Global car sales up in October: Scotiabank

Global car sales posted a further solid advance in October, a new report from Scotiabank says, climbing 5% above a year earlier.

Asia continued to lead the way, Scotiabank’s newest Auto News Flash report said, with gains buoyed by a 23% surge in China. “The latest advance in China extends double-digit increases to six consecutive months, and reflects a rush to buy new vehicles ahead of the expiration of a temporary tax cut at year-end,” the report said. “Volumes across the rest of Asia were largely flat last month, held back by weak performances in South Korea and Taiwan. However, employment and overall economic activity appear to be gaining momentum across Asia, developments that bode well for the car sales outlook in 2017.”

Outside of Asia, purchases are improving across Eastern Europe, Scotiabank said, rising 3% year-over-year in October — the largest advance since the opening months of 2014. “Solid gains continue among the new EU members, and the sales decline is moderating in Russia, as the world’s largest energy exporter begins to benefit from some tightening in the global oil market,” the report said.

More recent data for North America indicate that new vehicle sales revved up to monthly highs for November in all three NAFTA countries. “Volumes in both Canada and Mexico posted double-digit year-over-year advances, while U.S. purchases exceeded expectations and lifted year-to-date sales above a year ago,” Scotiabank said. “Last month’s stronger-than-expected U.S. results point to a new annual sales record in the United States this year, surpassing the 2015 peak. The industry even raised its North American production schedule to a 3% year-over-year gain in the opening months of 2017 — a significant acceleration from only a 1% advance in all of 2016.”

But despite strengthening auto sales in the U.S., concerns about the outlook have resurfaced in recent weeks. “Weaker-than-expected third-quarter earnings at a major automaker combined with reports of an increase in vehicle repossessions and subprime auto loan delinquencies have led to unease about the prospects for U.S. auto sales next year,” the report said. “However, we believe these developments are a reflection of the increase in number of vehicles being financed, and not a sign of weakening demand. We remain of the view that replacement of an aging fleet combined with rising incomes and improving household balance sheets are likely to lift U.S. new vehicle sales to new heights in 2016 and 2017.”

U.S. purchases of new and used vehicles have climbed 2% so far this year and are on target to surpass the 2015 annual total of 57 million units — one of the highest levels of the past decade. “However, even with this year’s gain, overall vehicle sales (new and used) in the United States still remain below the roughly 60 million units that were normal each year between 2001 and 2006,” Scotiabank said. “During that period, U.S. households typically bought 43 million pre-owned models annually, as well as 16.8 million new cars and light trucks.”