August Marks A Year of Decline for Global Auto Sales

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GLOBAL OVERVIEW

  • Global auto sales fell by 3.6% y/y (nsa) in August marking the twelfth month of consecutive declines.
  • Year-to-date [global] sales are down by 6.0% y/y (nsa), not far from where we expect global purchases to close out the year.
  • The sales rate picked up modestly (by 1.5% m/m sa) for a second month in a row but will do little to offset the downward trend for 2019.
  • A strong sales month for the US largely drove headline numbers globally as most other major markets saw flat or declining sales. Japan was another exception, but largely due to a pull-forward of purchases.
  • Major central banks have started to ease interest rates around the world, but heightened economic uncertainty risks eroding the full benefit.
  • Time is running out for policy responses to recover lost ground.

CANADA

  • Canadian auto sales posted a modest uptick in August with a 0.6% y/y (nsa) headline increase.
  • Solid fundamentals in the Canadian economy are not materially translating into auto sales growth.
  • High debt servicing costs are likely creating headwinds to higher auto purchases in Canada.
  • The sales rate picked up in August by 2.5% m/m (saar), but remains highly volatile.
  • Traditionally strong September sales will likely face headwinds.
  • We maintain our forecast at 1.94 mn units for total sales in 2019.
  • Auto sales across regions and provinces continue to be mixed.

USA

  • The US saw a strong surge in August auto sales of 10.5% y/y (nsa).
  • A second policy rate cut by the Federal Reserve in September, though more hawkish in its delivery than market expectations, should continue to underpin auto sales as the year advances.
  • US auto sales should close out the year on solid footing.

MEXICO

  • Mexican auto sales continue to slide steeply.
  • Mexico’s September Budget 2020 did little to bolster confidence.

ASIA-PACIFIC

  • Chinese auto sales continued to deteriorate in August with a 7.7% y/y (nsa) drop, a fourteenth consecutive month of declines
  • US-China trade tensions will remain the dominant headwind to Chinese auto purchases for the foreseeable future.
  • Japan continued to post positive auto sales growth in August with a 6.7% y/y (nsa) boost.
  • More generally, economic conditions will create headwinds for Japanese auto sales for the remainder of the year.
  • Indian auto sales continue to deteriorate sharply with a second month of near 30% y/y (nsa) decline in purchases.

EUROPE

  • All eyes are on Germany as it fends off a stalling economy.
  • German auto sales saw a 0.8% y/y (nsa) decline for the month.
  • Auto sales across the region otherwise continue to decline.
  • Easing by the European Central Bank should provide a modest boost to sales as the year advances.

SOUTH AMERICA

  • South American auto sales fell across the region in August.
  • Meanwhile, Argentinian auto sales continue to plummet with a drop of almost 30% y/y (nsa) for August as the government struggles to stabilize its economy.

Source: BNS

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