Bearish Outlook Maintained Across All Vehicle Segments
Vehicle sales in Peru declined 6.8% year-on-year (y-o-y) in the first quarter of 2014, to 45,500 units, as both passenger car and commercial vehicle (CV) sales contracted. BMI expects to see a broader slowdown in the economy over the coming year. This, combined with high base effects following strong vehicle sales growth from advanced purchasing decisions in 2013, has informed our view for a contraction of 3.1% in vehicle sales in 2014.
|Sales Decline To Continue|
|Peru Monthly Vehicle Sales, Units|
Passenger Car Sales Moderate Further
In Q114, passenger car sales declined 3.8% y-o-y, to 32,731 units. Sustained currency weakness, rising inflation, and a slowdown in the broader economy continue to weigh on consumer sentiment and retail spending. These dynamics, coupled with high base effects, are weighing on the passenger car segment, and we forecast a drop of 3% in 2014.
Commercial Vehicle Sales Stutter On Construction Slowdown
In line with our expectation for a slowdown in mining activity and infrastructure projects over the year, light commercial vehicle (LCV) sales decreased 13% y-o-y over the year to date, to 8,078 units, and heavy truck sales dropped 14.9% y-o-y, to 4,219 units.
The CV sector has expanded considerably over the last few years, chiefly on the back of a government stimulus package to boost the construction and infrastructure sectors. However, these stimulus measures wound down over the course of 2013, as most of the funding had already been spent, leading to the 0.9% drop in total CV sales over the year.
In 2014, we expect this weakness in the construction and mining sectors to continue to impact the CV segment, although we believe some relief will come from low base effects from a relatively poor 2013. On the back of this bearish outlook, we forecast a 2% drop in LCV sales and 5% decline in the heavy truck segment. Risks to our forecast remain to the downside, as the general slowdown in mining and construction may impact the CV segment more than we currently envisage.