The new data from LMC Automotive shows that the market was up in July although the selling rate slowed to under 85 million units/year, the weakest rate since September 2013.

The firm added that key markets in Eastern Europe and South America face significant headwinds, while sales in Japan are also now falling.

In July, US sales were up 4.9% compared to the same month last year on a selling day‐adjusted basis, with the selling rate standing at 16.5 million units/year, a little weaker than June but a solid performance nonetheless. LMCA forecasts market growth of circa 5% for 2014, bolstered by an improving economic backdrop as the year progresses.

It added that the Canadian Light Vehicle market looks set to enjoy full year growth too, with it forecast to reach circa 1.8 million units for 2014.

The West European market continued its positive momentum, up nearly 6%. The selling rate in July stood at 13.6 million units/year with the UK, Germany and Spain the markets making most progress in year‐on‐year terms.

However, with Eastern Europe down sharply once again, Pan‐Europe was fractionally lower overall. Russian sales continued to contract, this coming after the recent escalation in sanctions and reflecting the generally tough economic environment. The ongoing deterioration in Eastern Europe will likely mean that Pan‐European Light Vehicle sales growth will do little better than stall in 2014.

For China, according to preliminary data, the selling rate slowed for the second consecutive month to an eleven‐month low of 22.2 million units in July. Since the inventory at dealerships rose to a high level of 1.69 months at the end of June, automakers apparently reduced their deliveries to their dealers in July. LMCA noted that China’s sales data are wholesales from automakers to dealerships and also added that the World Cup seems to have slowed sales to some degree.

In the passenger vehicle market, “panic‐buying” ahead of the expected imposition of the local governments’ purchasing restrictions appears to have cooled down. In the Light Commercial Vehicle market, sales have been deterred by uncertainty over the impending China IV emission standard, which is expected to be much stricter than the current standard.

In Japan, the selling rate fell to below 5 million units/year in July for the first time since the consumption tax hike in April. Higher inflation, sluggish income growth, and weak investment point to a further slowdown of sales in the coming months.

The South Korean market appears to be heading for record‐high sales this year, with the selling rate averaging 1.63 million units/year in the first seven months of this year. New model launches and strong sales of imports have helped boost sales, while the sustainability of such a robust pace is a question.

Within South America, in Brazil, sales were weak in both June and July due to the World Cup. While some rebound is expected in August, the market is projected to remain sluggish due to a slowing job market, tighter credit conditions, and weak business spending. The extension of the IPI tax cut through December is not likely to help boost sales.

However, the Argentine market has surprised on the upside, with the selling rate picking up in July – right before the country defaulted on its debt for the second time in 13 years. While the full extent of the repercussions of the default on the economy and sales are still uncertain, there is little doubt that the default will depress sales for a while, added LMCA.