LMC Automotive Global Light Vehicle Sales Update (September 2018)

2018/10/22

Summary

  • Global Light Vehicle (LV) sales fell by 8.5% in year‐on‐year (YoY) terms in September, while the selling rate dropped to 90.2 mn units/year, from August’s record high of 99.7 mn units/year.
  • As expected, sales fell back in September following the implementation of WLTP – a new emissions testing procedure – which had pulled sales forward to August, mostly in Europe. However, a range of markets, from North and South America to the Asia‐Pacific region, also saw YoY declines.



Commentary

North America

  • September new US LV sales finished at 1,443,000 units, down 5.2% YoY. Retail sales dropped 8.4% to 1,150,000 units. However, the recent launch of the Tesla Model 3 bolstered the Compact Premium Car segment, which rose 44% YoY. Fleet sales continued to grow with a 10% YoY increase. This September performance translates into a selling rate of 17.6 mn units/year, up 780k from August.
  • Canada and Mexico also witnessed YoY slumps in sales. The Canadian market fell 6.8% YoY, to 175,000 units. This translates into an annualised selling rate of 1.9 mn units/year; besides last month, only April and July were below 2 mn units/year in 2018. In Mexico, sales fell for the 16th consecutive month. In September, 114,000 units were sold, which translates into a selling rate of 1.5 mn units/year.

Europe

  • Western European sales were badly hit by WLTP‐related distortion, with LV registrations falling 20.7% YoY in September, and the selling rate dropping to 13.2 mn units/year, from 20.3 mn units/year in August. However, this was clearly payback for August’s exceptionally high volumes as purchases were pulled forward ahead of the new WLTP emissions testing deadline of 1st September. In addition, some models were unavailable throughout September, due to backlogs in gaining approval under WLTP. As these models become available once again, we expect the pace of sales to pick up.
  • WLTP is not being implemented in Russia just yet, but Eastern Europe still saw LV sales drop by 15.1% YoY in September, driven by a dreadful 67.7% YoY fall in Turkish sales. The Russian LV market expanded by 6% in September to reach 157k, while the Russian selling rate increased to 1.75 mn units/year, from 1.49mn units/year in August. Our market forecast for 2018 is largely unchanged; we still see sales coming in at just below 1.8 mn units (+12.6%, YoY).

China

  • The world’s largest automotive market continues to decelerate. According to preliminary data, the September selling rate was a 16‐month low of 26.6 mn units/year, down 5.5% from August and the fifth consecutive month of MoM decline. On a YoY basis, LV sales (i.e., wholesales) declined by 10.3% in September, the third consecutive month of YoY decline. The slowdown was driven by an 11% fall in Passenger Vehicle sales, while Light Commercial Vehicle sales held up relatively well.
  • Sluggish sales reflect weakening consumer confidence, amid the escalating US‐China trade conflict, falling stock prices and the decelerating property market. With inventory rising, the Chinese Automobile Dealers Association is urging the government to take policy measures to boost demand, such as a tax cut.

Other Asia

  • In Japan, the selling rate slowed to 5 mn units/year in September after a surprisingly robust August. Yet, any rate above 5 mn is a good result for this mature and shrinking market. Sales have remained resilient, falling just 2% YoY in September, despite the fact that a number of powerful typhoons and major earthquakes have hit Japan lately. A strong job market and rising wages are supporting new vehicle sales.
  • As expected, the South Korean market slowed sharply in September, due to the long Chuseok holiday. Sales declined by 17.4% YoY in September against strong sales a year ago, since the lunar holiday fell in October last year. However, sales are expected to rebound strongly in Q4, boosted by the temporary tax cut on Passenger Vehicles, which is set to expire at the end of this year.

South America

  • Sales in Brazil grew more slowly in September, at 6.1% YoY, after a surprisingly strong August. The September selling rate was 2.46 mn units/year, closely aligned to the year‐to‐date average rate of 2.45 mn units/year. Consumers remained cautious about spending in the face of volatility in the financial markets and political uncertainty ahead of the October presidential election.
  • Amidst the country’s financial crisis, sales in Argentina continued to nose‐dive, with the selling rate plummeting to 534k units/year in September. On a YoY basis, sales plunged by 33.4% in September, the fourth consecutive month of sharp decline. With the recession deepening and inflation expected to exceed over 40% in the coming months, sales are not likely to stabilise soon.

 

Sales (units) Selling rate (Units/year)
September
2018
September
2017
Percent Change Year to date
2018
Year to date
2017
Percent Change September
2018
Year to date
2018
Year
2017
Percent Change
WORLD
7,885,210
8,618,383
-8.5%
71,153,025
69,960,529
1.7%
90,222,912
96,542,432
95,297,578
1.3%
USA
1,442,532
1,521,406
-5.2%
12,906,934
12,841,628
0.5%
17,556,170
17,142,972
17,189,409
-0.3%
CANADA
174,999
187,692
-6.8%
1,589,262
1,593,749
-0.3%
1,937,918
2,051,343
2,042,737
0.4%
WESTERN EUROPE
1,226,182
1,545,664
-20.7%
12,650,572
12,445,891
1.6%
13,189,629
16,760,816
16,202,605
3.4%
EASTERN EUROPE
301,036
354,466
-15.1%
3,136,604
2,980,872
5.2%
3,635,733
4,454,016
4,222,522
5.5%
JAPAN
479,555
489,411
-2.0%
3,970,684
4,005,904
-0.9%
5,028,350
5,199,708
5,164,249
0.7%
KOREA
124,795
151,168
-17.4%
1,302,276
1,314,003
-0.9%
1,537,534
1,762,659
1,751,938
0.6%
CHINA
2,405,568
2,683,267
-10.3%
20,191,127
19,946,801
1.2%
26,604,054
28,650,258
28,608,998
0.1%
BRAZIL / ARGENTINA
255,243
268,842
-5.1%
2,437,959
2,241,504
8.8%
2,995,738
3,279,091
3,029,738
8.2%
OTHER
1,475,300
1,416,467
4.2%
12,967,607
12,590,177
3.0%
17,737,786
17,241,568
17,085,382
0.9%
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.