LMC Automotive Global Light Vehicle Sales Update (June 2017)

2017/07/18

Summary

  • Global Light Vehicle sales grew by 1.3% year-on-year (YoY) in June — the selling rate picked up to 94 mn units/year from May’s 93 mn units/year.
  • Although US sales contracted in YoY terms, sales in China returned to positive territory. Meanwhile, Japan and South America both saw a strong increase in sales from year-ago levels.



Commentary

North America

  • June 2017 US Light Vehicle sales totalled 1,472,000 units, which translated into a selling rate of 16.5 mn units/year. Total industry sales have fallen 2.2% through the first half of 2017 compared to H1 2016; retail sales have only fallen 0.6% whereas fleet sales have declined 7.3% YTD. OEM incentive spending continues to climb as the year progresses with discounts of up 12% YoY, which, coupled with relatively low interest rates, continues to draw consumers into showrooms. Consumer confidence also increased in June from May as the unemployment rate fell, and fuel prices remained low and stable.
  • Canadian Light Vehicle sales for June 2017 totalled 203,000 units, representing a 6.6% increase from June 2016 and equated to a selling rate of 2.09 mn units/year.

Europe

  • Light Vehicle sales in Western Europe grew by 1.2% YoY in June, despite some markets seeing fewer selling days when compared with June 2016 — the selling rate in June was 16.3 mn units/year, continuing the generally strong pace of sales in the first half of the year. However, YoY results in individual markets were more mixed, with strong performances in some areas mitigated by falls elsewhere. The overall picture remains one of regional YoY growth continuing, albeit at a slower pace in the second half of the year.
  • In Russia, 141,000 Light Vehicles were sold in June, representing a YoY increase of 15%. Although we remain cautious about the likely impact of the new range of incentives (including the “First Car” and “Family Car” schemes) that started on July 1st, the outlook is for 10% market growth this year, which would be the first annual rise since 2012.

China

  • The Chinese market seems to be picking up again. Preliminary data indicates that the selling rate rose month-on-month for the second consecutive month in June to 27.9 mn units/year, up nearly 7% from May. On a year-on-year basis, sales increased by 1.8% in June and 2.5% in H1 2017. Yet, that is a significant slowdown, compared to a 12.6% increase in 2016. The rate of the temporary tax cut on smaller vehicles has been halved since January 2017, which has dampened sales.
  • Looking ahead, uncertainty surrounding US trade policies remains a major risk for the Chinese economy and vehicle sales. The government’s recent tightening measures of house purchase restrictions will be another drag for the economy. Nonetheless, ahead of the all-important Communist Party’s National Congress this fall, public investment is expected to remain buoyant and help support vehicle sales.

Other Asia

  • In Japan, the selling rate continued to accelerate and exceeded 5.5 mn units/year in June, the highest rate since December 2014. A very tight job market and higher stock prices are contributing to boost consumer spending. Yet, wage growth remains weak, which will be an obstacle for sustained growth in sales.
  • In South Korea, the selling rate surged to 1.86 mn/year units in June, ahead of the expiration of the scrappage incentive scheme for old diesel vehicles at the end of June. On a year-on-year basis, sales declined by 11% in June, but that was due to a high base effect (the temporary tax cut ended in June 2016). Reportedly, the heightened military tensions with North Korea are not having a significant impact on Light Vehicle sales.

South America

  • Despite the escalating corruption scandals among the top government officials, the Brazilian market continued to improve through June. The selling rate reached a relatively strong 2.37 mn units/year. In H1 2017, sales increased by 4.5% year-on-year. Falling inflation and interest rates are helping to support consumers’ purchasing power. The depressed job market, however, remains a major obstacle for the recovery in sales.
  • In Argentina’s volatile market, the selling rate surged to 919,000 units/year in June, the highest rate since December 2013. Sales increased by 33% year-on-year in H1 2017, supported by the economic recovery, falling inflation and rising government spending ahead of the October mid-term legislative elections.

 

Sales (units) Selling rate (Units/year)
June
2017
June
2016
Percent Change Year to date
2017
Year to date
2016
Percent Change June
2017
Year to date
2017
Year
2016
Percent Change
WORLD
8,051,026
7,944,086
1.3%
46,762,550
45,508,565
2.8%
93,907,919
93,275,694
93,115,043
0.2%
USA
1,472,064
1,512,988
-2.7%
8,441,340
8,635,637
-2.2%
16,458,908
16,921,336
17,540,327
-3.5%
CANADA
203,439
190,844
6.6%
1,038,925
988,574
5.1%
2,085,691
2,060,130
1,947,926
5.8%
WESTERN EUROPE
1,591,530
1,572,250
1.2%
8,738,465
8,423,233
3.7%
16,253,564
16,178,824
15,769,930
2.6%
EASTERN EUROPE
376,385
354,208
6.3%
1,953,295
1,841,257
6.1%
4,182,552
4,291,167
3,891,644
10.3%
JAPAN
472,695
414,246
14.1%
2,748,337
2,513,112
9.4%
5,540,572
5,279,680
4,903,736
7.7%
KOREA
161,425
181,698
-11.2%
882,136
914,318
-3.5%
1,864,402
1,798,477
1,783,990
0.8%
CHINA
2,119,971
2,081,706
1.8%
13,155,699
12,840,344
2.5%
27,897,222
27,208,570
28,021,288
-2.9%
BRAZIL / ARGENTINA
262,317
218,595
20.0%
1,426,200
1,275,506
11.8%
3,284,593
2,967,597
2,667,204
11.3%
OTHER
1,391,200
1,417,551
-1.9%
8,378,152
8,076,584
3.7%
16,340,416
16,569,914
16,588,998
-0.1%
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.