Record global car sales expected in 2017: Scotiabank

Global car sales accelerated sharply in the final months of 2016 and are expected to continue in 2017, albeit more slowly, as global growth rises an expected 3.4%, Scotiabank says in a report.

Employment growth — the key driver of car sales — is advancing at the fastest pace in more than a decade, the bank says. The result is expected record car sales for the eighth consecutive year.

Read: Don’t be too bullish on 2017 growth

Increased replacement demand in the U.S. will be complemented by a renewed sales upturn in most emerging markets, which represent 20% of the global car market.

Read: U.S. posts highest industrial output in two years

China is the exception, however, with an expected slowdown. The country’s auto sales are expected to grow only 1% in 2017, down from 6% in 2016.

“Although purchases are expected to decline in China for the first time since 2008, sales in the rest of the emerging world will lead sales gains in 2017 and reverse four consecutive years of decline,” Carlos Gomes, senior economist and auto industry specialist at Scotiabank, says in a release.

Eastern Europe is likely to lead the sales gains among emerging markets. Activity in South America will also begin to reverse the nearly 40% slump of the past three years, as double-digit declines come to an end in Brazil, and purchases begin to move higher in the region’s other markets. Peru has been the most stable auto market in South America in recent years on an expansion of the mining sector.

Read: India leads global economy upswing: Scotiabank

Sales drop in Canada and Mexico

In contrast, after several years of record vehicle sales in Canada and Mexico, purchases are expected to edge lower in 2017.

In Canada, volumes will be undercut by recent price hikes for new cars and light trucks, as well as lower replacement demand than in the United States.

Meanwhile, slowing economic growth combined with fiscal restraint, rising interest rates and a weak currency are expected to reduce car sales in Mexico. More than 40% of vehicles sold in Mexico are imported, and the 26% plunge in the Mexican peso versus the U.S. dollar during the first half of 2016 will likely create some sticker shock for many potential car buyers.

Staff

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