Top Five Auto Makers Report Record Profits: Scotiabank

--  Asia and North America lead the way, but losses widen in 
    Western Europe 
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 
expansion." 
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 
year." 
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 
www.scotiabank.com. 
Carlos Gomes, Scotiabank Economics, (416) 
866-4735,carlos.gomes@scotiabank.com; or Devinder Lamsar, Scotiabank Media 
Communications, (416) 933-1171,devinder.lamsar@scotiabank.com. 
SOURCE: Scotiabank - Economic Reports 
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CO: Scotiabank
ST: Ontario
NI: FIN  
-0- Nov/29/2012 12:00 GMT