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T he Japanese earthquake and tsunami continue to impact the auto
industry and the global economy. Global vehicle sales softened in
May, with purchases roughly unchanged from a year ago — a significant
slowdown from a 6% increase during the previous four months. In
addition, the downturn in global vehicle output also accelerated in May,
further dampening global economic activity. However, assemblies have
hit bottom and will post a sequential double-digit increase in the third
quarter, boosting economic growth.
Vehicle sales in the United States slumped below an annualized 12
million units in May, undercut by a shortage of Japanese models on dealer
lots. During the previous four months, purchases had consistently remained
above 13 million units. Excluding Japanese brands, sales continued to
advance, climbing 7% above a year earlier, led by double-digit increases
for South Korean brands.
The industry expects the sales slowdown to be temporary, and has
raised its third-quarter production schedule 18% above a year earlier.
Canadian plants will benefit most from higher output in the July-September
period, with production expected to jump 21% year-over-year, compared to
only a 3% gain in the first half of 2011.
Vehicle sales also weakened in Canada last month, with volumes
slumping to only an annualized 1.40 million units from an average of 1.67
million in March and April. In fact, looking only at the month of May, last
month’s volumes were the lowest since 1997. As in the United States,
Japanese automakers accounted for most of the decline. A shortage of
vehicles will continue to hold back sales through the summer, but a
rebound is expected once dealer lots are restocked later this year.
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