Luxury Sales Accelerate in China: Scotiabank Economics
TORONTO, April 30, 2018 /CNW/ - Global auto sales increased 1.2% y/y in March, as ongoing gains in most emerging markets, including an acceleration in China, and stronger volumes in the United States compensated for a temporary decline in purchases across Western Europe. In China, sales gains picked up to 5.1% y/y last month, up from a 3% increase during the previous two months.
"Luxury automakers are the key drivers of sales gains in China this year, accounting for nearly half of the overall year-over-year sales improvement through March," said Carlos Gomes, Senior Economist and Auto Industry Specialist, Scotiabank. "This rapid sales growth reflects ongoing strong gains in household wealth and rising consumer confidence."
Volumes at the top six premium automotive brands in China have accelerated to nearly a 25% y/y increase through the end of March, a sharp improvement from the 15% average annual increase during 2016–2017. China now represents nearly 30% of global volumes for the top six premium brands, up from less than 20% in 2012.
The Chinese government recently announced plans to ease restrictions on foreign automakers. Starting in 2022, automakers will be allowed to own more than 50% of their business units operating in China. For electric carmakers, the change is due to come into effect this year. In 1994, when the "50:50 rule" was implemented, the Chinese auto market had annual sales of less the 400,000 vehicles, and accounted for less than 1% of global volumes. In contrast, total auto sales in China totalled 24.2 million units in 2017, equivalent to nearly 30% of the global market.
From a global perspective, US sales were bolstered by strengthening income and wage gains, helping to lift the overall US sales pace to an annualized 17.5 million units in March. In fact, the US accounted for most of the increase in global sales last month, with purchases outside of the US remaining in line with year-earlier levels.
Sales in Canada were also stronger than expected last month, totalling an annualized 2.08 million units. Light truck purchases (CUVs, SUVs, pickups and vans) jumped 5% y/y and garnered more than 71% of overall new vehicle sales, up from less than 55% as recently as 2012. During the first quarter, Canadian overall purchases rose by 1.9% y/y, with most of the strength centred in Ontario, where sales climbed nearly 5% y/y alongside an 11% y/y jump in fleet volumes. The rebound in fleet activity in Ontario is consistent with strengthening business investment in the province, which accelerated in late-2017 at the fastest pace since mid-2015.
Other highlights:
- About 95% of all cars and light trucks sold in China are assembled locally, with only about 1.1 million units imported last year
- In most emerging markets, activity remained solid in March even as the pace of sales gains moderated below 10% y/y in many countries
- Western Europe was the only region to report lower sales last month, marked by volumes temporarily falling 6% below a year earlier
Read the full Scotiabank Global Auto Report online at: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/GAR_2018-04-30.pdf
About Scotiabank Economics
Scotiabank Economics provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues. Our reports are available at www.scotiabank.com/economics.
About Scotiabank
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SOURCE Scotiabank
Carlos Gomes, Scotiabank Economics, (416) 866-4735, [email protected]; For media enquiries only: Debra Chan, Global Communications, Scotiabank, (416) 866-6443, [email protected]
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