Automotive Industry Insights - Summer 2018

The auto industry showed signs of moderate improvement in the beginning of 2018, as global sales and earnings increased. The automotive industry continues to evolve as electrification gains a stronger foothold globally but North American automakers shift towards larger, more profitable vehicles.

Global light vehicle sales increased 2.3% in Q1 2018 relative to Q1 2017. In the United States, light vehicle sales grew 2.0% in Q1 2018 to 4.1 million units. Over the last-twelve months, overall light vehicle sales have grown at a slightly slower pace of 1.6% over the prior twelve-month period1. In March 2018, U.S. light vehicle sales reached an approximately 17.4 million-unit seasonally adjusted annual rate (SAAR)2, offering hope that vehicle sales will remain steady into 2018.

Interest rates on consumer installment loans for new automobiles reached 4.74% in February 2018, up from 4.52% in February 2017, providing a headwind for the industry3.

In 2017, auto production and sales in China were up 2.89% and 3.04%, respectively, over 2016; However, SAAR has remained flat through March 20184,18.

In Europe, January and February increases in new passenger registrations offset a decrease in March, which culminated in a 0.7% increase in Q1 2018 relative to Q1 20175.

M&A activity in the automotive sector decreased for the fourth quarter in a row, to 71 deals in the last twelve months (LTM) from 95 over the same period a year ago6.

Public company equity performance in the Automotive Original Equipment Manufacturer (OEM), Dealer, Aftermarket and Supplier sectors all trended downward over Q1 20186.

While OEMs are transitioning to focus on truck and SUV manufacturing in response to consumer demand in North America, new technologies such as autonomous vehicles, ride-hailing/sharing and electrification, continued to dominate headlines.



Sources:
1.“Global Light Vehicle Sales Update.” LMC Automotive Public Data.
2. “U.S. Light Vehicle Sales.” WardsAuto Public Data.
3. Federal Reserve Economic Data (FRED).
4. China Association of Automobile Manufacturers.
5. “Passenger Car Registrations: +5.8% first two months of 2018; +4.3% in February.” European Automobile Manufacturers Association. March 15, 2018.
6. S&P Global Market Intelligence.
18. “China Light Vehicle Sales Update.” LMC Automotive Public Data.

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