Global auto sales improve modestly again in October, report says

In North America, according to Scotiabank’s latest Global Auto Report, Canadian auto sales similarly continued to stabilize in October with a modest -0.6% month-over-month (m/m) (sa) deceleration, sitting 2.5% down year-over-year. “October’s selling rate at 1.85 million saar units is only 5% below 2019 annual sales, mirroring the broader economic recovery where gains are largely moderating following impressive rebounds in the immediate aftermath of lockdowns,” the report said. “Second waves across Canada will likely moderate auto sales heading into the end of the year.” In fact, preliminary figures for Ontario and, to a lesser extent Quebec, already showed slowing auto sales in October as those economies entered second waves earlier than other parts of the country, Scotiabank said. “But these are not expected to destroy demand as much as dampen demand in the near term with some deferral in sales into the new year,” the report said.

In the U.S., auto sales continued to normalize in October with a modest pullback of -0.5% m/m (0.9% y/y). October’s selling rate of 16.2 million units is less than 5% below last year’s annual sales, while a broad range of economic indicators similarly continues to hold up against second (or third) waves of the pandemic, the report said. “With some deterioration in auto purchase sentiment noted by the Conference Board, sales may be dampened over the remainder of the year, but reduced election uncertainty and the possibility of some form of fiscal support in the near term will likely put a floor under auto sales activity,” the report said.

Mexican auto sales modestly improved again in October (by 2.9% m/m) but still sit steeply in negative territory relative to last October (-21.3%). “Trend improvements are expected, albeit at a slower pace in line with a softer recovery in private consumption and economic output more generally, along with more limited fiscal capacity to accelerate the recovery,” Scotiabank said.

 EUROPEAN AUTO SALES FACE A STEEP CLIMB BACK

European auto sales continued to trend in the right direction in October but with considerable volatility and variability across markets, largely a function of outbreaks. “Western European sales, for example, slowed by -6.3% m/m for the month but this masked a 6.5% m/m improvement in Germany against a -4.5% m/m retrenchment in French auto sales, mirroring a difference in the path of the pandemic,” the report said. “Italy and Spain similarly saw October sales pull back modestly, while UK sales picked up modestly (1% m/m) despite escalating cases in October.”

With COVID-19 cases decreasing in November (or at least plateauing), auto sales in the region should continue to normalize over the remainder of the year, Scotiabank said.

SOUTH AMERICAN AUTO SALES HEADING IN THE RIGHT DIRECTION (MOSTLY)

South American auto sales showed signs of further recovery in October with an overall 2% m/m increase in activity. “This is the second month of solid rebounds across most of the region as it emerged from prolonged first waves that extended through the summer for the most part,” Scotiabank said.

Brazil continues to underperform, driving headline numbers as the largest auto market, with sales retreating by -4% m/m (-15% y/y). Chile, followed by Peru, showed what Scotiabank called “tremendous rebounds” of 35% m/m (29% y/y) and 9% m/m (7% y/y), respectively. “With political turmoil erupting in November, this could introduce further volatility in the trend recovery for Peruvian auto sales,” Scotiabank said. “Colombian auto sales improved by 9% m/m, but were still down relative to last year (-12% y/y).”

CHINA DRIVES GLOBAL AUTO SALES IMPROVEMENTS IN OCTOBER

Momentum in global auto sales continues to be driven largely by China, Scotiabank said. “October Chinese purchases retreated only modestly (-0.2% m/m), but posted a hefty 9.4% y/y improvement,” the report said. “Reportedly, 6% of October sales were electric vehicles as the country aggressively strives to meet a 25% EV sales target by 2025. As the pandemic remains at bay, Chinese auto sales are expected to continue to improve over the remainder of the year.”

Japanese auto sales, meanwhile, posted a strong sales month in October with a 6.1% m/m improvement as the country was enjoying a brief lull in COVID-19 cases. “Massive year-over-year improvements (29.2% y/y) speak more to the substantial sales declines last October when the sales tax was increased by 2 ppts,” Scotiabank said. “With cases escalating rapidly towards the end of the month, sales will likely be weaker for the remainder of the year, albeit with some offsets from base effects from last fall’s tax.”

And while it’s a smaller market, South Korea is on track to be the least-impacted auto sales market amidst the pandemic with year-to-date sales currently only -2% y/y. “October sales pulled back by -15.5% m/m, but are still modestly positive on a year-over-year basis (0.3% y/y),” Scotiabank said.

Rounding out the rest of the region, divergences in auto sales largely continue to track COVID-19 outbreaks, Scotiabank noted. “Australia posted another month of strongly accelerating sales (20.9% m/m; -1.5% y/y) as it has so far avoided major second waves,” the report said. “India experienced a further improvement in sales in October (11.7% m/m; 12.3% y/y) as a persistent first wave is largely under control, while Indonesian sales continue to contract (-10.7% m/m; -47.1% y/y) against rising COVID-19 cases.”