Consumer confidence, pent-up demand and easier credit availability drive 12% growth in 2012 North American light vehicle sales

 Consumer confidence, pent-up demand and easier credit availability drive 12%
              growth in 2012 North American light vehicle sales

Outlook for 2013 'cautiously optimistic' amid concerns of spending cuts and
increased taxes

PR Newswire

DETROIT, Jan. 17, 2013

DETROIT, Jan. 17, 2013 /PRNewswire/ --The North American automotive market in
2012 has been the "bright spot" amid the uncertain global scenario, according
to Ernst & Young's Global Automotive Center. Driven by improved consumer
confidence, pent-up demand and easier credit availability, sales of light
vehicles reached 17.13 million units, registering a growth of 12.5 percent.

Production in North America also continued to increase, with more than 95
percent capacity utilization observed for 2012. In line with demand, the
production of small cars in North America has steadily grown during the past
few years.

US market

Light vehicle sales in the US grew 13.42 percent, reaching 14.46 million units
in 2012.

"Demand remained strong throughout the year as the average light vehicle age
reached 11 years (a record high), the share of subprime loans grew to ease
credit availability and the economic scenario improved," said Mike Hanley,
Global Automotive Leader at Ernst & Young. "Vehicle sales got another boost
toward the year end, as customers rushed to replace their damaged vehicles in
the aftermath of the Superstorm Sandy."

As a result of the strong growth in new car sales, used vehicle prices
continued to decline during the year. The share of subprime loans remained
especially high in the case of used cars.

The growth in sales was accompanied by a change in the segment mix of
vehicles. The preference of US customers is shifting toward smaller cars, and
as a result, the share of small-sized cars touched a historic high of around
one-fifth of new car sales in 2012. The penetration of diesel cars also
increased significantly (albeit from a low base) amid rising awareness of
diesel as a clean fuel and a slew of new launches in this segment. However,
diesel car sales made up less than 1 percent of 2012 volumes.

Dealer and automaker incentives this year were targeted for specific segments
and vehicle models (such as high incentives in the luxury car segment), in a
sharp contrast to the "across the board" discounts offered by automakers
during 2008 and 2009.

Canadian market

Canadian light vehicle sales touched a 10-year high of 1.69 million units, due
to the huge incentives provided by automakers and the pent-up demand. As
witnessed in the US, there was a shift in the consumer preference toward
smaller, fuel-efficient cars in Canada. Luxury car sales also saw a jump
during the year as a result of the high demand from baby boomers and increased
incentives by automakers. On the other hand, the strong Canadian dollar
continued to hinder new investments in production.

Mexican market

In Mexico, light vehicle sales grew by 9.52 percent to touch 0.98 million
units as a result of the improved economic scenario and easy credit
availability. In terms of production, the country witnessed a record year with
volumes of 2.9 million units and capacity utilization well over 100 percent.
This is a direct result of the increased demand from the US and Mexico
offering a much lower cost of production than its North American neighbors.

2013 outlook

Moving into 2013, the outlook for the North American automotive market remains
cautiously optimistic.

"While overall uncertainty over the 'fiscal cliff' has abated, concerns remain
about the resulting spending cuts and other government programs that could
increase personal and corporate taxes," said Hanley.

The US market is likely to close the year with moderate sales growth driven by
replacement demand and a significant number of new vehicle launches. The
market will continue its steady movement toward achieving the pre-recessionary
sales level of 16-17 million units.

While the Canadian market is also likely to register marginal growth in 2013,
there is a strong possibility it will surpass the 2002 record high. Sales of
luxury cars in the country are anticipated to grow at a significant pace over
the near to medium term.

The outlook for the Mexican market is also moderately positive. Being an
export-oriented economy, the scenario is also dependent on the way the US and
other major global economies perform this year.

For more information on Ernst & Young's Global Automotive Center, visit
www.ey.com/automotive.

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How Ernst & Young's Global Automotive Center can help your business

The global recession reset the automotive industry landscape. As the industry
recovers, automotive companies across the value chain must focus on profitable
and sustainable growth, financial and operational stability, investments in
new technologies and seizing opportunities in high-growth markets. If you lead
an automotive business, you need to anticipate trends, identify implications
and make informed decisions that support your business goals. Our Global
Automotive Center enables our worldwide network of more than 7,000 industry
focused assurance, tax, transaction and advisory professionals to share
powerful insights and deep sector knowledge with businesses like yours. These
insights, combined with our technical experience in every major global
automotive market, will help you to accelerate strategies and improve
performance. Whichever segment of the automotive industry you are in — from
component suppliers to commercial or light vehicle manufacturers or retailers
— we can provide the insights you need to realize your potential today and
tomorrow.

SOURCE Ernst & Young

Website: http://www.ey.com
Contact: Regan Byron, Ernst & Young, +1-313-628-8974, Regan.byron@ey.com; or
Angela Bianchi, Weber Shandwick, +1-248-203-8125, abianchi@webershandwick.com