LMC Automotive Global Light Vehicle Sales Update (July 2020)

2020/08/14

Summary

  • Global Light Vehicle (LV) sales fell by just 6.8% year‐on‐year (YoY) in July — somewhat better than results seen in previous months — while the selling rate rose to 85.7 mn units/year, continuing the upward trajectory observed since the peak of the pandemic in April.
  • While lockdown measures have generally been loosening, a risk of deterioration or a major second wave of infections remains present. One important aspect of the speed of selling rate recovery has been pent‐up demand, which itself masks the current underlying level of market strength. As in June, Korea and China continued to display positive YoY growth, while other regions showed diminishing YoY declines.



Commentary

North America

  • US Light Vehicle sales fell by 11.2% YoY in July, to 1.24 mn units, while the selling rate increased to 14.6 mn units/year, from 13.2 mn units/year in June. This represented a significant improvement after the slump of recent months, and came despite retail vehicle prices increasing by USD393 compared to June, while cash incentives barely changed. Fleet sales are still much weaker than retail, falling by 28.7% YoY in July, compared to an 8.4% YoY decline for retail sales.
  • According to the initial estimate, Canadian Light Vehicle sales fell by 5.5% YoY in July, as the market continued to trend back towards more normal levels, following the massive slump in the spring. The selling rate accelerated to 1.77 mn units/year in July, from 1.63 mn units/year in June. The recovery in Mexico has been more gradual; Light Vehicle sales were down by 31.2% YoY in July, to 73k units, while the selling rate increased to 898k units/year in July, from 786k units/year in June.

Europe

  • West European LV registrations fell by 5.7% YoY in July, while the selling rate climbed to a solid 15.7 mn units/year, putting it back into familiar, pre‐crisis, territory. Government incentive schemes and the lifting of the most heavy lockdown restrictions are serving to boost sales demand. However, it would be premature to assume that this is a straightforward return to normality: the uncertainty surrounding COVID‐19 and the threat of future containment measures are still very much present.
  • Eastern European LV sales rose by 17.6% YoY in July, with a selling rate for the month of 4.4 mn units/year. The Russian market saw solid growth of 6.8%, though Turkey’s growth went through the roof with a near fourfold YoY increase last month.

China

  • The Chinese market continues to make a V‐shaped recovery. Preliminary data indicate that wholesales increased by 13.2% YoY in July, accelerating from 6.6% growth in June. The July SAAR spiked to an impressive 30.7 mn units/year, the highest rate since September 2017. The average selling rate in the three months to July has far exceeded the pre‐pandemic level in Q4 2019.
  • In July, most automakers cancelled summer holidays, trying to catch up with production that they lost during the COVID‐19 outbreak. As a result, wholesales, that is, deliveries to dealerships, have been unusually strong. There are reports, however, that inventory is rising, suggesting that the current robust pace may not be sustainable.

Other Asia

  • Sales in Japan continued to improve, falling by only 13.9% YoY in July, compared to the recent trough (‐45% YoY) in May. Consumers are apparently purchasing vehicles (in particular, smaller vehicles) to avoid crowded public transportation. Sales of Mini Vehicles (engine size 660cc or less) continued to fare much better than non‐Mini Vehicles, accounting for almost 40% of total Light Vehicle sales. The recent sharp rise in new COVID‐19 cases, however, could hinder the recovery in sales.
  • In Korea, the selling rate slowed from an all‐time high of 2.3 mn units/year in June to 1.8 mn units/year in July, as the first phase of the temporary excise tax cut on Passenger Vehicles expired at the end of June. Yet, the market is performing exceptionally well, with sales increasing by nearly 8% year‐to‐date. Sales in H2 2020 will continue be supported by the second phase (reduced scale) of the temporary tax cut.

South America

  • Brazilian Light Vehicle sales fell by 29.7% YoY in July, to 164k units. This was an upbeat result compared to recent months, as shown by the selling rate, which rose to 1.82 mn units/year in July, up from 1.47 mn units/year in June. Some of this improvement may be attributed to delayed registrations due to office closures at the height of the pandemic, but demand also appears to be increasing, helped by aggressive incentives and high credit availability, with a 70% approval rate.
  • After modest YoY growth in June, Argentinian sales were down by 40.4% YoY in July, to 28k units. The selling rate slowed to 308k units/year in July, from 396k units/year in June, possibly adding weight to the view that June’s relatively strong sales were a reflection of pent‐up demand and delayed registrations from earlier in the year.

 

Sales (units) Selling rate (Units/year)
Jul
2020
Jul
2019
Percent Change Year to date
2020
Year to date
2019
Percent Change Jul
2020
Year to date
2020
Year
2019
Percent Change
WORLD
6,679,540
7,167,573
-6.8%
39,400,732
52,246,029
-24.6%
85,735,050
69,256,448
90,321,711
-23.3%
USA
1,237,839
1,393,745
-11.2%
7,653,425
9,796,922
-21.9%
14,638,251
13,353,232
16,991,330
-21.4%
CANADA
163,889
173,455
-5.5%
812,181
1,158,287
-29.9%
1,772,513
1,430,564
1,927,656
-25.8%
WESTERN EUROPE
1,268,634
1,345,381
-5.7%
6,475,813
10,053,675
-35.6%
15,650,508
10,853,051
16,283,558
-33.3%
EASTERN EUROPE
382,535
325,286
17.6%
1,935,110
2,295,328
-15.7%
4,352,188
3,529,552
4,127,016
-14.5%
JAPAN
390,482
453,657
-13.9%
2,567,966
3,172,116
-19.0%
4,353,323
4,202,846
5,128,473
-18.0%
KOREA
160,041
148,297
7.9%
1,075,351
997,935
7.8%
1,822,741
1,829,159
1,750,320
4.5%
CHINA
2,035,376
1,798,314
13.2%
11,807,656
13,930,529
-15.2%
30,681,588
21,777,988
25,500,447
-14.6%
BRAZIL / ARGENTINA
192,265
280,766
-31.5%
1,102,607
1,772,376
-37.8%
2,125,666
1,955,086
3,105,790
-37.1%
OTHER
848,479
1,248,672
-32.0%
5,970,624
9,068,861
-34.2%
10,338,272
10,324,968
15,507,122
-33.4%
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.