Global car sales continued to strengthen in February, climbing 3% above a year earlier alongside ongoing solid job creation across developed markets, Scotiabank’s latest Global Auto Report said– and the record sales being reported in Canada are driving the country’s industrial revival.
More recent data for March point to further solid advance across North America, the report said. “Mexico led the way, with a double-digit year-over-year increase” and “Canada reported record volumes and the key U.S. market posted a 3% year-over-year advance.” Car sales in Mexico have surged 13% so far this year, one of the best performances among the world’s major auto markets, with gains supported by formal employment growth in excess of 5% year-over-year.
According to the report, car and light truck purchases surpassed an annualized 2 million units in Canada last month, exceeding the previous peak set last September. “This year’s record-setting pace has been much stronger than we originally anticipated. Five provinces have reported double-digit year-over-year sales increases so far this year, prompting us to raise our full-year forecast to 1.955 million, up from our previous estimate of 1.90 million.”
“The auto sector has also reclaimed its title as Canada’s largest exporter, overtaking the oil and gas industry. In fact, the auto sector’s share of overall manufacturing activity is now at the highest level since 2003, and exports have been so strong that the sector has swung to trade surplus in early 2016. This is a sharp reversal from the large deficits the industry faced since 2007, including shortfalls in excess of $16 billion in 2013 and 2014.”
Auto industry shipments surged 29% year-over-year in the opening month of 2016, accounting for nearly 80% of the year-over-year gain across all of Canada’s manufacturing activity. “Canadian vehicle assemblies jumped 8% sequentially in the first quarter, climbing to the highest level since mid-2012.” The rebound was driven by a 25% year-over-year surge in light truck production, Scotiabank said, with further growth on the way.
“Automakers recently lifted their North American production plans an additional 3% for the second quarter, mostly due to the surging popularity of crossover utility vehicles,” the report said. “Canada is well positioned to take advantage of this trend, as CUVs account for nearly two-thirds of overall production at Canadian assembly plants. As a result, Canadian vehicle output is scheduled to jump 12% year-over-year in the April-June period — nearly ten times the increase projected for facilities in the rest of North America.”
The report also noted that record North American vehicle demand, combined with the hefty 28% decline in the Canadian dollar since 2011, has enabled Canadian suppliers to recapture market share across North America. “Each vehicle built in Canada, the United States and Mexico now contains nearly US$1600 of Canadian-made parts — a significant improvement from the recent low of only US$1437 in 2013.”
Canadian suppliers are also outperforming their global peers. “Canadian auto parts exports advanced by roughly 16% last year, a further acceleration from a 14% jump in 2014,” the report said. “This highlights the improved competitiveness of the Canadian auto parts industry and lifted its share of global exports to 3.1%, the second consecutive annual increase and the highest level since 2008. This solid performance has enabled Canada to retain its position as a global ‘top 10’ auto parts exporter.”
(According to Canadian Plastics)