Global auto sales cool in February; Canadian parts industry enjoys bumper 2012

(Photo: Magna International)

TORONTO -- Global auto sales were moderate in February, undercut by weak volumes in western Europe and China where purchasing patterns were distorted by the Lunar New Year holidays, says a report by Scotiabank.

However, the bank says in its monthly Global Auto Report that the combined results for January and February indicate that car sales in China have advanced 19 per cent so far this year.

And outside of China and western Europe, sales continued to improve in most other regions in February, led by a 3.5 per cent year-over-year gain in North America.

Meanwhile, the report said more recent data for March point to ongoing strength in the U.S. with sales at an annualized 15.3 million units last month, in line with the average so far this year.

"However, looking at the sales on a daily rate basis, last month's performance was the best since August 2007, and highlights the broad-based strength currently evident across much of the U.S. economy," the report said.

In contrast, purchases in Canada fell one per cent below the levels of March 2012 and remained below a year-ago levels for the fourth consecutive month.

"Despite the weakness, we estimate volumes totalled an annualized 1.66 million units, in line with the average of the previous three months," senior economist and auto industry expert Carlos Gomes said.

Volumes are also forecast to gain momentum in the spring selling season and "we still expect full-year 2013 sales (in Canada) to reach our forecast of 1.69 million units - the second highest on record," Gomes said.

Meanwhile, Scotiabank said the Canadian auto parts industry enjoyed a bumper year in 2012, with full-year shipments accelerating 18 per cent to an annualized $23.8 billion.

But despite the 11 per cent gain in parts shipments south of the border and a 15 per cent jump in Canadian vehicle production, the content of Canadian-made parts in each North American-built vehicles only edged up $11 last year to $1,500, and still remains 17 per cent below the $1,800 average of the past decade.

"One of the emerging trends in today's auto industry is that vehicles are increasingly becoming more reliant on electronics," Gomes said.

"We're also seeing competitive cost challenges dictate that much of the electronics in today's vehicles is now being imported from low-wage countries."

Although North American companies still design semiconductor chips, censors and control devices used in automotive electronics, the assembly of electrical systems that route power and signals throughout a vehicle is very labour-intensive and is increasingly being performed in low-wage countries.

The segment now accounts for only four per cent of overall Canadian auto parts shipments, down from five per cent as recently as 2005.

Imported electronic parts currently supply more than 85 per cent of the Canadian market, with the United States still the largest supplier at roughly 40 per cent of overall imports.

However, U.S. parts are increasingly being displaced by shipments from low-cost countries, with Mexico, China and the Philippines now the top three exporters of vehicle electronics to Canada after the U.S.