-- Asia and North America lead the way, but losses widen in
TORONTO, Nov. 29, 2012 /CNW/ - The five largest auto manufacturers have posted
double-digit profit increases in 2012, climbing to a record high of USD$61.4
billion annualized through September, according to the Scotiabank Global Auto
Report released today.
"This represents the third-consecutive annual earnings improvement - a trend
likely to remain in place for several years," said Carlos Gomes, Scotiabank's
Senior Economist and Auto Industry Specialist. "Our leading indicators point
to ongoing gains in global car sales amid a slow, but enduring economic
According to the report, this year's profit is approaching the massive
cumulative loss of USD$69 billion sustained during the tumultuous years
between 2007 and 2009, highlighting the industry's dramatic turnaround.
Profitability is improving in most regions, with the exception of Western
Europe where industry losses continue to widen. North America tends to receive
most of the credit for the improved performance. However, excluding Japan,
profits in Asia - the world's largest auto market - continue to make steady
progress. Asia now accounts for nearly 30% of global car sales and one-quarter
of overall profits. Automakers earned a record USD$2.4 billion in the region
during the third quarter, a 58% year-over-year (y/y) surge.
"The earnings improvement is occurring despite a slowing in the pace of global
economic growth during the summer," said Mr. Gomes. "However most indicators,
especially from the world's two largest economies, point to some recent
acceleration in the pace of economic activity, a development which is
supportive of further gains in vehicle sales and earnings over the coming
Car sales in Asia, excluding Japan, and Latin America are now more than double
the sales pace in Western Europe, a sharp reversal from a decade ago when
these emerging markets accounted for less than half of the volumes in Western
Europe. Even taking into account lower car prices in the emerging markets -
USD$13,000 in Asia, excluding Japan, and USD$16,000 in Latin America -
automakers already collect more revenue from their operations in these markets
than from Western Europe.
"Outside of Western Europe, the industry is also making progress in containing
its fixed costs, especially in North America," said Mr. Gomes. "We estimate
that after slashing fixed costs by more than 25% during the 2008-2009
industry's restructuring, the two largest North American automakers have
trimmed their costs by an additional percentage point over the past year."
Looking ahead, Canadian car sales are expected to ease in November from the
previous month's annual rate of 1.7 million units. Quebec and P.E.I. led the
way in October, but sluggish labour markets in both provinces suggest that
sales gains will be more subdued this month.
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.
Scotiabank is one of North America's premier financial institutions and
Canada's most international bank. With more than 81,000 employees, Scotiabank
and its affiliates serve some 19 million customers in more than 55 countries
around the world. Scotiabank offers a broad range of products and services
including personal, commercial, corporate and investment banking. With assets
of $670 billion (as at July 31, 2012), Scotiabank trades on the Toronto (BNS)
and New York Exchanges (BNS). For more information please visit
Carlos Gomes, Scotiabank Economics, (416)
866-4735,firstname.lastname@example.org; or Devinder Lamsar, Scotiabank Media
Communications, (416) 933-1171,email@example.com.
SOURCE: Scotiabank - Economic Reports
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-0- Nov/29/2012 12:00 GMT
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