SOURCE: Scotiabank


June 06, 2016 08:30 ET

South American Auto Sales Begin to Stabilize: Scotiabank

Chile Leads the Improvement, Brazil Lags

TORONTO, ON--(Marketwired - June 06, 2016) -  Global car sales accelerated in April, climbing 5.5% y/y and posting the fastest growth since late 2015. Chile has outperformed, with vehicle purchases advancing 7% above a year earlier in the first four months of 2016. However, Brazil continues to lag, with the downturn in sales and economic activity showing no sign of abating.

Car sales have started to diverge across South America, following a synchronized double-digit slump throughout the region over the past two years. While Chile is leading the way, sales have also started to exhibit early signs of stabilization in Peru and Colombia.

"The improving sales trend evident in some South American countries reflects more stable global economic activity in recent months, especially the broad-based rebound in the price of commodities -- the main export for most of South America," said Carlos Gomes, Senior Economist and Auto Industry Specialist at Scotiabank. "The improving export trend will help boost economic activity across South America, as commodities and resource-based manufacturing account for more than 70% of the region's exports."

Despite the recent improving trend in car sales among the Pacific Alliance members in South America, we do not expect a quick return to the rapid growth that characterized the South American auto market between 2004 and 2012. During that period, car sales soared 11% per annum, only slightly below the 12% average annual gain across Asia. Economic growth across South America averaged 5% annually during that period, nearly six times faster than our current forecast for 2017, as the region continues to be held back by a prolonged downturn in the largest economy and prolonged lackluster performance globally.

More recent data for May shows volumes across North America remain on target to climb to record highs in 2016, led by double-digit gains in Mexico. However, the pace of improvement moderated across the continent last month due to fewer selling days and a shortage of several models, as the recent earthquake in Japan led to brief plant shutdowns in North America. As a result, sales in Canada fell below a year earlier, temporarily interrupting the record-setting trend of recent months. We estimate purchases eased to 1.88 million units in May, from an average of 1.97 million during the previous four months.

Other highlights:

  • In the United States, purchases totalled 17.3 million units in May, in line with the year-to-date average. Sales of small crossovers soared 52% above a year earlier last month, garnering a record share of the U.S. auto market.
  • Financial conditions have also been alleviated across both developed and emerging markets, helping to support economic activity. The narrowing in credit spreads has been most dramatic in Chile, Peru and Colombia, dropping nearly 30% since February, nearly double the decline for the overall emerging market average.
  • While the auto market in Peru has been slower to improve, overall economic activity has been stronger than expected. The Peruvian economy advanced 4.4% above a year earlier in the opening months of 2016, a significant rebound from a cycle-low of only 1.2% in late 2014.
  • The Colombian auto market has lagged other Pacific Alliance members this year, but the fall-off moderated to only 8% y/y in April, the best performance since last July and a sharp improvement from eight consecutive months of double-digit declines.
  • The pace of credit creation has picked up in China and copper import growth has accelerated 30% y/y through April, helping to lift commodity prices and global export activity.

Read the full Scotiabank Global Auto Report online at:,,3112,00.html.

Scotiabank provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.

About Scotiabank

Scotiabank is Canada's international bank and a leading financial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacific. We are dedicated to helping our 23 million customers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of more than 89,000 employees and assets of $895 billion (as at April 30, 2016), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges (NYSE: BNS). Scotiabank distributes the Bank's media releases using Marketwired. For more information, please visit and follow us on Twitter @ScotiabankViews.

Contact Information