Our country just celebrated its second-best year yet for auto sales.
How should Canadians celebrate?
Chances are, we’ll mark the occasion by buying even more cars in 2013, according to Scotiabank.
In its most recent Global Auto Report, the bank’s economics wing projects Canadian new-car sales will hit 1.69 million units in 2013 – a notch above 2012’s 1.68 million.
But by global standards, we’re actually lagging: Canada’s forecast of 0.6-per-cent year-over-year sales growth is marginal compared to the worldwide growth estimate of 4 per cent in 2013.
That’s 65 million new cars on the road around the globe – which, if it comes to pass, would mean sales records could be broken for the fourth year in a row.
Plotting global GDP growth next to auto sales over the past decade shows that there are close ties between economic expansion and the decision to buy new cars.
Scotiabank’s 2013 projections reflect global employment gains as well as low interest rates and the growing pace of the world’s monetary expansion, says Carlos Gomes, the bank’s auto industry specialist.
“Rapid sales gains in emerging markets will lead the way in 2013, while ongoing replacement demand in the United States will provide valuable support,” Mr. Gomes writes in the report.
As far as Canada is concerned, growing employment numbers in Western Canada are pushing Scotiabank’s 2013 forecasts to its near-historic highs.
However, Mr. Gomes expects the sluggish housing market to hamper consumer confidence and slow Canada’s auto-sales pace versus the rest of the world.
Leading among the developing countries is traditional juggernaut China – the “key driver” of global auto sales, Mr. Gomes writes, responsible for 60 per cent of sales-volume increases in the last 10 years.
Many economists believe China bottomed out last year and is on the upswing.
Citing the country’s rapid urbanization, Mr. Gomes expects China’s urban per-capita income to rise by 12.5 per cent over 2012, helping boost its dramatic demand for new vehicles; he forecasts a 10-per-cent year-over-year rise in auto sales in 2013 to nearly 12 million.
In the United States, strengthening household balance sheets and shrinking debts are putting Americans in a better position to replace their old junkers – which they might badly need to do, as the average age of cars in the U.S. is now more than 11 years old.
Good thing they dealt with that “fiscal cliff,” right?