The Global Light Vehicle (LV) sales rate reached 85 million units/year in June 2022, marking the best result of the year to date, according to the GlobalData LMC Automotive unit.

However, year-to-date sales are 8.5% lower than the same period in 2021, indicating that the global market has a long road to recovery.

LMC noted that while supply issues are still impacting demand in most regions, a strong recovery in sales in China, supported by the easing of lockdowns which allowed OEMs to ramp up production as well as new temporary tax cut for passenger vehicles (PV), means last month’s sales rate jumped from May.

REGIONAL COMMENT

North America

U.S. light vehicle sales fell 12.6% year-on-year in June to 1.13 million units. The annual comparison was helped somewhat by the fact that sales started to decline in June 2021 due to the shortage of chips. However, lack of inventory continues to plague the market. The pace of sales increased slightly to 13.0 million units/year in June, but supply issues are disrupting regular seasonality, skewing this metric. Additionally, record average transaction prices of US$45,988 in June are starting to impact some consumers.

BT’s Canadian sales are estimated to have fallen 11.5% year-on-year in June to 149,000 units. The pace of sales is said to have increased slightly in June, to just under 1.5 million units/year, but the market is clearly still in a slump due to persistent inventory shortages. In Mexico, sales rose 4.0% year-on-year in June, to 90,000 units. However, the pace of sales slowed to 1.11 million units/year from 1.18 million units/year in May.

Europe

The sales rate in Western Europe remained broadly stable compared to the previous month in June. At 11.3 million units/year, this brings the average for the first half of 2022 to just 11.0 million units/year. New vehicle registrations remain in poor shape due to supply constraints, with sales rates below annual results during the pandemic years of 2020 and 2021.

The sales rate in Eastern Europe was 2.7 million units/year in June, signaling no improvement from the previous month as the regional market struggled with the fallout from the war in Ukraine as well as supply problems.

China

In China, the sales rate hit a record high in June as the country lifted major lockdowns and OEMs ramped up production. Preliminary data indicates that in June, which is normally a slow sales month in the year, the sales rate soared to 32.9 million units, up 40% from the previous month. This follows a 65% MoM increase in May. In annual terms, sales (i.e. wholesale sales) increased by almost 30%, but have contracted by 2.3% since the start of the year.

Behind this exceptional performance are the faster than expected recovery of the supply chain and the temporary purchase tax reduction for passenger vehicles (PV), which was launched on June 1 (until December 31). 2022). In June, PV sales contributed all of the year-on-year gain, while light-duty vehicle sales remained sluggish, reflecting tighter safety regulations that led to higher prices and slower economy.

Other Asia

The Japanese market decelerated for the second straight month in June as component shortages intensified in the second quarter during shutdowns in China. The June sales rate was 3.62 million units/year, down 5% from a weak May. Year-on-year, sales contracted 10% in June (the 12th consecutive month of decline) and 15% since the start of the year. Yet demand currently remains robust and continues to outpace supply.

In Korea, sales accelerated in June, with June 30 being the original expiry date of the temporary PV excise duty reduction (which was extended to December 2022). June sales rate jumped to 1.69 million units/year, up 7.5% from a weak May. Nevertheless, it was a slow result for Korea. The continuing supply crisis and the week-long strike by truckers in the country disrupted supply and sales in June. In annual terms, sales were down 12% last month and 11% since the start of the year.

South America

Brazilian light vehicle sales fell 2.8% year-on-year in June to 165,000 units. While arguably one of the best results of the year so far, the sales pace slowed to 1.96 million units/year in June. Model availability is improving – inventory stood at 145.5,000 units in June, up sharply from 124,000 units in May, while days’ supply rose to 24 days from 21 days previously. Still, the market faces headwinds from a turbulent economic environment, including rising vehicle prices. The average interest rate on the purchase of a vehicle was 28% during the last week of June, which hurt affordability for many potential buyers.

In Argentina, light vehicle sales fell 7.8% year-on-year in June to 33,000 units, but the year-on-year drop is not the whole story. A year ago, the country was emerging from pandemic-related restrictions and sales surged accordingly, providing a high base effect. In fact, June 2022 saw a relatively good performance, with the sales rate climbing to 405,000 units/year, the highest rate since November 2020. Overall, however, the market is still held back by low inventories. and import restrictions.

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