Looking to 2015 and beyond, we maintain our view that the market will slow from its current pace, but positive growth, can be sustained over our forecast period to 2018, particularly if a soft landing for the housing market - a key indicator of light truck demand - can be successfully engineered. Our expectation for no rate hikes until the end of 2015 at the earliest also bodes well for vehicle sales, as auto loans have been driving growth in recent years thanks to low rates and longer terms.
However, this does exacerbate an issue we have previously highlighted in that household deleveraging will need to take place over the span of our forecast period. While the more painful recovery has seen US debt-to-GDP fall from 95% in Q109 to 76.7% in Q413, Canadian debt-to-GDP has continued to climb, reaching 97.4% at the end of 2013. Addressing this will impact private consumption. Nevertheless our average annual forecast of 1.8% growth in light vehicle sales for 2015-18 is positive for a developed state and will see the market on the brink of 2mn units by 2018.
In the heavier truck segment, a healthy order book and the improvement in sales over the year so far, with 3.9% y-o-y decline for 4M14 becoming growth of 0.65% y-o-y by the end of H114, aligns with our view of 4.7% growth in the freight sector in 2014 driving demand for heavy trucks, although this relies on most of these orders being converted throughout the year to meet our 5.0% sales growth forecast. Looking further ahead, our forecast for an even bigger increase in freight tonnage of 5.39% in 2015, is also supportive of our forecast for 2.0% average growth in truck sales for the 2015-2018 forecast period.
For domestic suppliers, however, the growth opportunities still appear to be elsewhere in the region, as Magna International has announced investment in a new plant in Tennessee. Having said earlier in the year it would no longer invest in new domestic plants, this project is another example of the US being...
The Canada Autos Report features the latest data and forecasts covering production, sales, imports and exports.
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BMI Industry View
Summary of BMI's key industry forecasts and views, covering production, sales and the introduction of new technology or products.
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