• Vehicle sales are also picking up in most regions

TORONTO, Oct. 11, 2011 /CNW/ - The global auto industry is rebounding from this summer's supply-chain-induced disruptions, according to the latest Global Auto Report released today by Scotia Economics.  Global vehicle production bottomed in May, and will continue to strengthen in coming months. Sales have also begun to improve in most regions, after being held back in recent months due to product shortages, especially for Japanese automakers.

Global vehicle output rose five per cent year over year (y/y) in August - a sharp improvement from a two per cent decline in the second quarter, when parts shortages from Japan forced cutbacks at many facilities throughout the world. Assemblies are scheduled to post a further double-digit increase in the final months of 2011.

"Asia remains the epicentre of the turnaround, with auto production jumping seven per cent year over year in August, and a further double-digit gain is likely in the October-December period," Carlos Gomes, Senior Economist and Auto Industry Specialist for Scotia Economics. "In August, assemblies in Asia totalled an annual rate of 40 million units - up from a low of only 31 million in April. We expect assemblies in the region to jump to an annual rate of 44 million units in for the final months of 2011, surpassing the late-2010 peak and accounting for a record 57 per cent of global vehicle output."

In North America, automakers boosted third-quarter production to an annualized 13.2 million units, a sharp acceleration from the slowdown in the April-June period, when supply chain disruptions cut North American assemblies to an annual rate of only 12.5 million units. Despite the improvement, output remains below the early 2011 high and below the industry's original third-quarter target of 14.0 million units set in early July.

"The recent rebound in U.S. volumes and low inventories for Japanese automakers have prompted manufacturers to schedule a further seven per cent quarter-to-quarter jump in North American assemblies during the final months of 2011," noted Mr. Gomes. "We estimate that this translates to an annualized production rate of 14.1 million units - a level above the early-2011 high and the highest level since the opening months of 2008, prior to the sharp fall-off in global economic activity later that year. This increase will likely add half of a percentage point to economic growth across North America in the final months of 2011."

While the rebound in production across North America is broad-based, it is being led by more than a 20 per cent y/y increase at Japanese-owned facilities, as these automakers attempt to restock depleted inventories. While production at Japanese plants across North America are now back to normal, inventories for these automakers remain 18 per cent below the industry average.

The auto industry is one of the largest manufacturing sectors in North America and consumes an extensive and diverse quantity of inputs, including steel, plastics, metals and electronics. These feeder industries are also boosting production, with North American steel output rising 8.5 per cent y/y in September, compared with only a one per cent advance in May.

Vehicle sales re-gain momentum

Global vehicle sales have also began to strengthen, reversing five months of decelerating growth. Purchases jumped six per cent y/y in August and appear to have continued to gain momentum last month. While data for September are still limited, global volumes for two major South Korean automakers accelerated to a 15 per cent y/y gain - the sharpest increase since January, led by record volumes in China. Car sales in Japan also climbed above a year earlier in September for the first time since August 2010.

In the United States, passenger vehicle sales posted a double-digit increase last month, advancing to an annualized 13 million units - the highest level since April. Light trucks led the way, with both pickup truck and SUV volumes surging more than 20 per cent above a year earlier.

"Canadian sales were held back by sharp declines for Japanese models," concluded Mr. Gomes. "Sales totalled an annualized 1.59 million units in September, down from an average of 1.61 million during the previous three months. However, outside of Japanese brands, which may still be constrained by product availability, the recovery remains intact with volumes advancing year over year for the 22^nd consecutive month."