A reacceleration in China and strengthening U.S. replacement demand will
TORONTO, Dec. 27, 2012 /CNW/ - The cyclical recovery in global auto
sales that began in mid-2009 remains intact, according to the
Scotiabank Global Auto Report released today. Gains have averaged 7%
over the past three years, including a 13% surge in the first year of
"We expect a further 4% advance in 2013, driving global volumes to the
fourth consecutive annual record," said Carlos Gomes, Scotiabank's
Senior Economist and Auto Industry Specialist. "Global sales will be
bolstered by strong employment growth in developing nations, record low
interest rates and the recent acceleration in the pace of monetary
expansion around the globe."
Car sales in Canada are expected to edge up to 1.69 million units in
2013 - the second-highest level on record and up from 1.68 million this
year. Ongoing employment gains - especially in Western Canada - will
support the market, but slowing housing activity will dampen consumer
confidence and household wealth, limiting the improvement.
"U.S. household balance sheets have improved significantly and are
currently at the healthiest level in a decade," said Mr. Gomes.
"Households have deleveraged by a trillion dollars over the past four
years, leaving them in good shape to replace many of the clunkers still
on the road - the average age of the U.S. fleet now exceeds 11 years
for the first time on record."
In contrast, volumes across Western Europe slumped to a 19-year low in
2012 undercut by plunging sales in the debt-ridden Mediterranean
nations. However, purchases are likely to begin stabilizing in the core
countries of northern Europe in coming months, as several leading
indicators of economic activity and auto sales have started to improve.
Car sales across Western Europe are expected to remain unchanged at
11.7 million units in 2013.
According to the report, China is the key driver of global car sales,
accounting for nearly 60% of the increase in world volumes over the
past decade. An improving economic performance is expected to lead to
a double-digit increase in car sales next year, up from a 7% advance in
2012. China now accounts for nearly 20% of global car sales and
one-quarter of global volumes if trucks are included. Increasing
urbanization, rising incomes and low vehicle penetration rates will
continue to drive rapid gains in China's car sales over the next
Car sales in Brazil will benefit from the acceleration in the pace of
economic growth to 3.5% in 2013 - more than triple this year's advance
- largely due to infrastructure developments ahead of the FIFA World
Cup in 2014 and the Summer Olympics in 2016. The central bank has
slashed short-term interest rates by five percentage points since July
2011 to spur economic growth.
Russia and Japan were key auto industry growth markets in 2012, with
volumes in both nations posting double-digit increases. Much of the
strength was provided by government incentives to purchase new
vehicles. However, these subsidies have expired in both nations leading
to a low-single digit advance in Russia over the coming year and
declining volumes in Japan.
After a challenging year marked by the slowest pace of economic growth
in India since 2002 and rising inflation, the outlook for 2013 is only
slightly better. Car sales in India are projected to advance a
moderate 5% in 2013, a gain in line with this year's increase. A
stronger performance is conditional on inflation pressures subsiding
and enabling the central bank to become more aggressive in cutting
Scotiabank 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. For more Scotiabank economic publications visit http://www.scotiabank.com/ca/en/0,,3112,00.html. For high-resolution video clips visit http://media.scotiabank.com/cdaen/multimedia/mc-videos.html.
Scotiabank is one of North America's premier financial institutions and
Canada's most international bank. With more than 81,000 employees,
Scotiabank and its affiliates serve some 19 million customers in more
than 55 countries around the world. Scotiabank offers a broad range of
products and services including personal, commercial, corporate and
investment banking. In December 2012, Scotiabank became the first
Canadian bank to be named Global Bank of the Year and Bank of the Year
in the Americas by The Banker magazine, a Financial Times publication.
With assets of $668 billion (as at October 31, 2012), Scotiabank trades
on the Toronto (BNS) and New York Exchanges (BNS). For more information
please visit www.scotiabank.com.
SOURCE: Scotiabank - Economic Reports
For further information:
Carlos Gomes, Scotiabank Economics, (416) 866-4735, email@example.com; or
Devinder Lamsar, Scotiabank Media Communications, (416) 933-1171, firstname.lastname@example.org.