Automotive industry driving global rebound
Global vehicle sales continue to strengthen, with North American volumes exceeding an annualized 14 million units since February 2011, says the latest Scotia Economics Global Auto Report.
TORONTO: Global vehicle sales continue to strengthen, with North American volumes exceeding an annualized 14 million units since February 2011 for the first time since the cash for clunkers program in mid-2009, according to the Scotia Economics Global Auto Report.
Carlos Gomes, Scotia Economics’ senior economist and automotive specialist said the North American rebound was driven by replacement demand and, “contrary to expectations, was accompanied by lower incentives.”
Global sales, excluding China, advanced 6% above a year earlier – the strongest gain since February 2011, prior to the tsunami in Japan last March, says the report that excluded China from last month’s performance because an early lunar New Year affected sales. Scotia Economics said it’s waiting for numbers from the first two months of the year to get a clearer picture of China’s auto market health.
The report noted Canada also started the year on a strong note, with volumes surging 15% above a year earlier.
“We estimate that purchases totalled an annualized 1.7 million units in January – the best performance since May 2008 and up from a full-year total of 1.59 million in 2011,” said Gomes in a release.
Stronger-than-expected passenger vehicle sales across North America have prompted automakers to schedule a further increase in vehicle assemblies, providing an additional boost to an economy that has been gaining momentum in recent months.
However, the report notes production gains are not limited to North America. Rising sales led to double-digit year-over-year increases in vehicle assemblies in India, Germany and the UK last month, while activity rebounded sharply in Thailand following last fall’s flood.
Production is also improving in Japan, with vehicle output in January posting a double-digit year-over-year increase. Output schedules even appear to be stabilizing in Western Europe, following a double-digit slump in late 2011.
In North America, vehicle assemblies are now scheduled to climb above an annualized 15 million units in the opening months of 2012, which Scotia Economics describes as the highest level since 2007.
Assembly plants in the US will lead the gain, with production planned to climb 14% above a year earlier. Vehicle output exceeded an annualized 10 million units in January – the highest level since early 2008, led by a 64% per cent year-over-year surge in car production.
Japanese manufacturers also assembled a record number of vehicles in North America last month, as they attempt to re-establish optimal inventories and continue to shift production from Japan to North America to reduce the impact of a strong yen on their financial performance. The report said assemblies will climb further as additional product is transferred to North America from Japan.
“We estimate that rising vehicle output will add nearly a percentage point to economic growth across North America in the opening months of 2012, helping sustain the improved economic momentum that has emerged in recent months,” said the report.
Scotia Economics forecasts continuing strength over the next several years, as foreign automakers continue to expand and build new production facilities in North America. It said once the planned expansions by Japanese and European automakers are completed by 2014, North American vehicle assembly capacity will climb to 19 million units – close to the prevailing level nearly 10 years ago when the Detroit Three began to restructure and shutter some of their facilities.