Geographic diversification “crucial” for auto exporters: Scotiabank report

TORONTO, Ont.– Global vehicle sales remained strong in March, climbing 6% above the previous year, according to the Scotiabank Global Auto Report released today. The increase was driven by a double-digit increase in Asia, an ongoing recovery in Western Europe and some improvement in the US, following several months of severe winter weather.

“Most major vehicle producers are geographically diversified, or in the case of emerging markets such as China, assemble cars and trucks mainly for their domestic market,” said Carlos Gomes, Scotiabank’s Senior Economist and Auto Industry Specialist.

“Canada has the most export-intensive auto industry in the world, with nearly 90% of overall production geared for export. However, Canada is the only country that relies almost exclusively on one market for its auto exports and has underperformed both its NAFTA partners and other major vehicle-producing nations in the current expansion,” Gomes added.

Highlights in the report include:

• Canada remains the second-largest vehicle exporter to the US, after Japan, and a global ‘top 10’ vehicle manufacturer. Canadian car and truck output totalled 2.38 million units last year, in line with the average of the past decade.

• The auto sales recovery in Western Europe continues to build momentum, with eight countries posting double-digit increases in March, up from seven the previous month. The U.K. reported an 18% year-over-year (y/y) jump in vehicle purchases, lifting monthly volumes to the highest level since March 2004.

• China is the fastest growing market for German luxury brands, with auto exports to China surging sevenfold over the past decade and now account for nearly 40% of overall German vehicle shipments to Asia, double the share of a decade ago. U.S. automakers are also making solid gains in China and the wealthy markets of the Middle East.

Read the full Scotiabank Global Auto Report online at: http://www.scotiabank.com/ca/en/0,,3112,00.html.