TORONTO, Jan. 30, 2018 /CNW/ - Global car sales are expected to gather speed in 2018 to a ninth consecutive annual record. A further acceleration in economic growth across all regions and healthy financial conditions are expected to extend the sales cycle further. The industrialized G7 nations represent nearly half of global auto purchases, with sales projected to advance by 1.5% in 2018. These markets are likely to constitute roughly 20% of the growth in global sales volumes this year.

"Stronger economic growth and replacement demand are expected to drive sales higher in North America and Western Europe during 2018," said Carlos Gomes, Senior Economist and Auto Industry Specialist, Scotiabank. "We also anticipate that developing markets, which accounted for more than 85% of the increase in global sales last year, will continue to lead growth going forward."

Sales in the key US market are projected to climb to 17.4 mn units this year, bolstered by strengthening economic growth, accelerating income gains, and the best vehicle affordability that has been observed in the past decade. Americans continue to drive their vehicles more than ever, at a time when the age of the vehicle fleet is at record highs. Roughly 40% of the US fleet is at least 13 years old, which means there are more than 100 mn cars and light trucks on the road in the US that will have to be scrapped over the next several years.

Canadian purchases climbed to a record 2.04 mn units last year alongside stronger-than-expected economic growth and job creation. However, some moderation in employment and income growth combined with decreasing affordability are likely to reduce Canadian car and light truck purchases to 2 mn units in 2018, the second-highest level on record.  

In developing markets, China remained a key driver of global sales gains, but its share of global growth has moderated to less than 40% last year, from roughly 60% since 2008. China's share of global sales gains will likely decline to less than 30% in 2018, as other developing markets shift to the forefront of growth and account for more than half of the increase in global sales. 

Developing markets in Asia, excluding China, are projected to lead with the highest growth rates this year as volumes are likely to jump 10% y/y, the best performance since 2010. Several Asian countries, including Thailand and the Philippines, reported double-digit sales gains last year and are expected to remain on this pace in 2018. The advance is expected to broaden as stronger economic growth and increased export momentum boost labour markets and incomes.

Other highlights:

• Traditional-engine models still account for 99% of overall global sales, and are expected to continue to garner more than 90% of the global market in a decade.
• Sales in Western Europe are projected to increase to 14.5 mn units in 2018, bolstered by the strongest economic growth of the past decade.
• Car sales in South America jumped 14% last year after three consecutive annual declines. Strengthening economic activity and rising commodity prices will likely keep South America among the growth leaders in 2018.

Read the full Scotiabank Global Auto Report online at: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/GAR_2018-01-30.pdf

Scotiabank provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.

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SOURCE Scotiabank - Economic Reports