LMC Automotive Global Light Vehicle Sales Update (August 2018)

2018/09/19

Summary

  • Global Light Vehicle (LV) sales grew by 2.7% in year‐on‐year (YoY) terms in August, while the selling rate hit an all‐time high, at 99.7 mn units/year, up from 96.1 mn units/year in July.
  • However, this spike was almost entirely due to distortions in Europe linked to the introduction of WLTP – a new emissions testing procedure – which pulled sales forward. We expect that European sales will fall in the coming months as a result, so that the effect is neutral for the year overall. Chinese LV sales fell YoY in August, while there was little growth in North America.



Commentary

North America

  • US consumers bought 1,488,000 Light Vehicles in August, up by 0.6% YoY. Retail sales were virtually flat, up by 0.1% YoY to 1,266,000 units. On the other hand, fleet sales kept their growth streak and gained 3.3% YoY, reaching almost 222,000 vehicles. Cash incentives were down $17 from July 2018, but increased $17 from July last year. This August performance translates into a selling rate of 16.7 mn units/year, while our forecast for the year stands at 17.2 mn.
  • While the US had a positive performance, Canada and Mexico lost sales from August 2017. In Canada, they dropped 0.6% YoY, to 183,000 units, but the selling rate reached 2 mn units/year for the first time since March. In Mexico, YoY sales dropped for the 15th consecutive month, to 118,000 units. This translates into a selling rate of 1.4 mn units/year, down 43k from July.

Europe

  • West European Light Vehicle registrations grew by 22.6% year‐on‐year (YoY) in August, while the selling rate jumped to 20.3 mn units/year, from 16.6 mn units/year in July. However, it should be remembered that the extraordinary growth in many markets was really a distortion caused by the transition to WLTP (the worldwide harmonized light vehicles test procedure) emissions testing, as suppliers rushed to self‐ register vehicles before the deadline, while savvy buyers may have brought forward purchases. We still expect West European LV growth of 1.7% in 2018.
  • Russian LV sales expanded by 11% YoY in August, bringing the cumulative increase for the first eight months to 16.2%. The August LV selling rate was little changed from July at 1.5 mn units/year. Although the weaker Ruble seems to be contributing towards price hikes, the planned 2% increase in VAT from 1st January may lead to a pull‐forward effect at the end of the year. We now expect 2018 LV sales to be just under 1.8m units (+12.8%).

China

  • The Chinese market continued to lose momentum in the face of the heightened trade tensions with the US. Preliminary data indicate that the August selling rate was 28.1 mn units/year, down 1.3% from July, and the fourth consecutive month of MoM decline. On a YoY basis, sales (i.e., wholesales) fell for the second straight month in August, dragged by weaker Passenger Vehicle sales. In contrast, Light Commercial Vehicle sales performed well. Imports from countries other than the US sold well, too, thanks to the import tariff reduction on 1st July.
  • The slowdown in sales reflects anxiety over the escalating trade conflict and the sharp fall in stock prices. The recent steep depreciation of the Yuan and rising fuel prices must be eroding consumers’ purchasing power, too.

Other Asia

  • The August selling rate in Japan reached a strong 5.4 mn units/year, despite a record number of powerful typhoons hit the country. A very tight job market and slowly rising wages are helping to boost consumer spending on new vehicles, while businesses are wary about the uncertain trade outlook. Nonetheless, on a YoY basis, sales declined marginally so far this year, after exceptionally strong sales last year.
  • In South Korea, the selling rate reached a robust 1.88 mn units/year in August, thanks to the temporary tax cut on Passenger Vehicles. Sales must have been pulled ahead, too, because the WLTP became mandatory for all diesel models on 1st September. On a YoY basis, sales increased by 5% in August and 1% YTD.

South America

  • The Brazilian market registered an unexpected surge in August, with the selling rate reaching 2.7 mn units/year, up 15% from July. On a YoY basis, sales increased by 14%, the second consecutive month of double‐digit growth. However, such a strong pace is unlikely to be sustained, given a weakening Real, rising inflation, and political uncertainty ahead of the October presidential election.
  • The Argentine market took another dive in August, in the face of the plunge in the Peso and soaring inflation and interest rates. The selling rate hit a two‐year low of 678k units/year in August, the third straight month of steep decline. Sales are expected to decelerate further, as the government is accelerating fiscal austerity measures to arrest the foreign exchange crisis.

 

Sales (units) Selling rate (Units/year)
August
2018
August
2017
Percent Change Year to date
2018
Year to date
2017
Percent Change August
2018
Year to date
2018
Year
2017
Percent Change
WORLD
7,523,016
7,326,255
2.7%
63,259,164
61,336,596
3.1%
99,680,666
97,257,974
95,291,682
2.1%
USA
1,487,914
1,478,980
0.6%
11,462,253
11,320,223
1.3%
16,749,501
17,088,191
17,189,410
-0.6%
CANADA
183,258
184,376
-0.6%
1,408,528
1,405,987
0.2%
2,004,645
2,060,391
2,042,556
0.9%
WESTERN EUROPE
1,127,291
919,245
22.6%
11,414,569
10,900,122
4.7%
20,324,921
17,184,846
16,202,578
6.1%
EASTERN EUROPE
347,807
333,423
4.3%
2,829,609
2,626,407
7.7%
4,050,256
4,471,026
4,222,522
5.9%
JAPAN
360,573
347,729
3.7%
3,492,686
3,516,493
-0.7%
5,444,126
5,224,038
5,164,249
1.2%
KOREA
142,866
136,043
5.0%
1,176,112
1,162,835
1.1%
1,881,364
1,788,500
1,751,938
2.1%
CHINA
2,104,980
2,161,668
-2.6%
17,782,452
17,258,276
3.0%
28,115,936
28,901,039
28,603,646
1.0%
BRAZIL / ARGENTINA
302,088
293,031
3.1%
2,182,496
1,972,662
10.6%
3,420,502
3,314,215
3,029,738
9.4%
OTHER
1,466,238
1,471,761
-0.4%
11,510,459
11,173,592
3.0%
17,689,414
17,225,729
17,085,046
0.8%
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.