Record 2012 forecast for global car sales
Driven by Japan, Emerging Markets and the U.S.
Sales in Canada will climb to 1.61 million units in 2012, up from 1.59 million this year and the best performance since 2008.
The cyclical recovery in global auto sales that began in mid-2009 remains intact, although gains have moderated to five per cent this year from 12 per cent in 2010, according to a global auto report released by Scotia Economics.
Global volumes will continue to be bolstered by strong employment growth and declining interest rates in emerging markets.
“We expect a further four per cent advance in 2012, though there is the potential for more downside if the euro zone debt crisis does not stabilize,” says Scotia Economics Senior Economist and Auto Industry Specialist Carlos Gomes.
“A rebound from this year’s tsunami-induced slump in Japan, and continued gains in emerging markets will lead the way.”
Purchases in the United States are also expected to climb to 13.5 million units – the highest level since 2007, as households and businesses replace their aging vehicles.
Western Europe will remain the weak link, with volumes dragged down by declining sales in the debt-ridden Mediterranean nations. There is also a risk that the weakness could spread to the core countries of northern Europe, if the debt crisis is not contained.
Sales in Canada will climb to 1.61 million units in 2012, up from 1.59 million this year and the best performance since 2008. The resource-rich Prairies will lead the way, but every region is expected to post moderate gains in the coming year.
“Global volumes will continue to be bolstered by strong employment growth and declining interest rates in emerging markets,” explains Gomes. “This represents a sharp reversal from the past year, when most central banks in developing nations were raising rates to contain inflation.”
After plunging by nearly 20 per cent this year and slumping to the lowest level since 1987, car sales in Japan are expected to post a double-digit increase in 2012, notes Gomes. However, despite this improvement the auto industry highlights the major shift taking place in global consumption patterns.
“In 2012, car sales in emerging nations will surpass purchases in the developed world for the first time on record,” adds Gomes. “We project that car sales in developing nations will expand by seven per cent in 2012, climbing to 31 million units and exceed volumes in the mature markets of Western Europe, North America and Japan. A decade ago, developing nations accounted for less than 20 per cent of global car sales.”
India was the second-best performing major auto market over the past decade, with sales climbing 11 per cent per annum to a record 1.97 million in this year. Despite the robust growth, vehicle penetration remains among the lowest in the world at only 17 vehicles per 1,000 people. India also enjoys a special demographic advantage – one of the world’s youngest populations – half of its 1.2 billion inhabitants are less than 25 years.
Car sales in Brazil were also held back in 2011 by rising interest rates – roughly 70 per cent of car buyers require financing. However, interest rates have declined by 2.5 percentage points from their peak in August and domestic demand is picking up, supported by low unemployment. We expect car sales in Brazil to rise four per cent next year, climbing to a record 2.8 million units.
Rising pent-up demand, a strengthening labour market and improving credit availability will lift passenger vehicle sales in the United States to 13.5 million units in 2012, up from 12.7 million this year and the best performance since 2007.
Vehicle scrappage rates have dropped to only four per cent of the U.S. fleet, nearly two percentage points below the average of the past two decades. As a result, the average age of vehicles in the United States is approaching a record 11 years, with many vehicles needing to be scrapped.
Category: Business
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