LMC Automotive Global Light Vehicle Sales Update (April 2019)

2019/05/20

Summary

  • Global Light Vehicle (LV) sales fell 6.9% in year-on-year (YoY) terms in April, while the selling rate was also down, to 88.7 mn units/year, from 91.9 mn units/year in March.
  • April’s sales represented another setback for a stuttering Global LV market. With a substantial YoY decline in Chinese LV sales, further evidence of a slowdown in North America, and no YoY growth in Western Europe, there was little positive news from the world’s largest markets.



Commentary

North America

  • US LV sales continued their downward trend in April. Sales were down by 2.2% YoY to 1.33 mn, which translates into an annualised rate of 16.4 mn units/year, down by 980k units from an abnormally high rate of 17.4 mn units/year in March. Even fleet sales were down (-1.1% YoY), but retail fell faster at 2.5% YoY. April’s average transaction prices were the highest so far in 2019 at $33,809 (+4.2% YoY).
  • LV sales in Canada reached 184k units in April, down by 3.6% YoY. Although this was the highest volume so far in 2019, the selling rate fell to 1.9 mn units/year, down by 84k from March. Vehicles were slightly more affordable in April, with average transaction prices falling by roughly $1k. With Easter being celebrated in April this year, sales in Mexico dropped by 9.1% YoY to just 97k units – the first time they have not reached 100k since April 2015. The annualised rate also dropped from March, falling by 280k to 1.3 mn units/year.

Europe

  • Western European LV sales were flat in YoY terms in April, but this represented an improved performance compared to previous months. The selling rate advanced to 16.3 mn units/year, from 16 mn units/year in March, implying that the region has found a degree of stability after recent fluctuations. Sales are still down 2% YoY for the year to date (YTD), but the final four months of the year should see significant growth, as a consequence of the low base effect stemming from last year’s WLTP implementation. Current downside risks include a still-uncertain Brexit and a possible escalation in trade friction between the USA and both China and the EU.
  • Russian LV sales disappointed in April, coming in at just over 148k, a drop of 2.7% YoY. LV sales for the first four months of the year dropped by 1% YoY, but the month-to-month performance has been volatile. Perhaps influenced by government incentive schemes, domestic “lower-cost” brands fared better in April; whereas premium brands generally performed poorly. Despite April’s setback, we still expect comfortably positive YoY growth for 2019 as a whole.

China

  • According to preliminary data, sales (i.e., wholesales) in China decelerated again after a strong rebound in March. The April selling rate (which is adjusted by selling days) was 23.6 mn units/year, down more than 11% from March, bringing the YTD average selling rate to 24 mn units/year. On a YoY basis, sales declined by over 14% in April and almost 13% YTD.
  • The return to a double-digit decline reflects the fact that automakers started to destock inventory at dealerships, ahead of the major upgrade in the emission standard from State V to State VI.  In some regions, the shift to the new emission standard has already been implemented, and in some other regions, it will be implemented this year, ahead of the nationwide launch in July 2020. In addition, consumers and businesses are taking a wait-and-see approach, since the government is expected to introduce extensive stimulus measures to boost the automotive market. The likelihood of the stimulus measures has risen, due to the renewed escalation of the US-China trade conflict.

Other Asia

  • After a sharp slowdown in the previous two months, the selling rate in Japan soared to 5.8 mn units/year in April, up 25% from a weak March, boosted by new model launches. On a YoY basis, sales rose 3.4% in April. The planned consumption tax hike on 1 October 2019 may be already pulling sales ahead, too. Yet, the cloudy economic outlook and weakening consumer confidence are a concern.
  • In South Korea, the April selling rate was a solid 1.7 mn units/year, but that was still down nearly 6% from a robust March. On a YoY basis, sales declined by 3.7% in April and 3.1% YTD. The renewed tensions in the US-China trade conflict and the slowing economy could undermine sales further in the coming months.

South America

  • Sales continue to recover in Brazil, with 221k LVs sold in April. That represents a 4.9% YoY increase and translates into a 2.64 mn units/year selling rate, up by 123k from March and the highest so far in the year. Nevertheless, if we exclude March’s Carnival-impacted result, April saw the weakest YoY sales growth since June 2018.
  • In Argentina, LV sales remain extremely weak under severe macroeconomic conditions. April sales plummeted by 52.2% YoY to 36k units. The annualised rate was somewhat stable from last month, losing just over 3k to 430k. Nevertheless, this was the lowest selling rate so far during this crisis.

 

Sales (units) Selling rate (Units/year)
Apr
2019
Apr
2018
Percent Change Year to date
2019
Year to date
2018
Percent Change Apr
2019
Year to date
2019
Year
2018
Percent Change
WORLD
7,198,923
7,734,868
-6.9%
29,730,508
31,823,948
-6.6%
88,710,287
89,425,730
94,627,915
-5.5%
USA
1,329,621
1,359,166
-2.2%
5,314,794
5,467,024
-2.8%
16,403,638
16,679,536
17,301,160
-3.6%
CANADA
184,251
191,059
-3.6%
599,768
620,116
-3.3%
1,892,778
1,968,211
2,000,736
-1.6%
WESTERN EUROPE
1,382,255
1,382,572
0.0%
5,681,073
5,798,660
-2.0%
16,281,673
16,437,813
16,148,973
1.8%
EASTERN EUROPE
340,709
381,778
-10.8%
1,258,447
1,370,630
-8.2%
3,844,561
4,165,987
4,231,177
-1.5%
JAPAN
374,143
361,861
3.4%
1,882,360
1,881,713
0.0%
5,824,095
5,354,152
5,201,809
2.9%
KOREA
151,447
157,271
-3.7%
557,145
574,673
-3.1%
1,704,328
1,737,936
1,777,379
-2.2%
CHINA
1,935,214
2,258,297
-14.3%
8,175,462
9,349,619
-12.6%
23,603,193
24,056,239
27,744,712
-13.3%
BRAZIL / ARGENTINA
256,834
285,152
-9.9%
971,443
1,077,529
-9.8%
3,066,662
3,061,351
3,247,220
-5.7%
OTHER
1,244,449
1,357,712
-8.3%
5,290,016
5,683,984
-6.9%
16,089,359
15,964,504
16,974,749
-6.0%
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.