LMC Automotive Global Light Vehicle Sales Update (July 2017)

2017/08/15

Summary

  • Global Light Vehicle sales grew by 3.2% year-on-year (YoY) in July — the selling rate increased to 95 mn units/year, up from 94 mn units/year in June.
  • China and Western Europe both grew modestly, while there were more spectacular gains in Eastern Europe and South America. However, the US market continued to shrink compared to year-ago levels.



Commentary

North America

  • July 2017 US Light Vehicle sales totalled 1,414,000 units, which corresponds to a selling rate of 16.8 mn units/year and a 7.1% YoY decrease compared to July 2016’s result. Total industry sales have fallen 2.4% through the first seven months of 2017 compared to the same period in 2016 (selling-day adjusted, SDA); retail sales have only fallen 0.7%, whereas fleet sales have declined 8.9% YTD (SDA). OEM incentive spending continues to climb as the year progresses, with discounts up 10% YoY; which, coupled with relatively low interest rates, is bolstering sales on the retail side. Consumer confidence also increased in July as unemployment was unchanged at 4.35% and fuel prices remained low and stable.
  • Canadian Light Vehicle sales for July 2017 totalled 182,000 units – establishing a new July record – representing a 4.9% increase from July 2016, which equals a selling rate of 1.97 mn units/year.

Europe

  • Western European Light Vehicle sales grew by 2.4% YoY in July, on an identical number of selling days as the previous year. However, the selling rate fell steeply to 15.4 mn units/year, with the pace of registrations cooling off as the second half of the year began. This is perhaps unsurprising given a very robust first half of 2017, and the strength of the Eurozone economy gives reason to believe that the outlook for the region is still fundamentally positive.
  • Russian Light Vehicle sales achieved very strong growth in July (+18.6% YoY), the third consecutive double- digit increase. Despite this, the selling rate fell from 1.59 mn units/year in June to 1.46 mn units/year. There has been some month-to-month volatility in the selling rate already this year and we expect this to be a blip as underlying demand picks up again from August.

China

  • After showing signs of slowdown earlier this year, the Chinese market accelerated for the third straight month in July. According to preliminary data, the July selling rate reached 29.3 mn units/year, the highest rate so far this year. That was, however, still weaker than the 31 mn-unit rate (the record high) in October and November 2016. On a year-on-year basis, sales increased by 2.4% in July and 2.5% in the first seven months of this year, compared to the 12.6% increase in 2016. The market remains lacklustre after the rate of the temporary tax cut on smaller vehicles was halved in January 2017.
  • With the all-important Communist Party’s National Congress coming up in the fall, the government is expected to maintain a good momentum in the economy, which should help support vehicle sales. However, uncertainty over US trade policies against China remains a major concern.

Other Asia

  • Sales in Japan slowed abruptly after three consecutive months of robust growth. The July selling rate was just below 5 mn units/year, down 10% from an average of 5.5 mn units/year in Q2. The purchasing rush for new models has subsided. Low summer bonus payments probably slowed sales, too. Looking ahead, however, serious labour shortages in the country should help boost wage growth, and new vehicle sales.
  • As expected, sales in South Korea slowed sharply in July, since the scrappage incentive scheme for old diesel vehicles expired at the end of June. The July selling rate was 1.66 mn units/year, down nearly 11% from June. On a year-on-year basis, sales increased by 9% in July, but that was due to a low base effect. Reportedly, South Koreans are little moved by the heightened military threats from North Korea, as they are accustomed to having lived with the unpredictable neighbour for decades.

South America

  • Amidst the never-ending political turmoil, the Brazilian market remains volatile. The July selling rate was 2.04 mn units/year, down nearly 14% on June. Although inflation and interest rates are continuing to fall sharply, unemployment remains high at over 13%, constraining consumers’ willingness and ability to buy new vehicles. Yet, sales increased by over 4% YoY so far this year, indicating that the market has stabilized.
  • The Argentine market has maintained a robust pace, thanks to the recovery in investment and government spending, as well as sharply falling inflation. The July selling rate was 814,000 units/year, down nearly 14% from an upwardly revised (and a record high of) 942,000 units/year in June. That was, however, a very good result for the volatile market.

 

Sales (units) Selling rate (Units/year)
July
2017
July
2016
Percent Change Year to date
2017
Year to date
2016
Percent Change July
2017
Year to date
2017
Year
2016
Percent Change
WORLD
7,438,006
7,205,227
3.2%
54,281,494
52,714,460
3.0%
95,143,737
93,748,275
93,117,033
0.7%
USA
1,413,920
1,521,263
-7.1%
9,855,260
10,156,900
-3.0%
16,814,321
16,906,048
17,540,327
-3.6%
CANADA
181,775
173,245
4.9%
1,220,700
1,161,819
5.1%
1,970,851
2,047,376
1,947,926
5.1%
WESTERN EUROPE
1,234,915
1,205,926
2.4%
9,977,666
9,629,228
3.6%
15,401,898
16,071,953
15,771,053
1.9%
EASTERN EUROPE
346,516
285,412
21.4%
2,297,384
2,126,858
8.0%
4,059,289
4,284,251
3,892,585
10.1%
JAPAN
423,273
411,006
3.0%
3,169,677
2,924,118
8.4%
4,958,613
5,230,045
4,903,736
6.7%
KOREA
146,166
134,247
8.9%
1,027,473
1,048,565
-2.0%
1,656,855
1,776,978
1,783,990
-0.4%
CHINA
1,924,092
1,879,378
2.4%
15,085,813
14,719,722
2.5%
29,298,364
27,518,447
28,021,288
-1.8%
BRAZIL / ARGENTINA
253,659
236,010
7.5%
1,681,985
1,511,516
11.3%
2,852,853
2,955,007
2,667,204
10.8%
OTHER
1,513,691
1,358,740
11.4%
9,965,535
9,435,734
5.6%
18,130,694
16,958,170
16,588,924
2.2%
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.