Global light vehicle sales stabilized in March with an annualized selling rate of 81.3 million units. China, the United States and Japan continued posting strong, growing results, moving the overall global auto market to near record levels. A slowing in some emerging markets, including India and Russia, is thought to be temporary, according to LMC Automotive economists.
As AutoInformed previously reported, U.S. light vehicle sales were the strongest since June 2007 at 1.45 million units. This was the fifth consecutive month where the selling rate was at or above 15.2 million units annually. The Detroit Three are being helped here by an improving U.S. housing market that is helping to increase the sales of large pickup trucks where they dominate. The Compact Premium crossover segment is also posting strong sales. Canada’s March 2013 sales were flat year-on-year with a 1.67 million units a year selling rate. Car sales remain sluggish.
Things as usual were dismal in Western Europe as sales continued to languish. March’s 12.5 million rate is consistent with the first quarter, but the increase in the rate of decline is worrisome. There’s no good news is in sight for the balance of 2013, a problem for virtually all major automakers, including the Detroit Three who are losing billions there.
Eastern European sales, while stable, are not helping allay regional European concerns. Russian sales were a little weaker than expected, but LMC says this does not warrant a forecast downgrade yet. “We continue to expect that Russian Light Vehicle sales will be marginally higher this year than last.”
In China the selling rate reached 20.1 million units a year in March, up 2.6% from February, and averaging at 21.2 million units annually during the first quarter of 2013. That is an improvement from an average of 19.7 million in the fourth quarter of 2012. The Chinese central bank has continued to remove cash from the economy since mid-February in order to stem inflationary pressures and the renewed risk of the overheating in real estate. LMC’s forecast remains little changed, but downside risks arise from measures to reduce air pollution in big cities, the possible spread of the bird flu, and a still uncertain global outlook.
In Japan, the rapid depreciation of the yen and the stock market rally continue to increase confidence and vehicle sales. However, rising prices could start to erode consumers’ purchasing power unless income growth increases.
South Korea saw the selling rate rise to 1.5 million units per year in March, up nearly 4% from February, despite rising tensions with North Korea. If North Korea stops escalating threats and harassing actions. Two U.S. Navy carrier groups in the area should calm things down, although at great expense to American taxpayers. Vehicle sales should remain solid this year, supported by the government’s increased social spending.
Brazil’s selling rate in March is estimated at 3.1 million units annually, flat from a weak, yet upwardly revised, February. LMC noted that soaring inflation, falling stock prices, and already high household debt are constraining growth. The government has extended the IPI tax cut through the end of 2013, but the positive impact of the tax incentive is fading.
In Argentina, the selling rate averaged 823,000 units annually during Q1 of 2013. The volatile market continues to go through large swings but, on average, the selling rate appears to have plateaued at 800,000-900,000 units per year. The government’s erratic economic policies remain the main obstacle for the market’s growth in LMC’s view.
