TORONTO, ON --(Marketwired - January 12, 2016) - Global car sales are expected to climb to record highs over the coming year, according to the Scotiabank Global Auto Report released today. This extends gains to a seventh consecutive annual record and surpasses the previous upcycle which lasted six years.
"Purchases will be buoyed by improving labour markets -- employment in the OECD is advancing at the fastest pace since early 2007 -- and a bottoming in purchases across emerging markets," said Carlos Gomes, Senior Economist and Auto Industry Specialist at Scotiabank. "Economic growth in developing countries is expected to pick up for the first time since 2010, helping reverse last year's slide in car sales which was driven by sharp contractions in both Russia and Brazil. Low gasoline prices, improving household balance sheets and rising incomes will also help lift sales.
"Despite the recent increase in short-term interest rates by the U.S. Federal Reserve, interest rates across the globe remain ultra-low and most central banks continue to add liquidity, providing support for global financial conditions and car sales. Purchases in North America climbed above 20 million units last year, surpassing the 2000 peak and should exceed 21 million in 2016. Each NAFTA member set sales records last year, but the U.S. will be the main growth driver going forward."
Other highlights from the report include:
- Full-year U.S. purchases are set to approach 18 million units in 2016, fueled by a strong labour market, the healthiest household balance sheets in more than a decade and rising replacement demand. The average age of the U.S. vehicle fleet is at record highs, with nearly 40% of all vehicles on the road at least 12 years old.
- Purchases in Canada were stronger-than-expected in 2015, climbing 3% to a record 1.90 million units, but are forecast to be largely flat in 2016. A double-digit gain in leasing activity accounted for the advance last year.
- Auto sales in China have accelerated in recent months and are expected to increase 7% in 2016, buoyed by a 50% reduction in the sales tax from 10% to 5% for new vehicles with engine capacity of less than 1.6 litres.
Read the full Scotiabank Global Auto Report online at:
http://www.scotiabank.com/ca/en/0,,3112,00.html .
Scotiabank 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.
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For more information, please contact: Carlos Gomes Scotiabank Economics (416) 866-4735 carlos.gomes@scotiabank.com For media enquiries only: Devinder Lamsar Public, Corporate and Government Affairs Scotiabank (416) 933-1171 devinder.lamsar@scotiabank.com
