Scotiabank predicts record global auto sales in 2016
Purchases in Canada will be largely flat in 2016, US to drive growth in NAFTA
The Scotiabank Global Auto Report says this extends gains to a seventh consecutive annual record and surpasses the previous upcycle, which lasted six years.
“Purchases will be buoyed by improving labour markets – employment in the OECD is advancing at the fastest pace since early 2007 – and a bottoming in purchases across emerging markets,” said Carlos Gomes, senior economist and auto industry specialist at Scotiabank.
He said economic growth in developing countries is expected to pick up for the first time since 2010, helping reverse last year’s slide in car sales, which was driven by sharp contractions in both Russia and Brazil. Low gasoline prices, improving household balance sheets and rising incomes will also help lift sales.
Despite the recent increase in short-term interest rates by the US Federal Reserve, interest rates across the globe remain ultra-low and he said most central banks continue to add liquidity, providing support for global financial conditions and car sales.
Purchases in North America topped 20 million units last year, surpassing the 2000 peak and the report projects they should exceed 21 million in 2016. Each NAFTA member set sales records last year, but the US will be the main growth driver going forward.
Full-year US purchases are set to approach 18 million units in 2016, fuelled by a strong labour market, the healthiest household balance sheets in more than a decade and rising replacement demand. The average age of the US vehicle fleet is at record highs, with nearly 40% of all vehicles on the road at least 12 years old.
Purchases in Canada were stronger than expected last year, climbing 3% to a record 1.90 million units, but are forecast to be largely flat in 2016. A double-digit gain in leasing activity accounted for the advance in 2015.
Auto sales in China have accelerated in recent months and are expected to increase 7% in 2016, buoyed by a 50% reduction in the sales tax from 10% to 5% for new vehicles with engine capacity of less than 1.6 litres.
Click here for a copy of the report.