Interruptions could negatively impact highly
integrated supply chain
TORONTO, April 17, 2017 /CNW/ - Global car sales
accelerated sharply in February in line with global growth, with
volumes jumping 6.9% above a year earlier and well above the 4% y/y
gain during the previous two months. This solid performance leaves
global volumes on track to climb to record highs for the eighth
consecutive year. However, the Trump Administration's push to
renegotiate NAFTA has created significant uncertainty for the
industry in North America. The
auto sector has the most highly integrated supply chain of all
manufacturing industries under NAFTA.
"The integration of the North American auto market has enabled
the sector to outperform on a global stage," said Carlos Gomes, Senior Economist and Auto Industry
Specialist, Scotiabank. "Any new restriction to the free flow of
vehicles and parts among the three countries would have a negative
impact on economic activity in Canada, Mexico and the Unites States including
potential job losses."
More than 92% of all auto industry shipments from the U.S. are
now destined to the three NAFTA countries. This integration has
boosted productivity and enhanced the industry's global
competitiveness, enabling it to increase its share of global
exports. The U.S. is the major supplier of auto parts to its NAFTA
partners and has been a major beneficiary of the rapid expansion of
assembly plants in Mexico. In
particular, Mexico is now the
destination for one-third of auto parts exported from the United States, up from less than 5% prior
to NAFTA's inception.
The highly integrated North American auto supply chain has
enabled U.S. auto industry employment to increase by more than five
times the growth in overall manufacturing jobs. The supply chain
under NAFTA has closely tied the three economies and any
interference could challenge the outperformance of the North
American auto industry including potential job losses for some of
the nearly 2 million positions at plants in the United States, Canada and Mexico.
Other highlights:
- More recent sales data for March confirm continued record
volumes in both Canada and
Mexico, but show some
disappointment in U.S. results.
- Sales in Canada jumped 7%
above a year earlier last month, with volumes buoyed by
double-digit gains in both light trucks and luxury models.
- Volumes in Mexico jumped 17%
above a year ago in March, even as interest rates moved higher and
economic activity slowed.
- Asia led the broad-based
acceleration of global car sales with a 16% y/y surge as sales in
China returned to double-digit
year-over-year growth.
- Sales in South America have
been stronger than expected, advancing above a year earlier in
February for the fourth consecutive month.
Read the full Scotiabank Global Auto Report online at:
http://www.scotiabank.com/ca/en/0,,3112,00.html.
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.
About Scotiabank
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billion (as at January 31,
2017), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges
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SOURCE Scotiabank