Neither Scotiabank nor its affiliates accepts C anadian auto sales climbed 6% last year, and will likely edge up further in 2013, advancing to 1.69 million units — the second-highest l
Trang 1Carlos Gomes (416) 866-4735
carlos.gomes@scotiabank.com
Global Economic Research
Global Auto Report
Scotiabank Economics
Scotia Plaza 40 King Street West, 63rd Floor Toronto, Ontario Canada M5H 1H1 Tel: (416) 866-6253 Fax: (416) 866-2829
This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness Neither Scotiabank nor its affiliates accepts
C anadian auto sales climbed 6% last year, and will likely edge up
further in 2013, advancing to 1.69 million units — the second-highest level on record The resource-rich provinces of Alberta, Saskatchewan and Newfoundland & Labrador will continue to lead gains Purchases in these provinces set record highs in 2012, climbing above the 2007 peak In contrast, even with a moderate gain this year, volumes in the rest of Canada will remain 6% below the 2002 peak
Labour markets, demographic trends and development activity are strongest in Western Canada, while a ramp-up of several projects on the east coast will support regional gains Commodity prices have rebounded since last summer, and will be underpinned over the coming year by the recent pick-up of economic growth in China and improving global financial market conditions Global equity markets have advanced by more than 20% since mid-2012, including 5% during the first four weeks of 2013
Alberta will be the auto industry’s growth leader in 2013 Vehicle sales in Alberta climbed to 239,000 units
last year — the second-highest on record We expect volumes to advance to 244,000 units in 2013, approaching the 2007 peak of 249,000 cars and light trucks Sales will be bolstered by a buoyant labour market, record population inflows and a continuing, albeit single-digit increase in energy sector investments Unemployment in Alberta has dropped to only 4.5% — the lowest level in Canada and nearly 3 percentage points below the national average Meanwhile, population growth accelerated to 2.5% last year — nearly triple the advance in the rest of Canada Alberta’s driving-age population is increasing at even a faster pace Despite these positive developments, the improvement in vehicle sales will be dampened by some slowing in energy sector investment The export price for Canadian heavy crude has fallen to a substantial discount from international benchmark prices due to export pipeline constraints The sharp widening in the discount for Canadian heavy crude oil is hurting Alberta’s public finances, prompting its premier to warn last week of a $6 bn revenue shortfall for the 2013-14 fiscal year
Vehicle sales in Saskatchewan climbed to a record-high 55,000 units in 2012, buoyed by a solid gain in farm
incomes and ongoing expansion of the mineral sector An increase in purchases to 56,000 units is projected for
2013, bolstered by the government of Saskatchewan’s commitment to spent at least $2.5 bn on infrastructure over the next several years and the scheduled start-up of the Cigar Lake uranium mine in late 2013 Despite declining mineral and natural gas production in Saskatchewan over the past year, the province still expects investments of nearly $45 billion in major resource projects over the next decade — a development which will keep labour and auto markets among the strongest in Canada
Newfoundland & Labrador also reported record car and light truck sales in 2012, with volumes jumping to
33,000 units — 29% above the 2001-08 average Purchases will be boosted this year by a rebound in offshore oil production and increased iron ore output After weakening in the first half of 2012 alongside slowing global economic activity, China’s imports of iron ore jumped to record highs late last year, setting the stage for higher prices and a ramp-up in iron ore production across Newfoundland in 2013 Oil output is also set to rebound, with production resuming at both the Sea Rose and Terra Nova projects, after being offline for maintenance last year However, longer-term gains in car and light trucks sales will be constrained by weak vehicle-buying
demographics in Newfoundland In fact, the demographic outlook is worse for the province than for its Maritime
Resource-Rich Provinces Will Continue To Drive Sales Gains In Canada
1.2 1.3 1.4 1.5
200 250 300 350 400
00 02 04 06 08 10 12
thousands of units
Vehicle Sales Resource-Rich Provinces*
(LHS)
Rest of Canada (RHS) forecast
millions of units
* Alberta, Saskatchewan, Newfoundland & Labrador.
Record Sales
In Resource-Rich Provinces
Trang 2neighbours The vehicle-buying population in Newfoundland &
Labrador declined by 0.2% last year and is projected to slump
0.5% annually over the next five years In contrast, the number
of potential vehicle buyers across Atlantic Canada is projected
to continue to edge higher
Vehicle sales in Manitoba advanced 6% last year, in line
with the improvement across Canada We expect a further
modest gain in 2013, underpinned by increased agricultural and
construction activity The value of building permits in Manitoba
jumped by nearly 30% last year, nearly three times the advance
in the national average A gradual pick-up in global demand for
the province’s diversified exports will also support further gains
in auto sales In particular, aerospace shipments in Manitoba
surged 20% last year, outpacing gains in other sectors
Vehicle sales in British Columbia rose 10% last year to
173,000 units — the highest level since 2008 Volumes will be
supported over the coming year by rising exports to Asia — the
destination for more than 40% of the province’s international
shipments — and the ongoing revival in the U.S housing
market However, despite an improving external environment,
offshore exports account for less than one-quarter of overall
economic activity in B.C Households are the key drivers of the
economy, accounting for 62% of overall activity — nearly 7
percentage points above the national average In particular, we
expect a slowing labour market and declining residential real
estate prices to weigh on consumer confidence — British
Columbians were the most upbeat Canadians in late 2012 —
limiting the gain in vehicle sales to less than 1%
Car and light truck purchases in Ontario jumped above
600,000 units last year for the first time since 2006, led by a
9% increase in fleet purchases Household volumes improved a
more moderate 4%, but set a decade high of 530,000 last year
Further modest gains are expected in 2013, as the ongoing
improvement in manufacturing — led by a revival in the auto sector — more than offsets restraint from both the federal and provincial governments The auto parts sector led Ontario’s manufacturing employment growth last year, advancing by 5%
— the strongest increase since the turn of the millennium Further gains are scheduled for 2013, as vehicle production strengthens to 2.6 million units — the highest level since 2005
Quebec’s auto market lagged last year, with volumes advancing by only 1% alongside sluggish employment growth and increased taxes Purchases are expected to edge up to 417,000 units in 2013, supported by rising private sector investment and a modest improvement in the key aerospace sector The largest aerospace company in Quebec recently announced a near-doubling in aircraft orders last year, and employment in the sector has begun to reverse a four-year slide
The increase in vehicle sales across New Brunswick was
also smaller than the national average However, last year’s 1% advance was enough to lift sales to a decade high of 39,000 units Further gains will be supported over the coming year by rising exports to the United States Cross-border shipments are the main driver of the provincial economy, with international and inter-provincial exports accounting for nearly 80% of overall economic activity Increased potash production, following the completion of a $1.7 bn investment, combined with rising lumber exports to the U.S will boost provincial spending and help lift vehicle sales to 40,000 units in 2013
Nova Scotia posted a 7% advance in vehicle sales last year to 48,000 units A further small improvement will be underpinned by expansion of the Halifax Shipyard to accommodate the building of combat ships starting in 2015 Several other projects, including construction of the Halifax Convention Centre, will also boost employment and vehicle purchases in the coming year
International Car Sales Outlook
*Includes light trucks.
(millions of units)
Trang 3Canada/U.S Motor Vehicle Sales Outlook
Vehicle Sales Outlook By Province*
Average
NORTH AMERICAN
*Includes transplants; light, medium and heavy trucks **U.S sales and North American production to November
(millions of units, annualized) (millions of units, annualized) (thousands of units, annualized)
200 300 400 500 600 700 800
200
300
400
500
600
700
800
80 84 88 92 96 00 04 08 12
Ontario
Quebec
Includes cars and trucks (light, medium and heavy).
thousands of units
50 75 100 125 150 175 200 225 250 275
50 75 100 125 150 175 200 225 250 275
British Columbia
Atlantic
thousands of units
Alberta
20 30 40 50 60 70
20 30 40 50 60 70
Manitoba
Saskatchewan
thousands of units
Average
*Includes cars and light trucks.
(thousands of units, annual rates)
Trang 4Auto Market Share By Manufacturer — Canada*
Truck Market Share By Manufacturer — Canada*
*Source: Dealer sales from the Association of International Automobile Manufacturers of Canada.
Jan to Dec
(thousands of units, not seasonally adjusted)
*Source: Dealer sales from the Association of International Automobile Manufacturers of Canada.
Jan to Dec
(thousands of units, not seasonally adjusted)
Trang 5Auto Sales By Province
Truck Sales By Province*
(thousands of units, not seasonally adjusted)
*Light, medium and heavy trucks.
(thousands of units, not seasonally adjusted)
Trang 6Canada — Motor Vehicle Production Canada — World Auto Trade Balances
Canadian Motor Vehicle Production*
*Production data from Ward’s Automotive Reports **Light, medium and heavy trucks.
(thousands of units, not seasonally adjusted)
0.2 0.6 1.0 1.4 1.8 2.2 2.6 3.0 3.4
0.2
0.6
1.0
1.4
1.8
2.2
2.6
3.0
3.4
82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
quarterly
Total
Millions of units, seasonally adjusted annual rates.
* Light, medium and heavy trucks.
Cars
Trucks*
-30 -20 -10 0 10 20 30 40 50
-30 -20 -10 0 10 20 30 40 50
82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
billions of dollars
Assembled vehicles
Total
Parts
2012 data are January-November annualized.
Trang 7Scotiabank Car Price Indicators — Canada
Scotiabank Car Price Indicators — Canada
Scotiabank Car Price Indicators — United States
New & Used Car Prices
-15 -5 5 15 25
-15 -5 5 15 25
Used*
* Scotiabank estimate from Canadian Black Book data.
CPI New
year-over-year per cent change
2 4 6 8 10 12 14 16 18 20
2 4 6 8 10 12 14 16 18 20
1 Year
Scotiabank estimate from Canadian Black Book data.
4 Year
thousands of dollars by age of car, seasonally adjusted
2 Year
-15 -5 5 15 25
-15 -5 5 15 25
Consumer price indices for new and used cars.
Shaded areas indicate recession periods.
Used
New
year-over-year per cent change
CPI
Trang 8Retail Auto Dealer Bankruptcies
Canadian Corporate Financial Performance Motor Vehicle Dealers and Repair Shops
Quarterly at annual rates
Pre-tax Profit Margin: pre-tax income/sales Debt/Equity Ratio: (short-term and long-term debt)/total equity
Inventory Turnover Ratio: sales/inventory Return of Shareholders’ Equity: after-tax income/total equity
0 5 10 15 20 25 30
0
5
10
15
20
25
30
New car dealers only; cumulative total during the year.
number of bankruptcies
2012
2010 2011