Stronger-than-expected passenger vehicle sales combined with sharp gains in global vehicle production will provide a boost to global economic activity, the Scotiabank Global Auto Report has concluded.
“Global vehicle sales shifted into high gear in the opening months of 2013, with purchases in January soaring 13% above a year earlier,” said Carlos Gomes, Scotiabank’s senior economist and auto industry specialist.
It was the strongest gain since early 2010 with China leading the way – its volumes soaring 49% year over year.
“But the improvement was broad-based with every region, excluding Western Europe, posting solid advances,” said Gomes.
More recent data for North America point to ongoing strength in February, with purchases in the US climbing to an annualized 15.4 million units, up from an average of 15.3 million during the previous three months.
The report says the improvement reflects robust replacement demand and low interest rates, increased credit availability, plus moderate gains in both the labour market and household wealth.
“These factors combined with the significant deleveraging undertaken by US consumers during the current economic upswing are more than offsetting the negative impact of this year’s increase in payroll taxes for US households,” says the report.
An improving US housing market lifted pickup truck purchases 21% above a year earlier in February, which the report contends is a sign business confidence is on the mend and it’s consistent with other data pointing to a strengthening capital goods cycle south of the border.
In Canada, car and light truck sales fell 3% below a year earlier in February, undercut by inclement weather and weaker consumer confidence.
Scotiabank estimates purchases totalled an annualized 1.63 million last month, down from more than 1.7 million units in January, but roughly in line with the average of the past three months. However, volumes are likely to gain momentum in March and during the spring selling season, leaving full-year 2013 sales on target to reach a forecast of 1.69 million units.