Global auto sales accelerated during the summer: Scotiabank

Global car sales accelerated through the summer, a new report from Scotiabank said, with volumes advancing 4.5% above a year earlier in August, double the growth of the previous three months.

South America is leading the way, with a 14% year-to-date gain, Scotiabank’s newest Global Auto Report said, including a 21% year-over-year (y/y) surge in August. However, purchases have picked up in most regions. Volumes in Asia advanced at the fastest pace in six months, as sales in China hit the highest selling-rate in almost a year. Inventories have also fallen to multi-year lows, pointing to stronger vehicle output.

“Sales continue to strengthen in Western Europe, buoyed by improving economic conditions and the strongest consumer confidence in more than fifteen years,” the report said. “Meanwhile, purchases in Eastern Europe have advanced 10% year-to-date, the best performance since the opening months of 2012; gains are broadly-based, with four countries reporting advances of more than 20% y/y in August. Volumes are back on the upswing in Russia, the region’s largest market, with double-digit year-over-year sales gains in the last four months. The upturn reflects strengthening income gains and represents a sharp reversal from the cumulative slump of more than 50% in the Russian auto market during the previous four years.”

More recent data for September point to a further strengthening in demand across North America, the report continued. “Sales in the NAFTA region picked up to 4.9% y/y last month, the best performance since last November,” Scotiabank said. “Canada led the way, with volumes advancing 8% y/y and setting a monthly record for September. However, the U.S. was the big surprise in September, with volumes surging to an annualized 18.5 million units, the highest since July 2005, and significantly above the average of 16.9 million during the previous eight months.” The rebound was aided by Texans replacing vehicles damaged by Hurricane Harvey, Scotiabank said. “Car sales in Houston jumped 22% above a year earlier last month, rebounding from a 46% y/y plunge in August. The Houston area accounted for 6% of overall US sales in September, triple its normal share.”

In Canada, meanwhile, the western provinces continue to lead the advance in new vehicle sales. “Preliminary September volumes point to a fifth consecutive month of double-digit year-over-year gains,” Scotiabank said. “This stronger-than-expected performance has led us to increase our full-year 2017 sales forecast to 2.03 million units.”

Canadian vehicle sales continue to climb to record highs, Scotiabank said, but much of the growth has recently shifted to leasing, prompting a moderation in auto loan growth. “Leasing has improved vehicle affordability, by reducing the monthly payments required to drive a new car or light truck,” the report said. “Data from DesRosiers Automotive Consultants indicate that leasing now garners more than one-third of the Canadian retail new vehicle market, up from 19% four years ago and only 7% in 2009 during the global financial crisis. The rising popularity of leasing has driven the share of auto loans to less than 60% of the Canadian new vehicle market, the lowest level of the past decade and down from more than 68% in 2010.”