Global slowdown of vehicle sales continued in April: Scotiabank
Global auto sales fell by 7.9% year-over-year in April for an eighth consecutive month of year-on-year declines, a new report from Scotiabank says.
Global auto sales fell by 7.9% year-over-year (y/y) in April for an eighth consecutive month of year-on-year declines, a new report from Scotiabank says.
The pace of the global slowdown was led by China, Scotiabank’s newest Global Auto Report said, where April sales declined by 17.7% y/y, suggesting last month’s rebound was temporary.
In Canada, meanwhile, vehicle purchases dropped by 3.5% y/y, continuing a fourteen-month decline from a 2017 peak. “Auto sales for April totalled an estimated 1.93 million units on a seasonally-adjusted annualized rate (saar) basis, representing a 2.2% drop m/m sa,” Scotiabank said. “We anticipate that year-on-year declines will continue through the next quarter, before picking up later in 2019 reflecting a modest rebound in GDP growth, as well as a lower base-effect from the late-2018 slowdown. We forecast that vehicle sales will close out the year at 1.93 million, down from 1.98 million and 2.04 million units sold in 2018 and 2017 respectively.”
A composition shift towards light trucks also continued in April, the report said. “Truck sales witnessed a third consecutive month of growth in April at 1.2% y/y,” Scotiabank said. “Light trucks now represent almost three-quarters of the Canadian auto market.”
U.S. vehicle sales, meanwhile, continued their steady decline in line with moderating growth. “April sales fell by 1.7% y/y, a very modest improvement over the prior two months, but nevertheless a continued year-over-year decline for the fourth consecutive month,” Scotiabank said.
Mexican auto sales witnessed a sharp contraction in April, reflecting what Scotiabank called “heightened policy uncertainty.” “Sales fell sharply by 10.2% y/y, ending a three-month positive streak in month-on-month purchase increases,” Scotiabank said. “Minimum wage increases underpinned stronger sales activity earlier in the year despite a moderating economy, however heightened domestic and trade policy uncertainty weighed heavily on April’s performance. We expect a modest sales rebound ahead with recent resolutions on the trade front, but still trending downward reflecting high interest rates and a slowing economy.”
Chinese auto sales resumed a steep decline following last month’s temporary reprieve, Scotiabank said. “April witnessed a year-on-year drop of 17.7%, roughly in line with double-digit contractions in the six-month period through February, with escalating trade tensions with the U.S. weighing on April numbers,” the report said. “We anticipate year-on-year sales to continue to contract over the next quarter, coming off last year’s high base, but we should see an easing in the decline later in the year with additional government support and easing trade tensions.”
One bright spot was the EU, Scotiabank said, where vehicle sales continue their solid recovery with six consecutive months of growth. “Germany, France, and the UK had experienced a bounce-back to positive year-on-year growth last month, whereas Italy and Spain have caught up, both posting positive year-on-year growth for April,” the report said. “Meanwhile, German sales in April have pulled back modestly toward trend growth with a 1.1% y/y contraction in line with a slowing economy. UK sales dropped precipitously by 4.1% y/y in April, amid renewed political uncertainty around Brexit. Overall, we expect a slow but steady rebound for the European Union with 2019 sales to land on par with 2018 sales at 14.2 million units.”