TORONTO - More people buying cars in the U.S. and China helped boost overall global auto sales in the summer, says a report by Scotiabank.
Sales rose by 6.5 per cent in July and August from a four per cent increase in June, as global economic growth accelerated in the June to September period to the fastest pace since early 2012.
However, the bank (TSX:BNS) says that the uncertainty surrounding the U.S. government funding and debt ceiling issues has the potential to undermine the pace of global economic growth, especially if stop-gap measures aren't put in place by mid-month.
Car sales in Western Europe climbed above an annualized 12 million units in the three months leading up to August, up from an average of 11.7 million from January to May.
That improvement reflects a rebound in business and consumer confidence, which is currently at the highest level in two and a half years, the report said.
In Canada, car and light truck sales set a third consecutive monthly record, as purchases totalled an annualized 1.75 million units last month, up from an average of 1.73 million through August.
There was a 15 per cent year-over-year gain in pickup trucks, which lifted overall sales of vans, utility vehicles and pickups six per cent above a year earlier.
"While full-year purchases will climb to record highs in Canada, we expect volumes to ease over the next several months alongside the expiration of some new vehicle incentives in September," senior economist and auto industry expert Carlos Gomes said in the report.
Used car prices also picked up in early October as enhanced incentives on several new vehicles expired. They are expected to remain strong in coming months because of an ongoing tight supply of pre-owned models, the report said.
A shortage of used cars and light trucks is also being felt in the United States, and the number of pre-owned vehicles imported into Canada from the U.S. has also dropped sharply.
Auto industry expert Dennis DesRosiers noted earlier this week that while sales have been growing rapidly and are back to levels not seen for some time, they're still well below the market potential.
What's more, the benefits of upswing in the industry isn't resulting in increased production or investment in Canadian auto plants.
"The legitimate issue for Canada is that we are in this incredibly positive environment and Canada's not seeing an upside," DesRosiers said.
"In every previous up cycle, Canada was able to grow and grow quite significantly. That's not happening this cycle. We're actually tracking down slightly this year."