Recovery in global auto sales to continue in 2013; Scotiabank sees 4% increase
Car sales in Canada are expected to edge up to 1.69 million units in 2013, the second-highest level on record and up from 1.68 million this year. (file image)
The Canadian Press
Published Thursday, December 27, 2012 2:25PM CST
Last Updated Thursday, December 27, 2012 5:06PM CST
TORONTO -- The cyclical recovery in global auto sales that began in mid-2009 should remain intact in the coming year, according to a new report from Scotiabank (TSX:BNS).
The bank, in its Global Auto Report, said Thursday it expected worldwide auto sales to advance four per cent in 2013 after having seen average growth rates of seven per cent the previous three years , including a 13 per cent surge in the first year of the recovery.
"Global sales will be bolstered by strong employment growth in developing nations, record low interest rates and the recent acceleration in the pace of monetary expansion around the globe," said Carlos Gomes, Scotiabank senior economist and auto industry specialist.
Car sales in Canada are expected to edge up to 1.69 million units in 2013, the second-highest level on record and up from 1.68 million this year.
Scotiabank said ongoing job gains, especially in Western Canada, will support the market. However, it says slowing housing activity will dampen consumer confidence and household wealth, limiting the improvement.
A better performance is also expected south of the border.
"U.S. household balance sheets have improved significantly and are currently at the healthiest level in a decade," Gomes said.
"Households have deleveraged by a trillion dollars over the past four years, leaving them in good shape to replace many of the clunkers still on the road," he said, noting that the average age of the U.S. fleet now exceeds 11 years for the first time on record.
In contrast, car sales across western Europe are expected to remain unchanged at 11.7 million in 2013 after having slumped to a 19-year low in 2012, undercut by plunging sales in the debt-ridden Mediterranean countries.
China, which has accounted for nearly 60 per cent of the increase in world volumes over the past decade, should continue that role in 2013, the bank said.
"An improving economic performance is expected to lead to a double-digit increase in car sales next year, up from a seven per cent advance in 2012," the report said.
"China now accounts for nearly 20 per cent of global car sales and one-quarter of global volumes if trucks are included. Increasing urbanization, rising incomes and low vehicle penetration rates will continue to drive rapid gains in China's car sales over the next decade."
Brazil is another bright spot, expected to benefit from the acceleration in the pace of economic growth to 3.5 per cent in 2013 -- more than triple this year's advance -- largely due to infrastructure developments ahead of the FIFA World Cup in 2014 and the Summer Olympics in 2016.
Russia and Japan were key auto industry growth markets in 2012, with volumes in both posting double-digit increases. Much of the strength was provided by government incentives to buy new vehicles.
However, the bank noted that these subsidies have expired and expects "a low-single digit advance in Russia over the coming year and declining volumes in Japan."
Car sales in India, meanwhile, are projected to advance a moderate five per cent in 2013, a gain in line with this year's increase.
"A stronger performance is conditional on inflation pressures subsiding and enabling the central bank to become more aggressive in cutting interest rates," the report said.