Auto industry driving force in NA economic recovery
Strong motor vehicle sales and a decline in dealership inventories throughout North America are responsible for much of the increase. U.S. auto dealers had a 59-day supply of new vehicles for the month of April, compared with an average supply for the last 10 years of 67.
"Vehicle production on both sides of the border climbed to an annualized 15.7 million units in April and May -- a 10-per-cent year-over-year increase -- and is scheduled to surge to 16.5 million in June, up from 13.9 million in late 2001," says Carlos Gomes, Scotiabank's auto industry specialist. "Assemblies fell to a decade low of only 13.6 million in early 2001."
The rebound has also led the industry to hire more workers, a change from the massive layoffs that have marked the past two years. In productivity, Canadian plants outscored their U.S. and Mexican counterparts. Vehicle assembly and parts production are expected to add another percentage point to the overall economic growth in the second quarter of 2003.
"In Canada, the auto industry (assemblies and parts) has added 4,700 new jobs so far this year -- a significant turnaround from the nearly 15,000 jobs lost since late 2000," adds Gomes. But the U.S. plans to build new plants in the Southern states over the next five years, which could cut into Canada's share of the market.
Canadian sales have increased by 10 per cent from this time a year ago. May purchases totalled 1.69 million, in line with the average for the past four months. Despite the fact that U.S. sales have fallen off 6 per cent from the same time a year ago, year-to-date sales continue to be strong, at an average of 16.4 million vehicles, the fourth highest level on record.
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