Scotiabank says recovery in global auto sales continuing, but slowing down

"We expect a further four per cent advance in 2012, though there is the potential for more downside if the eurozone debt crisis does not stabilize," senior economist and auto industry specialist Carlos Gomes wrote in the bank's Global Auto Report released Thursday."A rebound from this year's tsunami-induced slump in Japan and continued gains in emerging markets will lead the way."Sales in the United States are expected to climb to 13.5 million units, the highest level since 2007, as households and businesses replace their aging vehicles, the report said.Sales in Canada will climb to 1.61 million units in 2012, up from 1.59 million this year and the best performance since 2008."The resource-rich Prairies will lead the way, but every region is expected to post moderate gains in the coming year," it said.Meanwhile, western Europe will remain the weak link, with volumes dragged down by declining sales in the debt-ridden Mediterranean countries. There is also a risk that the weakness could spread to the core countries of northern Europe if the debt crisis is not contained.At the same time, Gomes said global volumes would continue to be bolstered by strong employment growth and declining interest rates in emerging markets."This represents a sharp reversal from the past year, when most central banks in developing nations were raising rates to contain inflation," he said.After plunging by nearly 20 per cent this year and slumping to the lowest level since 1987, car sales in Japan are expected to post a double-digit increase in 2012, said Gomes.Despite the improvement, the auto industry highlights the major shift taking place in global consumption patterns, the report said."In 2012, car sales in emerging nations will surpass purchases in the developed world for the first time on record," Gomes said."We project that car sales in developing nations will expand by seven per cent in 2012, climbing to 31 million units and exceed volumes in the mature markets of western Europe, North America and Japan. A decade ago, developing nations accounted for less than 20 per cent of global car sales."India was the second-best performing major auto market over the past decade, with sales climbing 11 per cent per annum to a record 1.97 million in 2011.In another emerging market, Brazil, sales are expected to rise four per cent this year to a record 2.8 million units as interest rates have declined 2.5 percentage points from their August peak. About 70 per cent of car buyers in Brazil require financing.