Asia to lead 2015 car sales
The Scotiabank Global Auto Report’s forecast on 2015 global auto sales remains bright, in spite of the sluggish world economy, due to the strengthening of labour markets, continuing low interest rates (both short and long-term) on top of monetary expansion.
Asia will be one of the driving forces in the market due to the low oil prices. Daily oil consumption in Asia is roughly 30 million barrels, more or less the same as in the Americas; however, Asia only produces 9 million barrels per day, hence there is still a 70% gap from supply to demand that has to be filled. The two biggest economies in Asia – China and India – have experienced a 15% decline in petrol price since August 2014, driving up car sales for 2015. Last year marked the end of double digit growth in new vehicle sales and moderation of urban income per capita growth will dampen car sales; nevertheless, the auto sales forecast of 7% growth for 2015 translates to 19.5 million units – still a huge number relative to sales in other countries – and urbanisation and employment growth will remain strong.
2015 is likely to also be a good year for the North American auto market. There is improvement in household income as well as strong replacement car market as nearly 40% of the vehicles on the road in the United States are at least 12 years old. Overall volume in Eastern Europe will fall due to the low oil prices and faltering economy in Russia, which caused the sharp decline of the ruble; having said that, the auto market in Central and Eastern Europe will improve, with Poland as the key driver representing 40% of car sales in the region.
South America’s outlook is very much dependent on the economy policy reforms by the re-elected President Rousseff in Brazil. The current labour market is weak, inflation is hovering at 6.5% while the Bank of Brazil recently hiked the short term interest rate to 11.7%, adding pressure to auto financing. Colombia was the leader in auto growth for 2014, however, the outlook is slightly bleak this year as oil makes up 50% of the country’s overall export.