TORONTO, Feb. 25 /CNW/ - Rising global vehicle sales and profitability
have encouraged automakers to continue to increase vehicle production,
providing the global economy with some positive offset to the dampening
impact of the recent surge in energy prices, according to the latest
Global Auto Report released today by Scotia Economics.
"During the latest financial reporting season, virtually every automaker
increased their full-year 2011 global sales forecast and boosted their
production schedule for the opening months of 2011," said Carlos Gomes,
Senior Economist, Scotia Economics. "We estimate this will lead to a
further double-digit year-over-year increase in vehicle production in
most countries during the first half of the year."
According to the report, China - the world's leading vehicle-producing
nation - will lead the increase in vehicle output, with full-year
assemblies expected to jump 17 per cent to more than 21 million units.
In fact, vehicle output in China will surpass European assemblies - the
traditional vehicle production leader - in 2011 and account for about
28 per cent of overall global vehicle output. This is more than double
its 13 per cent share as recently as 2008, and a sevenfold jump from
only a four per cent share a decade ago.
"Surging car sales in China are also lifting vehicle production in
Western Europe, especially Germany," continued Mr. Gomes. "In January,
global sales for Germany's three major automakers jumped 21 per cent
above a year earlier, led by a 31per cent year-over-year surge in
China. This sharp increase prompted manufacturers to significantly add
to their first-half vehicle production schedules. We estimate that over
the past month, European automakers have boosted their first-quarter
output plans by more than six per cent and their second-quarter
schedules by two per cent."
Rising output schedules will also enable assemblies in Germany to
surpass their pre-recession peak in 2011 - a first among developed
nations. Vehicle production in Germany will likely climb to 6.3 million
units in 2011, overtaking the previous record of 6.2 million set in
2007. This reflects the rising popularity of luxury models across the
globe, but especially in China, as well the as heavy export-orientation
of Germany's automotive sector - roughly 75 per cent of all vehicles
produced in Germany are exported.
In the report, Mr. Gomes noted that the auto industry will also add to
economic growth in Latin America. Sales continue to advance in Brazil,
Argentina, Chile and Peru, leading automakers to plan for an additional
13 per cent increase in vehicle production over the coming year. While
this is a moderation from a 15 per cent jump in 2010, the industry will
continue to support economic growth.
The NAFTA region - Canada, the United States and Mexico - is also
expected to post a solid increase in vehicle assemblies this year. In
the United States, the latest U.S. industrial production report
confirmed that motor vehicle output jumped 3.2 per cent month-to-month
in January - the largest increase among all industrial sectors - and 15
per cent above a year earlier. Further gains lie ahead as automakers
have planned a 20 per cent year-over-year jump in first-quarter
assemblies to better align output with strengthening demand.
Canada is scheduled to post the largest increase in vehicle output
across North America in early 2011, as production ramps up following
the late-2010 retooling at a major car plant in Brampton, Ontario. The
first-quarter jump in Canadian assemblies will be the largest since
mid-2009, when the global economic recovery was in its infancy.
"We estimate that rising vehicle output will add roughly 1.5 percentage
points to economic growth in Canada, significantly higher than the one
percentage point contribution expected from the auto sector in both the
United States and Mexico," concluded Mr. Gomes.
Scotia Economics provides clients with in-depth research into the
factors shaping the outlook for Canada and the global economy,
including macroeconomic developments, currency and capital market
trends, commodity and industry performance, as well as monetary, fiscal
and public policy issues.
SOURCE Scotiabank - Economic Reports
For further information:
Carlos Gomes, Scotia Economics, (416) 866-4735, firstname.lastname@example.org; Patty Stathokostas, Scotiabank Media Communications, (416) 866-3625, email@example.com.