Scotiabank Economist Juan Manuel Herrera issues his first Global Auto
Report
TORONTO, July 9, 2018 /CNW/ - The growth of auto sales to
date in 2018 has been led by strong gains in developing economies,
but US protectionism may stall further gains, wrote Scotiabank
Economist Juan Manuel Herrera in the
July 2018 Global Auto Report.
"The growth in sales thus far in 2018 has, as expected, been led
by strong gains in developing economies while a number of advanced
economies have reached sales plateaux, albeit near record levels,"
said Juan Manuel Herrera. "The
global economy remains solid amid a mutually reinforcing expansion
brought about by rising trade flows across the world. An escalation
of US protectionism, however, threatens to slow the pace of global
growth."
Highlights of auto sales to mid-year in the report include:
- Automobile sales in the US and Canada remain just below record-high sales
levels following a year-on-year decline of 1.7% in June in
Canada and a strong 4.7% y/y
expansion in June in the US.
-
- A slight increase in purchases in Central Canada has been offset by sales
declines in Western and Atlantic
Canada so far in 2018.
- Sales in each of the Atlantic Provinces have decreased year to
date for a regional decline of 7.7% y/y.
- Purchases in Western Canada
are down by 1.1% y/y YTD after four consecutive months of
year-on-year declines.
- Global tariffs on US auto imports would likely result in
tit-for-tat retaliatory measures by affected nations.
-
- If the US imposes tariffs on all countries, but maintains
duty-free trade under NAFTA, the impact on the Detroit Three
automakers would be relatively subdued since non-NAFTA imports make
up approximately 5% of their combined sales in the US.
- An import tariff imposed on foreign autos from Canada and Mexico would impact a much larger swath of
vehicles sold in the US, and would seriously hurt the Detroit Three
firms.
- Political uncertainty in Mexico dampened purchases of vehicles in the
lead-up to the Presidential election on July
1st, with a year-to-May decrease of 8.8% y/y.
-
- Sales in Mexico are expected
to bounce back in the second half of 2018.
- Sales declines in the United
Kingdom have been large enough to drag down the growth rate
of vehicle purchases to 1.4% y/y in Western Europe so far in 2018.
-
- Auto purchases in the UK are down 6.8% y/y year-to-May amidst
dampened economic growth brought on by Brexit uncertainty. In
comparison, vehicle sales in the rest of Western Europe have advanced by 3.2% y/y
year-to-date.
- Sales in Eastern Europe have
climbed by a strong 6.3% y/y so far in 2018 owing to a surge in
auto deliveries in Russia.
- Purchases of automobiles in South
America expanded by double digits in year-on-year terms in
the first five months of 2018 led by Brazil and Chile.
-
- Sales in Brazil, the largest
auto market on the continent, have risen by 16% y/y YTD in 2018 as
the country leaves behind the 2015–16 recession and weak economic
growth in 2017.
- Auto purchases in Chile have
spiked by 25% y/y so far in 2018 following a couple of years of
depressed growth. Continent-wide vehicle deliveries in South America expanded by 2.2% y/y in May for
a year-to-date rise of 14% y/y.
- An increase in auto purchases in China in recent months has lifted sales in the
Asia-Pacific region, which follows
a weak performance for the sector in late-2017.
Scotiabank Economics provides in-depth commentary on economic,
financial market, and policy developments, both domestically and
internationally.
Read the full July 2018 Scotiabank
Global Auto Report online here.
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SOURCE Scotiabank