Toronto, Ontario – Global auto sales slumped nearly 30 per cent year-over-year in 2008 and are expected to continue that way until mid-2009, according to a new report by Scotia Economics.
“We expect the double-digit year-over-year declines to continue through the first half of 2009, amid a simultaneous recession in North America, Western Europe and Japan,” said Carlos Gomes, Scotiabank senior economist and auto industry specialist. “Purchases are, however, expected to stabilize in the second half of 2009, limiting the slump in global car sales to an average decline of eight per cent this year. Nevertheless, the fall-off will be steeper than the five per cent average drop in global volumes in 2008, the first downturn since 2001.”
Gomes said that increased bank lending and stimulus packages being introduced by many governments should help global economic activity rise by the second half of 2009, leading to some stabilization in vehicle purchases. Historically, he said, growth in car sales normally resumes about nine months after a sharp drop in short-term interest rates.
According to the report, the U.S. has led the downturn in global sales, with vehicle purchases dropping to nearly 10 million in the fourth quarter of 2008, from an average of 16.7 million over the past decade. Volumes are expected to remain around current levels in the opening months of 2009.
In Western Europe and Japan, vehicle sales will remain weaker for longer, with economic activity continuing to shrink alongside declining employment and the lowest consumer confidence since the early 1990s.
“Vehicle sales held up better in Canada than in other mature markets through October, but are now also being pulled lower by the global financial crisis that has spilled into this country,” Gomes said. “Purchases slumped by 21 per cent year-over-year in December, leaving full-year 2008 sales at 1.64 million units, virtually unchanged from 2007. However, we expect purchases to post a double-digit drop in 2009, falling to 1.475 million units, the lowest level since 1998, as unemployment climbs to eight per cent.”
Emerging markets that until recently were among the main source of strength in global sales, such as China and India, are expected to recover more quickly.