June showed a softening of global vehicle demand as Chinas market fell back, in spite of strength elsewhere - notably in the US

June showed a softening of global vehicle demand as China's market fell back, in spite of strength elsewhere - notably in the US

Data released by LMC Automotive shows that the global light vehicle market in June posted an annualised result similar to the previous month at around 87.2m units a year. The flat result was shaped by a decline in sales in China, Brazil and Russia, while the US and West European markets posted growth.

LMC noted that the decline in sales in China marked a significant change in the regional dynamics of the past couple of years in which "that market has been a pillar of strength".

North America still strong

In the US, June light vehicle sales hit 1,475,062 units - resulting in the strongest June since 2005 - translating into a selling rate of 17.1m units a year. LMC said several factors were evident in enticing consumers to purchase new automobiles including: an improving labour market, high consumer confidence, low interest rates, increased OEM incentives, and lower-than-normal summer gasoline prices. Canada's market also continued to show a strong trend, with light vehicle sales registered at approximately 178k units, representing a selling rate of 1.81m units a year.

Europe: Western Europe in recovery, but Eastern Europe sees sharp Russia fall

LMC said that Central and East European sales continued to decline as the dramatic drop in Russian demand hit the regional total: Russia sales were down by almost 30% in June and 36% in the year to date. In the rest of the region, however, the market has continued to do well: sales in non-Russia Eastern Europe were up by almost 20% in June, and 14% in the year to date.

Although there is uncertainty in to Greece's membership of the eurozone and associated economic issues, West European sales fared well in June, with sales rising by an estimated 14%. LMC said that the latest concerns have not yet fed through to consumers in the region. However, it said that its "expectations for the region have been lowered in response to fallout from the crisis". LMC does however see a major negative economic and vehicle market impact as "low probability".

China market goes into decline

According to preliminary data, China's June annual selling rate was 22.8m units a year, down over 4% from May. The selling rate declined month-on-month in five out of the six months so far this year. On a year-on-year (YoY) basis, sales fell by nearly 2% in June, LMC said. A notable development is that Passenger Vehicle sales declined YoY in June for the first time since the global financial crisis, excluding Januarys and Februarys in which year-on-year comparisons are distorted by the timing of the Chinese New Year holidays.

LMC noted that the Chinese economy continues to decelerate. While there is some news that the ailing property market is showing some signs of bottoming out, the recent sharp falls in the Shanghai stock market could dampen consumer confidence and spending, as individuals account for 80% of stock buyers in China.

Japan June rebound; Korea market strong

Elsewhere in Asia June was a relatively good month for Japanese car sales. The selling rate rebounded slightly to just below 5m units a year in June after a weak May. LMC said the summer bonuses from large corporations, a gradually improving job market, and higher stock prices helped support sales.

The selling rate in South Korea surged to a record high of 1.85m units a year in June. Sales were boosted by robust demand for SUVs. Luxury imports from Europe also sold well, thanks to a strong won.

Gloom in South America continues

The Brazilian market continued to decelerate sharply along with the deteriorating economy, in June. The June selling rate of 2.4m units a year was the lowest rate since the 2008 global financial crisis. The looming recession (the worst in 25 years) is hitting consumer spending, LMC said.

In neighbouring Argentina, the vehicle market remains highly volatile. The selling rate surged by 31% in June from the previous month, following a 17% decline in May. Sales were supported by a surge in government spending in the run-up to the presidential election.

Global light vehicle sales H1


June June % YTD YTD % SAAR SAAR
%

  2015 2014 change 2015 2014 change June 2015 YTD Year 2014 change
WORLD  7,526,638  7,362,507 2.2%  44,261,418  43,725,704 1.2%  87,222,404  87,763,693  87,362,753 0.5%
USA 1,475,062 1,418,520 4.0% 8,508,210 8,148,718 4.4% 17,128,692 16,854,338 16,490,861 2.2%
CANADA 177,857 175,786 1.2% 932,308 909,805 2.5% 1,806,172 1,816,517 1,852,549 -1.9%
W EUROPE 1,462,625 1,287,368 13.6% 7,725,765 7,130,037 8.4% 14,836,483 14,455,873 13,587,387 6.4%
E EUROPE 346,458 372,676 -7.0% 1,862,665 2,180,889 -14.6% 3,946,511 4,074,479 4,558,104 -10.6%
JAPAN 433,778 442,828 -2.0% 2,615,023 2,943,533 -11.2% 4,966,707 4,971,959 5,439,522 -8.6%
KOREA 157,061 136,881 14.7% 840,861 789,205 6.5% 1,853,633 1,728,056 1,624,669 6.4%
CHINA 1,819,362 1,851,783 -1.8% 12,034,402 11,726,698 2.6% 22,766,508 23,979,756 23,628,960 1.5%
BRAZIL/ARGENTINA 258,580 300,039 -13.8% 1,568,318 1,942,456 -19.3% 3,094,182 3,264,043 3,972,603 -17.8%
OTHER 1,395,855 1,376,627 1.4% 8,173,867 7,954,364 2.8% 16,823,516 16,618,673 16,208,098 2.5%

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.

SOURCE: LMC Automotive

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