LMC Automotive Global Light Vehicle Sales Update (January 2017)

2017/02/14

Summary

  • Following a strong finish to 2016, which itself was driven by increased market activity in China, the Global Light Vehicle market selling rate slipped back to 92.8 mn units/year (see the chart below). In year-on-year (YoY) terms, the market improved 4.3%.
  • Despite China and US market results last month being fairly flat YoY, solid growth in Western Europe, and some year-on-year growth in South America, helped push the global total higher.



Commentary

North America

  • January 2017 US Light Vehicle sales totaled 1,141,000 units, which translated into a selling rate of 17.5 mn units/year and rather flat on the January 2016 result (-0.5% YoY). Economic indicators are still favourable with unemployment at 4.8%, low interest rates (albeit on the rise), relatively low fuel prices (also on the rise), and consumer confidence up 14% from last January. Further spurring January consumption is the 7% YoY increase in OEM incentives with an average OEM spend of $3,600.
  • Canadian Light Vehicle sales for January totaled 111,000 units representing a 2.3% increase from last January and a seasonally adjusted annualized rate of 2.02 mn units/year.

Europe

  • Following a solid improvement in 2016, the West European Light Vehicle market is out of the blocks well in 2017. In January, the market grew 10.1% YoY, impressive even when taking into account the extra selling day in nearly all markets. This resulted in a seasonally adjusted annualised rates of sales of 16.5 mn units/year, a solid footing on which to begin 2017. Despite political uncertainty, surveys indicate that consumer confidence is holding up well, for the most part. With a stable, if fairly muted, economic backdrop, we continue to forecast growth in West European Light Vehicle sales this year.
  • Russian Light Vehicle sales slipped back 5% compared with January 2016, with the selling rate standing at 1.34 mn units/year compared to 1.41 mn in December. This slowdown in the pace was to be expected in view of the run out of incentives in December. Elsewhere in Eastern Europe, sales picked up well, with Turkey a key explanation.

China

  • The Chinese market is off to a weak start in 2017. Advance data indicates that the selling rate slowed markedly to 26 mn units/year in January, down nearly 12% from a robust December. As is always the case at the beginning of the year, the timing of the Chinese New Year, which fell on January 28, disrupted sales. More importantly, the higher tax on vehicles with smaller engines dampened sales. In mid-December, the government announced the extension of the tax cut through to December 2017. However, the rate of the tax cut will be half this year.
  • In the coming months, US President Trump’s hawkish rhetoric on US-China trade could undermine both business and consumer confidence. A possible trade war is a serious concern. Yet, if China is to let the yuan appreciate to accommodate the US concern on currency, that could help boost Chinese consumers’purchasing power and vehicle sales.

Other Asia

  • The Japanese market started 2017 on a solid note, with the selling rate reaching just above 5 mn units/year in January. However, the sales outlook is cloudy, as the yen is strengthening again and uncertainty over new US policies is making Japanese businesses and consumers nervous.
  • In the South Korean market, the selling rate fell sharply to 1.6 mn units/year in January, down 14% from a robust December. The introduction of the scrappage tax incentive for old diesel vehicles failed to boost sales. Both business and consumer confidence continued to weaken.

South America

  • The Brazilian market is off to a weak start in the New Year. The January selling rate was 1.8 mn units/year, down 7% from an already sluggish December. The unemployment rate has reached 12% and real interest rates remain high, depressing consumers’ ability and willingness to spend on new vehicles.
  • Argentina’s volatile market started 2017 with a mixed result. The January selling rate of 749,000 units/year was down 12% from December. Yet, on a year-on-year basis, sales increased by 64% in January. The recent hike in the electricity tariffs is expected to refuel inflation and dampen consumer spending in a short run.

 

Sales (units) Selling rate (Units/year)
Jan
2017
Jan
2016
Percent Change Year to date
2017
Year to date
2016
Percent Change Jan
2017
Year to date
2017
Year
2016
Percent Change
WORLD
7,523,573
7,216,720
4.3%
7,523,573
7,216,720
4.3%
92,814,669
92,814,669
93,367,037
-0.6%
USA
1,140,659
1,146,483
-0.5%
1,140,659
1,146,483
-0.5%
17,527,716
17,527,716
17,539,088
-0.1%
CANADA
110,903
108,424
2.3%
110,903
108,424
2.3%
2,016,329
2,016,329
1,947,684
3.5%
WESTERN EUROPE
1,248,421
1,134,070
10.1%
1,248,421
1,134,070
10.1%
16,493,393
16,493,393
15,761,962
4.6%
EASTERN EUROPE
230,255
218,135
5.6%
230,255
218,135
5.6%
3,898,021
3,898,021
3,912,943
-0.4%
JAPAN
397,633
379,153
4.9%
397,633
379,153
4.9%
5,029,057
5,029,057
4,905,852
2.5%
KOREA
121,104
120,608
0.4%
121,104
120,608
0.4%
1,610,474
1,610,474
1,783,990
-9.7%
CHINA
2,555,513
2,545,772
0.4%
2,555,513
2,545,772
0.4%
26,027,922
26,027,922
27,980,831
-7.0%
BRAZIL / ARGENTINA
233,421
204,230
14.3%
233,421
204,230
14.3%
2,572,281
2,572,281
2,661,585
-3.4%
OTHER
1,485,664
1,359,846
9.3%
1,485,664
1,359,846
9.3%
17,639,477
17,639,477
16,873,101
4.5%
Notes: The percentage change in the final column compares the average selling rate in the year-to-date with the last full year.
Late reporting countries and estimates are included in "Other".
Eastern Europe includes Turkey.
China includes estimate of light vehicle imports.

For further information or inquiries for forecast data, please refer to LMC Automotive's products.