LMC Automotive Global Light Vehicle Sales Update (October 2017)

2017/11/21

Summary

  • Global Light Vehicle sales grew by 2% year-on-year (YoY) in October, although the selling rate fell from last month’s record high of almost 100 mn units/year, to 97.7 mn units/year.
  • Western Europe surged ahead in October, growing by 5.9% YoY, but there were weaker results in the US, which fell by 1.3%, and China, which was down 0.2%. The South American Light Vehicle market’s on-going recovery was also a driver of growth.



Commentary

North America

  • October US Light Vehicles sales totalled 1,353,000 units, down 1.3% from a year ago. The October selling rate reached 18.1 mn units/year. Fleet sales drove the month’s positive results: while they soared 18.8%, retail sales dropped 1% (selling day adjusted). Incentives grew 2.4% from last year, to $3,925 on average. They were above $4,000 in both August and September.
  • Canada kept its growth streak going. October sales added 164,000 light vehicles, 6.2% more than in October 2016, although the selling rate fell to just under 2 mn units/year from 2.1 mn units/year in September. Incentives reached a record high last month. Meanwhile, sales in Mexico fell to 123,000 units in October, down 15.4% from a very strong October 2016, when sales soared 21.8%.

Europe

  • The Western European Light Vehicle market grew by 5.9% YoY in October, on a comparable number of selling days to October 2016. However, the selling rate continued to slip back, to 15.9 mn units/year, from 16.1 mn units/year last month. Nevertheless, the regional market is set to achieve its best full-year result since before the global financial crisis. This is chiefly a reflection of strong economic growth in the Eurozone, which this year is likely to be the highest since 2007.
  • The recovery in the Russian Light Vehicle market remains on track following a 17% increase in sales in October, taking the year-to-date increase to 11.3%. The selling rate was generally quite flat over the summer, but increased from 1.67 mn units/year in September to 1.71 mn units/year in October. We have increased our 2017 Light Vehicle forecast slightly to 1.58 mn. The recovery is expected to continue in 2018, and the recent uptick in oil prices suggests an upside risk to our forecast of a 12% increase in LV sales.

China

  • Preliminary data indicate that the Chinese market maintained a solid rate through October, ahead of the expiration of the temporary tax cut on smaller vehicles at the end of this year. The October selling rate was 30.4 mn units, down 2% from September, but still a good result. On a YoY basis, sales declined marginally in October. There is a good chance that sales (i.e. wholesales) will remain subdued during the rest of this year, since the end of the temporary tax cut is expected to dampen retail sales in 2018.
  • President Trump’s visit to China ended with no big discussion on trade, diminishing the immediate probability of a serious trade war between the two countries. China’s President Xi consolidated his power during the Communist Party’s National Congress last month, and is expected to tolerate slower economic growth during his second five-year term, in order to address the economy’s structural issues. Thus, the expansions of both the economy and automotive market are projected to moderate in the future.

Other Asia

  • In Japan, the selling rate abruptly slowed to 4.9 mn units/year in October, dragged by a plunge in Nissan’s sales after the revelation that the automaker was using unlicensed employees to conduct the final inspection of new vehicles. With Nissan resuming normal deliveries, however, total Light Vehicle sales are expected to rebound in November and exceed 5 mn units in 2017 on the back of the buoyant economy.
  • After a spike in September, the selling rate in South Korea decelerated sharply in October, distorted by the timing of the Chuseok (mid-autumn festival) holiday. With September and October combined, however, the selling rate averaged 1.74 mn units/year, maintaining a solid pace. Sales are expected to fall marginally this year, due to the pull-ahead effect of the temporary tax cut in 2016.

South America

  • The recovery in the Brazilian market is firming up. The selling rate exceeded 2.3 mn units/year for the third consecutive month in October. On a YoY basis, sales increased by nearly 27% in October and 9.7% so far this year. The sharp declines in inflation and interest rates, as well as a nascent recovery in the job market, are helping to boost consumer confidence and spending.
  • After a marked slowdown in September, Argentina’s selling rate accelerated to 844,000 units/year in October. On a YoY basis, sales increased by 21% in October and 27% year-to-date. Following the decisive victory in the October mid-term elections, President Macri’s centre-right government has unveiled sweeping tax reform proposals, which could boost LV sales in the long term.

 

Sales (units) Selling rate (Units/year)
October
2017
October
2016
Percent Change Year to date
2017
Year to date
2016
Percent Change October
2017
Year to date
2017
Year
2016
Percent Change
WORLD
7,999,039
7,842,746
2.0%
78,161,262
75,972,401
2.9%
97,742,652
94,837,491
93,145,715
1.8%
USA
1,353,420
1,371,382
-1.3%
14,212,940
14,474,753
-1.8%
18,076,287
17,154,026
17,540,327
-2.2%
CANADA
164,186
154,633
6.2%
1,753,206
1,661,854
5.5%
1,992,393
2,040,888
1,947,926
4.8%
WESTERN EUROPE
1,257,986
1,188,006
5.9%
13,697,045
13,277,904
3.2%
15,928,331
16,090,009
15,771,610
2.0%
EASTERN EUROPE
383,957
332,796
15.4%
3,366,107
3,074,408
9.5%
4,571,732
4,333,826
3,891,943
11.4%
JAPAN
368,745
374,244
-1.5%
4,374,649
4,099,384
6.7%
4,906,993
5,191,625
4,903,736
5.9%
KOREA
127,605
144,512
-11.7%
1,441,552
1,440,441
0.1%
1,501,851
1,775,140
1,783,990
-0.5%
CHINA
2,646,351
2,651,324
-0.2%
22,584,877
22,059,900
2.4%
30,361,612
28,304,016
28,021,578
1.0%
BRAZIL / ARGENTINA
270,363
216,143
25.1%
2,515,747
2,203,339
14.2%
3,153,791
3,037,048
2,672,018
13.7%
OTHER
1,426,425
1,409,706
1.2%
14,215,139
13,680,418
3.9%
17,249,661
16,910,914
16,612,587
1.8%
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.