After global auto sales accelerated sharply in the final months of 2016, gains are expected to continue over the coming year, lifting purchases to an eighth consecutive annual record, according to a new report from Scotiabank, Canada’s national bank.
Increased replacement demand in the United States and western Europe is expected will complement a renewed sales upturn in most emerging markets after several years of declining sales, the report states. However, China is projected to be the exception, with sales growth projected at one percent this year compared to a six percent increase in 2016.
The report noted the global economy gained momentum in the second half of 2016, and several economic indicators including employment growth, low interest rates, and credit conditions are encouraging consumers to replace their aging vehicles.
A boost in replacement demand, growing consumer confidence, and attractive financing options are expected to lift sales in the U.S. to a third consecutive annual record. As the world’s second-largest auto market, sales are expected to increase to 17.8 units this year as households continue to upgrade their existing vehicles (17.6 units in 2016).
In contrast, the report shows sales in both Canada and Mexico are projected to “edge lower” in 2017, despite several years of record vehicle sales. In Canada, recent price increases for new cars and light trucks and lower replacement demand will tamper sales. And after eight consecutive years of annual increases, the expected downturn in Mexico’s car sales is attributed to slowing economic growth, fiscal restraint, weak currency, and rising interest rates.
The full global report by Scotiabank can be viewed here.