Revival in global auto production, except Western Europe

October 9, 2012

According to a ‘Global Auto Report’ published by Scotia Bank (October 4, 2012), there has been a significant recent boost in auto production in most regions around the world, except Western Europe.

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Russia and Brazil have been leading the way with double digit year-on-year increases in the first 9 months of 2012. Production in South America is likely to climb more than 15% y/y in the final months of 2012, underpinned by the recent strength in new car demand in Brazil. Car sales in Brazil have soared by more than 20% y/y in recent months and vehicle production set a record high in August, the recent revival being driven by government stimulus.

In Russia, vehicle output is on target to reach a record of 2.3 million units in 2012, surpassing auto production in France. Sales of new cars in Russia grew 10 % y/y in September after a rise of 15% the previous month taking the total to 2.19 million in the first nine months of 2012 – up 14% y/y.

The improvement in vehicle production across North America continues unabated, and automakers are once again running their plants at full tilt. Car and light truck output is expected to increase to an annualised 15.6 million units in the final quarter of 2012. Sales in the USA advanced 13% y/y in September, climbing to an annualized 14.8 million units and up from an average of 14.2 million during the previous three months. The September results were the best in five years and highlight the importance of pent-up demand for replacing ageing vehicles with fuel-efficient cars and crossover utility vehicles.

Demand also remains solid in Canada, advancing 6% y/y last month, and climbing to the second-highest level on record for the month of September. The Scotia Bank Economics Report estimates that car sales totalled an annualized 1.67 million units in September 2012, in line with the average of the past year.

Car sales also continue to gain momentum in China, with volumes advancing 11% above a year earlier in August. However, purchases in the rest of Asia have softened, held back by lower sales in India. More recently, activity in Japan edged down year-over-year in September, undercut by the end of government subsidies for eco-friendly vehicles.

Meanwhile conditions in Western Europe continue to deteriorate. Preliminary sales results for September point to at least a 15% slump across the region, double the 7.5% decline through August. Sales in Germany, Italy, Spain and France all declined last month, according to official data. In Germany, the region’s largest single market, registrations were down 10.9%. In France, registrations dropped 18% while sales in Spain dropped by 37%. In Italy, sales fell 26%. Only the UK recorded a rise in new-car sales in September – the seventh consecutive monthly increase – which is in sharp contrast to other major European markets that are suffering steep declines. Registrations grew by 8.2%.

To help reverse the sales fall-out in Spain, the government announced a vehicle scrapping programme this week. The programme provides a discount of EUR 2,000 to new car buyers, half will come from the Spanish government and the other half from automakers. The government has set aside EUR75 million for this initiative.

www.gbm.scotiabank.com

 

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