Global Auto Market Regains Momentum
Global car sales regained momentum in September, showing its strongest performance since March with the improvement led by double-digit, year-over-year advances in North America and Western Europe, according to the latest Global Auto Report.
In October, there was a further acceleration in North America, with purchases in the U.S. jumping 14 percent year-to-year to a higher-than-expected annual rate of 18.1 million units, said the report, compiled annually by Scotiabank.
“The North American auto industry is a key driver of overall economic activity and is outperforming other industrial sectors,” said report author Carlos Gomes, senior economist and auto industry specialist at the Canadian bank.
The September and October sales results, he said, “represent the best back-to-back monthly performance since the global economy was in the midst of the tech boom in early 2000.”
Stronger economic conditions should continue to buoy industry volumes over the next several years, but significant concerns have been raised about the potential dislocation of sourcing patterns for vehicles and parts if the Trans-Pacific Partnership (TPP) is implemented.
“The TPP provides the North American auto industry with preferential access to the rapidly growing markets of Asia and South America, but reduces the rules of origin requirement for vehicles and parts that have been in place under the North American Free Trade Agreement (NAFTA),” said Gomes.
NAFTA’s export growth to its TPP partners is nearly five times larger than the advance in auto parts shipments from the European Union to the TPP members in Asia and Latin America.
However, said Gomes, “the strength of the North American auto industry is that it has become more innovative in recent years, responding better to pressures triggered by globalization and is in a much stronger competitive position than in the previous decade.”
In addition, North American auto industry exports are outpacing the increase in overall global automotive exports largely because of the most highly integrated supply chain network in the world and the fact that more than 75 percent of all motor vehicle parts used in the region are sourced within NAFTA.