Data released by LMC Automotive suggests that the summer slowdown in global light vehicle sales appears to be over for now with the selling rate picking up in October to an estimated 92m units a year, one of the best readings on record.
The global market got a boost from strong sales in China and the US as well as a solid result in Europe. India also posted a strong result. The positive markets comfortably upset weak sales in Russia and Brazil.
October saw another historically high month in the US light vehicle market with a selling rate topping 18m units a year. LMC noted that consumer fundamentals in the US continue to improve, “though sustainability of continued strong growth is in question”.
Canadian light vehicle sales remain on target for a new record in 2015, after another strong showing in October.
The rate of growth cooled in Western Europe on October as the boom in the UK looks to be finally coming to a halt, though no major scaling back is expected there. But the slowdown in growth was not just concentrated in the UK as gains in sales in both France and Germany eased. From a selling rate perspective, at a 14.7m units a year level, the market remains in a “relatively solid position” LMC said.
However, the continued year-on-year decline in Russia dominates the picture in Eastern Europe and this is unlikely to change quickly, though it is clear that the market has found the bottom, according to LMC. LMC says the selling rate has hovered at around 1.5m units a year since April. Some cooling in other Central and East European countries, notably Turkey and the Czech Republic, was also evident.
Chinese consumers respond to tax cut with 26.8m-unit SAAR
LMC said that Chinese consumers have responded to the temporary purchase tax cut positively. According to preliminary data, the October selling rate spiked to a record high of 26.8m units a year, up nearly 14% from a lacklustre September. Passenger vehicles accounted for most of the gains, as the tax cut is only applied to vehicles with engine size 1.6 litres or below. Sales are expected to remain buoyant through the end of 2016 when the tax cut expires. The overall economy, however, continues to slow, with investment and exports decelerating further, LMC said. And that economic slowdown raises a concern over job growth and the sustainability of robust vehicle sales after the end of the tax cut, LMC noted.
In Japan, the October selling rate was a solid 5m units a year but, on a year-on-year basis, sales continued to fall as the economy is once again on the verge of recession, and prices (excluding fuel) are rising. Inexpensive Mini Vehicles led the decline.
In South Korea, the temporary consumption tax cut boosted the October selling rate to a record high of 1.9m units a year. The market is now expected to finish 2015 with the highest annual vehicle sales on record despite a relatively sluggish economy.
In Brazil, sales continued to weaken along with the deepening recession. The selling rate fell to 2.1m units a year in October, in the face of soaring inflation and rising unemployment. With the government struggling with fiscal reform efforts, the stagnation of the automotive market could become “prolonged”, according to LMC.
The Argentine market maintained relatively strong momentum last month, with the selling rate reaching 653,000 units a year in October. Robust government spending ahead of the presidential election helped boost sales, though LMC warned that the sustainability of the momentum is in question.