The cyclical recovery in global auto sales remains intact, with purchases advancing in every region, except Europe, over the past year, according to the latest Scotiabank Global Auto Report.
“Purchases in Canada are expected to edge up to a record 1.76 million units in 2014, with volumes boosted by an improving labour market and the best vehicle affordability in more than three decades,” said Carlos Gomes, Scotiabank’s senior economist and auto industry specialist. “Volumes in Western Europe began to stabilize in the second half of 2013 and are forecast to increase next year for the first time since 2009, helping to lift global car sales to record highs.”
According to the report, China will continue to be the main driver of global volumes. The most populous nation has accounted for nearly half of the increase in global car sales over the past decade, and more than 60 percent of the improvement this year. “We expect solid income gains and a rising number of new models to support a further double-digit increase in vehicle purchases in China next year to nearly 18 million units,” the report said. “Per capita income continues to advance at a double digit pace and leading indicators of vehicle sales, such as money supply, continue to post solid gains. Furthermore, recognizing the importance of China’s market, automakers plan to introduce more than 200 new or upgraded models in China next year. By way of comparison, the entire U.S. market has less than 300 different models for sale. Demand in China is being driven by first-time car buyers in smaller cities. With Beijing and other tier 1 cities introducing limits on vehicle registrations, demand is soaring in smaller markets, as prospective buyers rush to purchase their first vehicle ahead of a potential introduction of quotas in smaller cities.”
The report also noted that, in the United States, passenger vehicle purchases are expected to climb to 16 million units in 2014 – the highest level since 2007, as households and businesses continue to replace their aging vehicles.
Also, the United Kingdom and Spain have been the strongest European auto markets over the past year and are expected to lead the way in 2014. “Volumes across Western Europe bottomed at a 19-year low in early 2013 and began to improve as the continent emerged from recession around mid-year,” the report said. “Sales have increased year-over-year for three consecutive months, setting the stage for higher volumes in 2014. Improving consumer confidence, some labour market stabilization and an easing in credit conditions have lifted our leading indicator of Western European auto sales to a seven-year high, leading us to forecast a 3% increase in car sales next year – the first annual gain since 2009.”