has launched green subsidy schemes which has resulted in Germany calling on Europe to deploy similar strategies to counter competition from U.S. in this respect.
7. Spain
Total car production in 2021: 1,662,174
Total car production in 2020: 1,800,664
European countries have a strong presence in our list and Spain is the second-largest European car manufacturer. The vast majority of car production in Spain is to cater to exports, with over a dozen car factories located in the country. Currently, the industry is in dire need of an overhaul in terms of catching up to other European nations in the electrification process. Meanwhile, a slow recovery from the Covid-19 pandemic slump, semiconductor shortages and temporary factory closures have seen its production slow down significantly in 2021 as compared to the previous year.
6. Brazil
Total car production in 2021: 1,707,851
Total car production in 2020: 1,607,175
Brazil is a huge market for cars, which is why while it doesn't have many major car companies apart from Agrale, most of the major global car companies have a strong presence in the country which is why it ranks quite highly in our list.
