TORONTO, March 29, 2018 /PRNewswire/ - Global auto sales advanced 3% y/y in the first two months of 2018, accelerating from a 2.3% gain during all of 2017. The improvement is being led by double-digit gains in many emerging markets and reflects the strongest global economic growth since early 2014. North America is the only region to post a decline in sales in the opening months of 2018, but sales are expected improve later in the year as the US market strengthens.
"While the US is one of the few countries to report lower sales so far this year, we remain confident that purchases will pick up as 2018 progresses," said Carlos Gomes, Senior Economist and Auto Industry Specialist, Scotiabank. "Sales gains should be buoyed by strengthening economic activity, improving incomes, consumer confidence at a 14-year high, and replacement of an aging vehicle fleet."
The health of new auto loans continues to improve in the US, with prime and super-prime auto loans gaining market share alongside strengthening household finances. These two segments accounted for a record 74% of all new vehicle sales in late-2017, up from an average of 72.6% during the past three years. The average credit score for auto loans and leases has also increased, climbing to a four-year high in late-2017. The number of delinquent US auto loans has begun to decrease, with both 30- and 60-day delinquencies down roughly 3% from a year earlier in the final months of 2017—the largest year-on-year improvement in more than two years.
The rental-car industry was the main source of weakness in the US auto market last year, with purchases dropping 12% to 1.59 million units. Volumes have declined an additional 3% y/y in the first months of 2018, but the impact on industry volumes is starting to be offset by businesses renewing their aging vehicle fleets.
In Canada, passenger vehicle sales have advanced 4% y/y through February, approaching a record pace of an annualized 2.1 million units. The gains have been broadly-based, with volumes in Ontario powering ahead a further 5% y/y. This advance is in sharp contrast to declining existing home sales, which have plunged 27% below a year earlier in Ontario, reducing overall volumes in Canada 11% y/y.
Emerging markets have taken the lead in global sales growth. Purchases in Eastern Europe have surged 19% y/y so far in 2018, while volumes in South America have jumped 16% y/y alongside strengthening economic activity.
- US monthly auto loans absorbed a near-record low of only 5.35% of household income in late-2017, in-line with the level prevailing in late-2015
- Purchases in Western Europe advanced by 4.5% y/y in the opening months of 2018, nearly double the 2.5% increase reported during all of 2017, bolstered by the strongest economic growth of the past decade
Read the full Scotiabank Global Auto Report online at:
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