LMC Automotive Global Light Vehicle Sales Update (February 2017)

Summary

The Global Light Vehicle market maintained its positive year-on-year (YoY) momentum, with sales volumes up 7.7%. In selling rate terms, the global market surpassed 96 mn units/year from an upwardly revised 94 mn units/year in January.
China’s market picked up the pace in February, helping drive the global total higher. Another solid selling rate performance came from Western Europe and the US.

February 2017 US Light Vehicle sales totalled 1,332,000 units, which translated into a selling rate of 17.5 mn units/year. Interest rates are rising from recent months; although February 2017 is lower than February 2016, long loan durations (currently at 68 months) mitigate the monthly cost that consumers face. Fuel prices, while rising slowly, are still perceived as favourable as they are significantly lower from a few years ago and are stable. Consumer confidence continues to rise as stock market indices continually establish new records, with no expected economic shocks in sight – assuming trade negotiations do not result in a tariff war.
Canadian Light Vehicle sales for February totaled 123,000 units representing a 3.2% increase from last February and a seasonally adjusted annualized rate of 2.05 mn units.

West European Light Vehicle sales grew by just 0.8% YoY in February, slowing from the strong January result; however, just as January benefitted from an extra selling day versus the year-ago month, for February 2017, most markets faced one fewer selling day compared to February 2016. The latest result for Western Europe translated into a selling rate of 16.4 mn units/year, only slightly lower than the previous month; Italy was the star performer as the Light Vehicle market there continued its recovery momentum.
Russian Light Vehicle sales came in at 106,700 units in February, a decline of 4% compared to February 2016. The selling rate stood at 1.52m units. Overall, Eastern Europe was marginally lower (-0.6%), though this would have been worse were it not for a solid improvement in Poland.

After being disrupted by the Chinese New Year holiday in January, sales in China rebounded strongly in February. The holiday-adjusted February selling rate was 29 mn units/year, up 4% from an upwardly revised January. On a year-on-year basis, sales increased by 7.4% in the first two months of this year, which is not a bad result, given that the rate of the temporary tax cut has been halved since the beginning of this year.
The Chinese economy seems to have started 2017 on a solid footing. Despite uncertainty surrounding new US policies under President Trump, the manufacturing and services PMIs both remained in the expansion territory in both January and February, though they both seem to have lost some momentum compared to the final quarter of 2016. In addition to an uncertain economic outlook, a concern for the economy and sales arises from rising inflationary pressures.

In Japan, sales, in particular Light Commercial Vehicle (LCV) sales, remained buoyant in February, as a weaker yen boosted business confidence. After years of weak LCV sales, replacement demand must be picking up, too. Yet, an uncertain global outlook continues to present a major risk to Japan’s economy and vehicle sales.
After a weak start in January (due to the Lunar New Year holiday), the South Korean market rebounded strongly in February, with the selling rate reaching 1.9 mn units/year. Sales in the first half of this year are expected to be supported by the ongoing scrappage tax incentive for old diesel vehicles.

In Brazil, the February selling rate was 2 mn units/year, up 10% from a weak January. Yet, sales continued to decline year-on-year, amidst the deep recession. While inflation and interest rates are falling, the job market remains depressed, undermining consumer confidence and spending. The economy contracted in Q4 2016 for the eighth consecutive quarter, indicating that the recovery in vehicle sales will take some time.
Mirroring an improving economy, the Argentine market maintained a solid pace in February, with the selling rate rising to 770,000 units/year. Falling inflation (albeit still very high) and easing credit conditions are helping to support consumer spending. Nonetheless, the government’s fiscal austerity measures are likely to continue to constrain the sales recovery in the near term.

	Sales (units)						Selling rate (Units/year)
	Feb 2017	Feb 2016	Percent Change	Year to date 2017	Year to date 2016	Percent Change	Feb 2017	Year to date 2017	Year 2016	Percent Change
WORLD	7,017,426	6,516,396	7.7%	14,471,588	13,725,431	5.4%	96,309,878	95,268,943	93,366,003	2.0%
USA	1,331,524	1,341,615	-0.8%	2,472,225	2,488,098	-0.6%	17,501,399	17,514,880	17,538,559	-0.1%
CANADA	123,032	119,209	3.2%	233,935	227,633	2.8%	2,054,382	2,035,355	1,947,684	4.5%
WESTERN EUROPE	1,141,057	1,131,500	0.8%	2,389,941	2,265,474	5.5%	16,421,000	16,453,004	15,771,002	4.3%
EASTERN EUROPE	273,435	275,079	-0.6%	503,956	492,185	2.4%	3,960,820	4,037,543	3,900,528	3.5%
JAPAN	479,877	446,126	7.6%	877,510	825,096	6.4%	5,067,814	5,075,841	4,903,736	3.5%
KOREA	134,097	124,240	7.9%	254,706	244,848	4.0%	1,911,572	1,754,991	1,783,990	-1.6%
CHINA	1,912,631	1,587,384	20.5%	4,440,008	4,133,395	7.4%	29,092,158	28,531,878	28,021,288	1.8%
BRAZIL / ARGENTINA	187,368	188,116	-0.4%	419,343	392,346	6.9%	2,783,811	2,672,269	2,661,741	0.4%
OTHER	1,434,406	1,303,127	10.1%	2,879,964	2,656,356	8.4%	17,516,922	17,193,181	16,837,475	2.1%
Notes：	The percentage change in the final column compares the average selling rate in the year-to-date with the last full year. Late reporting countries and estimates are included in "Other". Eastern Europe includes Turkey. China includes estimate of light vehicle imports.