TORONTO, Jan. 5 /CNW/ - The cyclical recovery in global auto sales that
began in the spring of 2009 and accelerated last year will likely lift
volumes to record highs in 2011, according to Scotia Economics' latest
Global Auto Report. The emerging markets of China, India and Russia
will continue to lead the way, but the U.S. market is also expected to
post its second consecutive double-digit increase in the coming year, a
development that has not occurred since the early 1980s.
"The recovery in global car sales has shifted gears and will
increasingly be driven by improving labour markets," said Carlos Gomes, Senior Economist, Scotia Economics. "This represents
a healthy transition from the massive and synchronized monetary and
fiscal stimulus that was required to get the industry, and the global
economy, back on a positive growth trajectory."
According to the report, the pace of job creation - and not the level of
unemployment - is the key driver of global car sales, and the ongoing
improvement should enable the United States and the euro zone to climb
out of their deep hole. The auto industry is also getting a helping
hand from increased auto lending across the globe, especially in
emerging nations, where loan growth is approaching 40 per cent
year-over-year. However, loan growth will moderate in 2011, as central
banks in emerging nations tighten monetary policy more aggressively to
dampen inflation pressures.
"In 2011, new car sales in China and the other BRIC nations (Brazil,
Russia, India and China) will surpass the combined volumes of Western
Europe and Japan, and account for roughly 30 per cent of global car
sales," said Mr. Gomes.
Sales growth in China will moderate to about 15 per cent over the coming
year, held back by the expiry of government scrapping incentives, and a
sharp reduction in license plate issuance by the city of Beijing, as it
attempts to tackle vehicle congestion. Per capita income in China is
currently US$4,200 - in the sweet spot for auto industry growth. Historically, vehicle sales have experienced the fastest growth, when
per capita income is in the US$4,000-US$6,000 range.
"Even with the rapid sales growth in recent years, vehicle penetration
in China remains low, only 40 vehicles per 1,000 people, compared with
an average of 673 vehicles for the G7 nations," added Mr. Gomes. "In
addition, more than one-quarter of the world's key vehicle-buying age group,
40-to-49 year olds, reside in China, and are experiencing rapid income
India has been the second-best performing major auto market over the
past decade, with car sales climbing to a record 1.82 million units in
2010. Despite this robust performance, vehicle penetration remains
among the lowest in the world at only 14 vehicles per 1,000 people -
nearly half the level prevailing in all of Africa.
Mr. Gomes added, "India enjoys a special demographic advantage, one of the world's
youngest populations, half of its 1.2 billion inhabitants are less than
25 years old. In fact, India is home to 20 per cent of world's
population under 25 years of age. These 610 million potential future
car buyers are twice the size of the entire U.S. population, and nearly
two-thirds of the current global vehicle fleet, 965 million cars and
trucks. Recognizing India's enormous growth potential, the major global
automakers and the local producers will add nearly one million units of
new vehicle assembly capacity in India over the coming year. "
Car sales in Russia soared by roughly 30 per cent in 2010, and will
likely continue to post double-digit gains in 2011, as government
incentives remain in place. Improving automotive credit and employment
prospects - job creation is advancing at the fastest pace since
mid-2008 - have lifted the willingness of Russian consumers to purchase
big-ticket items to the highest level since the summer of 2008.
Turning to North America, vehicle sales in the United States climbed 11
per cent in 2010 to 11.5 million units, and a further double-digit gain
to 12.7 million is expected for the coming year. The improvement was
led by business purchases in 2010, but will be driven by strengthening
retail volumes in the coming year, as Americans increasingly replace
their aging vehicles. The average of the U.S. fleet now exceeds 10
years for the first time on record, and consumer confidence has picked
up alongside a stabilizing labour market and some improvement in
household balance sheets.
Canadian consumers are also returning to dealerships, with enhanced
incentives boosting sales by seven per cent in 2010. A further two per
cent increase is projected for 2011, lifting purchases to 1.59 million
units - in line with the average of the past decade. In contrast, even
with the improvement over the coming year, U.S. volumes will still
remain 20 per cent below the decade average.
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; Joe Konecny, Scotiabank Media Communications, (416) 933-1795, or email@example.com.