Global car sales have a big chance to set another record year. This extends gains to a seventh consecutive annual record and surpasses the previous upcycle which lasted six years.
Purchases will be buoyed by improving labour markets at the fastest pace since early 2007 and a bottoming in purchases across emerging markets. Economic growth in developing countries is expected to pick up for the first time since 2010, helping reverse last year's slide in car sales which was driven by sharp contractions in both Russia and Brazil. Low gasoline prices, improving household balance sheets and rising incomes will also help lift sales.
Full-year U.S. purchases are set to approach 18 million units in 2016, fueled by a strong labour market, the healthiest household balance sheets in more than a decade and rising replacement demand. The average age of the U.S. vehicle fleet is at record highs, with nearly 40% of all vehicles on the road at least 12 years old. Car purchases in Canada were stronger-than-expected in 2015, climbing 3% to a record 1.90 million units, but are forecast to be largely flat in 2016. A double-digit gain in leasing activity accounted for the advance last year. Auto sales in China have accelerated in recent months and are expected to increase 7% in 2016, buoyed by a 50% reduction in the sales tax from 10% to 5% for new vehicles with engine capacity of less than 1.6 litres.
