According to Nomura, in 2015F, strength in the US and China would continue to drive global auto growth, coupled with further improvement in Europe and India

Global auto demand would continue to be steady with a 3.2% increase driven by Europe, the US and India and these three markets would also drive profitability, says Nomura in a research note. It said, "In our opinion, the largest changes affecting the auto sector over the past six months on the macro front have been yen depreciation and lower crude oil prices."

"However," Nomura cautioned, "the market environment is likely to remain harsh in some emerging economies such as Russia, Indonesia and Brazil owing to currency depreciation and excess production capacity, while in Japan, we think there will be a further deterioration, particularly in the mini-vehicle segment."

According to the note, while lower oil prices are positive for the US and India, it would be negative for Russian auto market. It said, "Cheaper gas is likely to drive a mix improvement in the US market. For India, this means lower inflation and lower operating costs for consumers. On the other hand, oil dependent economies such as Russia are likely to suffer."

In 2015F, Nomura said, it looks for lower gasoline prices in the US to provide a further boost to the increasing consumer interest in light trucks, especially SUVs and crossovers. An increase in the sales weighting of high-ticket, high-margin light trucks should be a positive for many automakers. In India, which imports the majority of its crude oil, lower crude oil prices help to improve the trade balance and to dampen inflation, and help to reduce running costs via lower petrol and diesel prices. These factors will be positive for auto demand, it added.

"In contrast, auto sales are already falling in Russia, which is highly dependent on oil exports, and the rouble has been depreciating further. The country's auto parts industry is not yet adequately developed, and it imports many auto parts as well as autos themselves, thus we think the earnings environment for automakers will remain harsh owing to a negative impact from currency depreciation as well as lower volumes," the note said.

For India, Nomura sees strong economic recovery and lower fuel prices to support robust volume growth in FY16/3F. Segment wise, MHCVs are likely to grow 30%, passenger vehicles up 16%, while two-wheeler volumes are likely to grow around 12% in FY16/3F. "We believe benign commodity prices, lower discounts/ incentives and operating leverage benefits will drive margin expansion, leading to strong double-digit earnings growth for most of the Indian automakers in FY16/3F," it added.

Nomura said compared automakers listed in Japan, Korea, China, India, and Indonesia by their forecasted 2015 profit growth and P/E ratios relative to domestic stock markets. "Our screening revealed that Japanese automakers are the most appealing given expectations for rapid profit growth and low relative P/E multiples. Indian automakers look the next most appealing, as despite slightly high valuations compared to other regions, we expect profits to grow strongly over the medium term. In China, the passenger car market continues to grow despite stiff competition. Meanwhile, we expect limited price competition by Japanese automakers and thus think the impact of the weak yen on Korean automakers will not be as unfavourable as some investors expect. In Indonesia, automakers have added substantial production capacity over the past few years even as demand has stalled owing to a slowdown in the economy, higher gasoline prices, and rising interest rates. We think market conditions are likely to deteriorate further."

On global front, Nomura said its top picks are Mazda Motor and Nissan Motor as both the companies have scope to increase sales volumes and profits by leveraging company-specific factors such as technology and their new model cycle. These two automakers are also likely to benefit from favourable competitive conditions and forex rates in key markets, and lastly both automakers look attractive with low valuations, it added.

In its regional picks, Nomura said four automakers, Hyundai Motor (Korea), Great Wall Motors (China), Maruti Suzuki (India), and Toyota Motor (Japan) look appealing.