TORONTO, Oct. 30 /CNW/ - Crossover Utility Vehicles (CUVs) are buoying
Canadian vehicle output, with assemblies surging by nearly 30 per cent through
September, according to the latest Global Auto Report released today by Scotia
Economics. Canada currently produces about 27 per cent of all CUVs assembled
in North America, roughly 10 percentage points higher than our share of the
region's total production.
    CUV output in Canada has benefitted from the assembly of the Ford Edge
and the Lincoln MKX in Oakville, and will get an additional boost in 2008,
when Toyota starts producing the new RAV4 crossover at its new 150,000-unit
facility in Woodstock.
    Despite a three per cent year-over-year decline in overall U.S. vehicle
sales so far this year, purchases of CUVs, compact and mid-size SUVs built on
car platforms, continue to soar throughout North America. U.S. volumes have
surged by 16 per cent this year to 2.1 million units, leapfrogging past sales
of both small cars and pickup trucks. CUVs are now the second-largest segment
in the United States, behind only mid-size cars which have year-to-date sales
of 2.4 million units.
    "CUVs have existed as a segment only since the 2000 model year, and like
Sport Utility Vehicles (SUVs) in the nineties, the segment has witnessed
phenomenal growth, climbing from only seven per cent of overall Canadian and
U.S. vehicle sales in 2002, to more than 17 per cent so far this year.
However, in contrast to the SUV craze which peaked in 2003, demand for
crossovers should continue to expand over the next decade," said Carlos Gomes,
Scotiabank's auto industry specialist. "As a result, we expect CUVs to become
the largest segment in North America next year, overtaking mid-size cars."
    In Canada, CUV volumes have surged by an even faster 25 per cent this
year, partly due to Ottawa's rebate for fuel-efficient vehicles, such as
Chrysler's new crossovers, the Compass and Patriot. These two models have
accounted for seven per cent of the Canadian crossover market this year, more
than double their three per cent share south of the border.
    The popularity of the Big Three's CUVs is partly offsetting double-digit
declines in sales of minivans, SUVs and pickup trucks, segments that account
for more than half of the Big Three overall cars and light truck sales.
Crossovers now account for 20 per cent of the Big Three's overall light truck
volumes, up from less than 14 per cent a year ago. CUVs will continue to gain
momentum, as SUVs, minivans and pickups succumb to changing consumer
preferences, due to the fallout from high gasoline prices and a softening U.S.
housing market.
    "While media attention focuses the weakness in SUVs and pickup trucks,
minivans are the worst-hit segment of the U.S. auto markets this year, with
volumes plunging 18 per cent below a year ago," said Mr. Gomes. "Minivan sales
peaked in Canada and the United States at 2.1 million units in 1999, but will
decline to only 1.1 million in 2007, nearly 50 per cent below the peak set
less than a decade ago, as consumer increasingly shift to more attractive
CUVs, which in some cases can seat up to seven people."
    Given double-digit declines in sales of traditional light trucks,
crossovers will be key in stabilizing the Big Three's market share. These
models have already helped lift Detroit's overall share in the United States
back above 51 per cent in both August and September. Detroit's share had
fallen to a record low of less than 50 per cent in July.
    "With CUVs striking a chord with the public, inventories are low and some
automakers are ramping up production, at a time when overall vehicle
assemblies across North America are set to drop to the lowest level since the
economic downturn of the early 1990s," says Mr. Gomes.

    Global Auto Sales

    Global vehicle sales continue to advance, climbing three per cent through
September, despite ongoing weakness in the mature markets of the United States
and Western Europe. South America has become the fastest-growing region in
2007, with car sales surging by 24 per cent so far this year, led by a
blistering 27 per cent gain in Brazil. China and Brazil are running neck and
neck, competing for the title of fastest-growing auto market. Other large
developing nations, such as India and Russia, also continue to experience
rapid sales gains.
    GM and Ford are benefitting from a robust expansion overseas. GM's global
volumes climbed four per cent in the third quarter, buoyed by a 14 per cent
gain outside of North America. Despite a seven per cent year-over-year decline
in the company's U.S. sales, global purchases were boosted by a 22 per cent
surge in Latin America and a 16 per cent gain in Asia, led by China. Non-U.S.
sales now account for about 56 per cent of global volumes at both GM and Ford,
up from about one-third as recently as 2003. Rapid growth in overseas sales
has enabled GM to recapture the global sales title from Toyota, after briefly
being dethroned in the opening months of 2007.

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shaping the outlook for Canada and the global economy, including macroeconomic
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