MOSCOW (MRC) -- World vehicle sales in November declined for a third consecutive month in year-on-year (y/y) terms owing to a steep contraction in auto sales in China, a weakening of economic conditions in Western Europe, and a slow, but steady, decline in purchases in the U.S, said Canplastics.
According to a new report from Scotiabank, November’s 7% y/y decline in global auto sales brings the year-to-date total sales on par with the figure recorded during the same period in 2017. Vehicle purchases in Canada in November fell below 1.9 million annualised units for the first time since late-2016, Scotiabank’s latest Global Auto Report said; sales are, however, still on track for their second-highest year on record in 2018.
In November, Canadian vehicle purchases fell just below 1.9 million annualised units for the first time since late-2016 owing to a decline of 4.5% month-over=month (m/m) in seasonally-adjusted terms. “Sales also posted their sharpest year-on-year drop since 2009, at 9.4% y/y, although this drop follows the third highest-ever monthly total last November,” Scotiabank said. The new auto market’s year-to-date (ytd) contraction of 2.3% y/y is driven by particularly poor sales of Fiat-Chrysler (FCA) automobiles, Scotiabank said, which have fallen by close to 15% y/y ytd compared to a rest-of-the-market decline of 0.5% y/y ytd. “Furthermore, across the totality of the market, rising fleet vehicle sales have offset a bigger decline of 2.5% y/y ytd in retail purchases so far in 2018.”
In the U.S., despite a 0.5% m/m fall in auto sales, November’s sales of 17.4 million annualised units prolonged a strong three-month string of 17.4+ million deliveries on the back of robust fleet demand and end-of-year offers. “However, last month marked the first November year-on-year decline since 2009 in the U.S., at 0.7% y/y.” Scotiabank said. “We expect sales to fall below 17 million annualised units in the last month of 2018 for an annual average of 17.1 million tied with 2017’s second-highest-ever total.”
Scotiabank forecasts U.S. vehicle sales to fall from 17.1 million in 2018 to 16.8 million in 2019 owing to moderating employment gains and rising borrowing costs. “Although we project the U.S. economy to continue to expand at a solid, above-potential, rate of 2.4% in 2019 – aided by late-cycle fiscal stimulus by the Trump administration – labour markets have approached full employment with the jobless rate at its lowest point since the late 1960s. Bank lending rates on new autos have also edged up to a seven-year-high near the 5% mark.”
In Mexico, Scotiabank said, market weakness persists, as double-digit auto lending rates and broader policy uncertainty continue to discourage auto sales in 2018 with purchases down 5.4% y/y in November for a ytd decline of 6.7% y/y. “We expect new auto sales to decline further in 2019, as interest rates and still-high inflation price would-be buyers out of auto dealerships and toward the used car market,” Scotiabank said.
The economic slowdown in China brought on by a government-led crackdown on excessive lending and, more recently, the economic uncertainty boiling from U.S. trade tensions has led to a severe slump in auto sales in the country. Vehicle purchases in China fell by 13.9% y/y in November for a total year-to-date decline of 1.8% y/y ytd. “We forecast auto deliveries in China to contract by close to 2% in 2018 for their first annual decrease since 1999, before posting only a mild expansion next year on the back of stimulative economic policies by the Chinese government and still relatively-low vehicle penetration in smaller non-coastal urban centres,” Scotiabank said.
MRC