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IHS Forecasts 88.6 Million Global Light-Vehicle Sales in 2015

SOUTHFIELD, Mich. — With 2015 off to a good start, IHS Automotive, part of IHS Inc., forecasts global automotive sales for 2015 to reach 88.6 million, an increase of 2.4% over 2014, continuing an unbroken five-year run of sales recovery and growth from the low point set in the depth of the Great Recession in 2009. However, a slowdown is being signaled with just two of the high-potential BRIC markets likely to see increased sales this year.

China will lead the sector’s volume growth, though IHS expects the market to slow from 2014. The North American market will continue its upswing, though the pace differs by country. The size of the contraction of the Russian car market remains a significant wild card that will impact the European market throughout the year, according to the analysis, while other countries in the region continue to recover at a rate of 2.5% to 3%, helped by the European Central Bank’s (ECB) commitment to full-blown Quantitative Easing (QE).

For the APAC region in 2015, China’s economic growth will decelerate further, to 6.5% from 7.4% in 2014, as a result of industrial overcapacity and weakness in the real estate sector. However, IHS Automotive analysts still expect light vehicles sales in China to grow by 7% in 2015 to 25.2 million units, aided with increased auto finance penetration, fast dealership expansion and government vehicle scrappage programs.

According to the analysis, the current anti-trust campaign environment could alter the relationships among consumers, dealers and OEMs. The campaign is expected to have a long-lasting effect on premium parts/vehicle prices in China. Coupled with this, the momentum could lead to downward adjustment in premium pricing, which helps provide solid foundation for premium vehicle penetration to further increase in China in the next decade. IHS expects premium vehicles in China to top two million units in 2015 with year-over-year growth of 15%.

IHS Automotive experts also expect SUVs to remain the fastest-growing segment in China in 2015. “We see SUV market share (as percent of passenger vehicle sales) to increase from 26% in 2014 to 28% in 2015 as consumers look to this segment to address evolving transportation needs,” said Lin Huaibin, manager, China light vehicle sales forecast, IHS Automotive.

In India, falling inflation, lower interest rates, energy prices and regained confidence will help lift the car market into growth mode starting in 2015 after a two-year lull.

North America continues to be an impetus to global light vehicle demand levels. Improving credit conditions throughout the region and sustained, but tenuous economic growth among the countries in the region have helped to motivate total auto sales levels.

“Although the economic conditions and pace of recovery differ slightly among the North American countries, consumer confidence, credit availability and pent-up demand have played key roles in sustaining auto demand momentum since the Great Recession,” said Chris Hopson, manager, North American light vehicle sales forecasting, for IHS Automotive. “This should help motivate sales once again in 2015.”

IHS Automotive projects regional light vehicle sales volume in North America to hit more than 20 million units in 2015, up 2.5% from last year.

In the United States, IHS Automotive analysts continue to believe the upside risks for auto demand are more apparent than the downside risks. With a strong exit to 2014, and gasoline prices currently plunging, consumers may feel even more positive throughout 2015. The IHS Automotive U.S. light vehicle sales forecast for 2015 is 16.9 million units.

Light vehicle sales in Canada set an annual record in 2014 that is scheduled to be broken once again in 2015. Light truck sales, especially CUVs, helped motivate demand levels last year and with lower fuel prices expected, should once again dominate growth in 2015. The Canadian light vehicle sales forecast from IHS Automotive for 2015 stands at 1.88 million units.

In Mexico, auto sales stalled through the first seven months of 2014, causing some concern that new tax policies implemented at the beginning of 2014 were hurting auto demand growth; however, motivated by incentives to help spark demand, light vehicle sales grew throughout the second half of the year. This momentum should continue in 2015, and IHS projects sales volume to grow 3% to 1.17 million units.

There was a stark change in 2014 South America automotive demand compared to 2013, when monthly sales broke the 500,000 unit mark seven times. The year preliminarily closed with 5.34 million units — a 10% drop from 2013; with politics impairing Argentina and Venezuela, and the economic climate weighing down markets like Brazil, Chile and Peru, where it may take a few years for demand to recover to previous highs.

Uncertainty lingers over Argentina, Brazil, Chile and Venezuela for 2015. Argentina is displaying hints of the “tango crisis” of 1998: uncontrolled inflation, lack of foreign currency and risk of devaluation. As a result, IHS Automotive is expecting 2015 sales in Argentina of roughly 500,000 units. In Brazil, banks have been tightening credit for the last three years, and they are not showing interest in boosting credit to the automotive sector. This, along with the increase in the IPI (an industry tax) in early January, higher financing rates and weak job generation should translate into sales in Brazil of 3.25 million units.

In Chile, doubt over car sales is drawn from the emissions tax and the risk of further currency devaluations will ring in the market close to the 300,000 unit mark. Finally, it is difficult to imagine the Venezuelan market tumbling any lower than it already has; however, as oil prices plummet, the government’s access to foreign currency will continue to be limited, thus impairing vehicle production.

In Europe, the crisis in Russia could offset the boon of lower fuel prices for Europe’s car buyers and even the new QE boost from the ECB. As the Russian economy slumps into a deep recession in 2015, its negative impact on the Eurozone and surrounding countries could be large enough to offset the consumer benefit from falling fuel prices. Overall, the IHS forecast for light vehicle sales in Western Europe has only been fractionally upgraded for 2015 despite the benefits of $60 oil.

After a better-than-expected 5% increase in 2014, light vehicle sales in the mature West European region are forecast to improve by another 3% in 2015, with upside coming if the apparent open-ended commitment to QE by the ECB pushes the Euro down still further.

“The size of the market contraction in Russia is the biggest wild card facing vehicle manufacturers across the European continent, if not the world, in 2015 and 2016,” said Nigel Griffiths, chief automotive economist, IHS Automotive.

After the recent enormous volatility of the Russian currency, prices of imported cars look like they will increase well over 20% or so and even domestically-produced vehicles will have to see double-digit price hikes. This, along with a deep recession compounded by the recent credit rating downgrades, could push the market down to just 1.8 million units; a 27% decline over 2014 and nearly 40% (1.2 million) below the market level recorded in 2012.

From a global perspective, the auto industry is now being faced with and will have to adjust to very large and widespread exchange rate movements, commodity and raw material price changes and, of course, the new low oil prices. The last two will be significant tailwinds for the auto sector, its margins and for most of the world consumers, but at the same time, their unpredictability will mean long-term business plans will likely change at a more cautious pace.

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Toyota Global Sales Rise 2.8% in Tight Race vs Volkswagen

Toyota Motor Corp. said global sales climbed 2.8 percent in the first nine months of this year as the carmaker battles Volkswagen AG for leadership, reported Bloomberg.

Worldwide deliveries for Toyota, including its Hino Motors Ltd. and Daihatsu Motor Co. units, climbed to 7.6 million vehicles through September, spokesman Dion Corbett said by phone. Volkswagen reported a 5.3 percent gain in sales to 7.4 million vehicles, excluding results for its two heavy-truck units.

The tight race between global giants is playing out as automakers, their customers and regulators contend with mounting recalls and rising scrutiny over the safety of vehicles. The industrywide struggle with defective cars poses risk to both Toyota and Volkswagen, which are benefiting from increasing demand in the China and U.S. markets.

“It’s a fantastic race, with their strengths coming in different parts of the world,” James Chao, a Shanghai-based director at IHS Automotive, said by phone. “You see the U.S. coming back quite strongly for Toyota, and then you see the great engine of growth for Volkswagen being China, which is continuing to perform.”

President Akio Toyoda told shareholders the company was “advancing into uncharted territory” in the annual report the Toyota City, Japan-based carmaker released last month. Toyoda, 58, noted the unprecedented milestone of selling more than 10 million vehicles worldwide last year, a mark both his company and Volkswagen are on pace to exceed again in 2014.

Record Sales

The industry is selling record numbers of vehicles globally as crises involving auto safety swirl. Air bags made by Takata Corp. are linked to at least four deaths and more than 30 injuries in the U.S. after the safety devices deployed with too much force, spraying metal shrapnel at occupants. U.S. authorities have begun an investigation and almost 8 million cars made by 10 automakers have been recalled to fix the hazard.

In the U.S., General Motors Co. (GM), the No. 3 automaker by worldwide deliveries, faces death claims that could rise into next year involving defective ignition switches. The Detroit-based company has confirmed 29 fatalities tied to the flaw, which it failed to fix after more than a decade.

Even with those concerns, GM sales rose 2 percent to 7.37 million vehicles during the year’s first nine months. The biggest U.S. automaker last week reported third-quarter profit that beat estimates as North American customers flocked to pickups and sport-utility vehicles and recall expenses ebbed.

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Volkswagen Edges Out GM For No. 2 Spot in Global Sales

DETROIT, Mich. – Despite posting its strongest third quarter since 1980, General Motors appears to have given up its spot at second place in global sales to Volkswagen for the first nine months of 2014, reported Michigan Live.

GM’s global sales were up 2 percent to 7,371,743 vehicles through September, but VW said it sold 7.4 million cars during the same period, the Associated Press reports.

The AP notes that Toyota, which led all automakers after the first half of the year with nearly 5.1 million units sold, doesn’t plan to release its nine-month sales totals until later this month.

GM’s sales growth this year has been driven by increases in the U.S. and China, its two larges markets. In the third quarter, GM’s sales were up 8 percent in the U.S. and rose 14 percent in China.

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Fiat’s Chrysler Says Global Vehicle Sales Rose 12 Percent In February

Chrysler Group LLC, the U.S. automaker run by Fiat SpA, said its global sales in February rose 12 percent from a year earlier with the rate of growth outside North America quickening from January.

Deliveries climbed to 128,321 vehicles last month, Auburn Hills, Michigan-based Chrysler said in an e-mail. Global sales this year through February rose 14 percent to 229,787, below the 32 percent growth rate that Chief Executive Officer Sergio Marchionne has targeted for this year, reported Bloomberg.

Chrysler’s new vehicles and refreshed models haven’t had a chance yet to fuel new sales growth, Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan, said today in a telephone interview. He said he’s skeptical that the current lineup will be able to meet Chrysler’s sales goals.

“On the product side, they still need quite a bit of work,” he said. While Chrysler doesn’t have a product portfolio likely to drive “significant” gains, “they’ve done a good job in basically refining the products they already had in the market.”

Sales outside of the U.S., Canada and Mexico rose 8.6 percent to 11,305 compared with a year ago, said Ralph Kisiel, a Chrysler spokesman. Non-North American sales in January rose by 1.3 percent.

Sales from the Asia-Pacific region rose 51 percent to 3,648 in February, and deliveries in Western and Central Europe fell 33 percent to 2,083, Kisiel said yesterday.

Latin America sales rose 12 percent to 3,355 in February and deliveries in Chrysler’s sales region that includes Africa, the Middle East, Eastern Europe and Russia rose 17 percent to 2,210, he said.

The company previously reported U.S. sales rose 13 percent to 95,102 in February.

Chrysler’s second-largest sales market is Canada, where sales climbed 8.5 percent to 15,238 in February. Mexico sales last month rose to 6,676 from 6,013, the company said.

Marchionne, who is also CEO of Fiat, has said Chrysler will sell 2 million vehicles this year, 32 percent more than the 1.52 million the automaker sold in 2010. The automaker is trying to boost international sales and become profitable as it prepares for an initial public offering in the second half of the year.

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