LMC Automotive Global Light Vehicle Sales Update (May 2018)

2018/06/19

  • Global Light Vehicle sales grew by 4.5% in year-on-year (YoY) terms in May, with the selling rate at 98.3 mn units/year, a strong performance compared to 2017’s total sales of 95.3 mn. Year to date (YTD), global sales are up 3.3%, YoY.
  • China followed a strong April with another solid result in May, while sales in the US and Eastern Europe also drove global growth higher. Western European sales held steady compared with the prior year, while the Japanese and South Korean markets remain at historically high levels.



Commentary

North America

  • US new Light Vehicle sales totalled 1,593,000 units in May, up 5.2% YoY. This May volume translates into a selling rate of almost 16.9 mn units/year, down from 17.1 mn units/year last month. SUV sales soared 16.5%, bringing new vehicle negotiated price up by 2.6% YoY, to $35,526. Incentives increased 2.6%, helping retail sales to grow 2.7%, to 1.27 mn units. Fleet, on the other hand, jumped 10.2%, to 327k.
  • Canada sales inched down 0.8% YoY in May, the third negative result of the year. Sales totalled 216,000 units, which translates into a selling rate of 1.9 mn units/year, the second month in a row that the rate has fallen below 2 mn units/year. Mexico faced declining sales for the 11th consecutive month. The 114,000 units sold in May (-6.7%, YoY) indicate a selling rate of 1.47 mn units/year, unchanged from April.

Europe

  • West European Light Vehicle sales were virtually unchanged in May in YoY terms, but the fact that there were fewer selling days than a year earlier in a number of markets helped propel the selling rate to 16.8 mn units/year, up from 16.3 mn units/year in April. Considering that 2017’s total sales were 16.2 mn, which was itself a strong result, the region appears to be in good health. Nevertheless, with the Italian market beginning to show signs of peaking, and ongoing uncertainty in the UK, we believe that we will see the selling rate fall back in the coming months, with growth of 1.5-2% for 2018 as a whole.
  • Once again, Russian Light Vehicle sales came in slightly ahead of expectations in May, with an 18% YoY increase. Most manufacturers increased prices by 1-3% during May, and although the rouble has since recovered some ground, it seems likely that May sales were inflated by pull-forward sales. In May, the selling rate for Light Vehicles came in at just under 1.9 mn units/year compared to 1.8 mn units/year in April. In view of May’s strong sales, we have pushed up our Light Vehicle sales forecast slightly and now see a total market of 1.82 mn units in 2018 (+13.8%, YoY).

China

  • In China, sales (i.e., wholesales) remain buoyant. The May selling rate was just above 30 mn units/year, little changed from April. That brought the year-to-date (YTD) average selling rate to 29.2 mn units/year, slightly above last year’s total Light Vehicle sales of 28.6 mn units. On a YoY basis, deliveries to dealerships increased by 8+% in May and 5% so far this year. The market has gained some momentum in Q2, after sales in Q1 were impacted by the expiry of the temporary purchase tax cut in December 2017.
  • Looking ahead, the Chinese economy and Light Vehicle sales could be directly or indirectly impacted by the US’s protectionist trade policies and rising global oil prices. On the other hand, the reduction in the import duty on automobiles on 1st July is likely to boost sales of imports.

Other Asia

  • Aided by a strong job market, sales in Japan remained healthy in May, with the selling rate reaching 5.4 mn units/year. On a YoY basis, sales declined marginally, due to a high base effect. On the negative side, the new scandal at Subaru over the falsification of fuel efficiency data led to a plunge in the brand’s sales.
  • The South Korean market surprised on the upside again. The selling rate exceeded 1.8 mn units/year for the second consecutive month in May. On a YoY basis, sales increased by 1.3% in May and 1.1% YTD, a good result given that sales reached a record high last year. New model launches and rising asset prices helped boost sales.

South America

  • The Brazilian market slowed in May, disrupted by the truckers’ strike, which paralyzed the economy for over 10 days. The May selling rate of 2.36 mn units/year was nearly 14% lower than April (which was inflated due to the timing of Easter). On a YoY basis, sales increased by only 2.6% in May. Although the strike has ended, vehicle production and sales will take time to return to their normal levels.
  • Sales in Argentina remained resilient, despite the ongoing foreign exchange crisis. While the selling rate weakened slightly to 932k units/year, sales increased by nearly 9% YoY in May. Possibly, consumers are rushing to buy new vehicles before their peso savings lose their value further. Yet, the recent massive interest rate hikes and higher inflation are likely to start to undermine sales in the coming months.

 

Sales (units) Selling rate (Units/year)
May
2018
May
2017
Percent Change Year to date
2018
Year to date
2017
Percent Change May
2018
Year to date
2018
Year
2017
Percent Change
WORLD
8,115,865
7,765,268
4.5%
39,869,797
38,587,851
3.3%
98,339,123
96,991,191
95,285,990
1.8%
USA
1,592,864
1,513,817
5.2%
7,047,517
6,958,740
1.3%
16,855,704
17,029,325
17,189,430
-0.9%
CANADA
215,531
217,299
-0.8%
833,923
836,245
-0.3%
1,900,347
2,083,594
2,041,609
2.1%
WESTERN EUROPE
1,470,686
1,470,697
0.0%
7,268,418
7,149,811
1.7%
16,772,275
16,685,854
16,202,674
3.0%
EASTERN EUROPE
380,891
358,217
6.3%
1,751,557
1,569,980
11.6%
4,600,463
4,657,489
4,222,525
10.3%
JAPAN
368,148
368,514
-0.1%
2,249,861
2,275,306
-1.1%
5,438,488
5,205,798
5,164,249
0.8%
KOREA
154,253
152,219
1.3%
728,926
720,723
1.1%
1,811,678
1,770,507
1,751,938
1.1%
CHINA
2,229,789
2,059,566
8.3%
11,578,868
11,015,343
5.1%
30,028,373
29,184,328
28,603,646
2.0%
BRAZIL / ARGENTINA
274,511
263,108
4.3%
1,351,618
1,160,363
16.5%
3,291,023
3,378,047
3,029,738
11.5%
OTHER
1,429,192
1,361,832
4.9%
7,059,109
6,901,340
2.3%
17,640,772
16,996,247
17,080,181
-0.5%
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.