CARY, N.C. -

There was a 1.2-percent year-over-year gain in global new-car sales in March, according to Scotiabank, but the goings-on in China, Latin America and elsewhere perhaps tell a more intriguing story.

The aforementioned sales hike was driven by U.S. and emerging markets, which made up for a “temporary” slowdown in Western Europe, Scotiabank reported in its latest Global Auto Report.

While the U.S. represented the lion’s share of international car sales growth, other markets appear to be equally promising.  

Loosening regulation in China

Luxury car sales, driven by gains in household wealth and consumer confidence, are pushing a growing car market in China, the report notes.

But not only did the country show sales growth in the first quarter, regulatory relaxations there could help globalize the market, as the Scotiabank report details. 

“Sales gains in China picked up to 5.1-percent year-over-year (in March), up from a 3-percent increase during the previous two months,” Scotiabank said in its report.

“This implies that the market is no longer being affected by the removal of the tax incentives offered on the purchase of small fuel-efficient vehicles,” it noted.

The Chinese auto market is being dominated by luxury vehicles, the report noted, helping to drive its global market share of the top six luxury brands from under 20 percent six years ago to the 30 percent it now commands.

“Luxury automakers are the key drivers of sales gains in China this year, accounting for nearly half of the overall year-over-year sales improvement through March,” Scotiabank said. “In fact, the advance in China’s luxury auto market in 2018 is the fastest since the government’s launch of its anti-corruption drive in 2013.”

And then, of course, the regulation front.

The government said last month it is allowing Chinese automakers to hold a majority share of their own enterprises starting in 2022 — and makers of electric cars will be able to do so this year, the report explained.

When that “50:50 rule” came into effect nearly a quarter-century ago, there were less than 400,000 car sales in China each year. That equaled a 1-percent global share, the company said.

China’s international market share is close to 30 percent, having sold 24.2 million cars last year.

“The ‘50:50 rule’ has been the cornerstone of China’s auto industry since 1994, and was designed to give local automakers time to acquire technology and build their brands before providing overseas companies with unrestricted access to the Chinese market,” Scotiabank notes.

Another action outlined by Scotiabank was Beijing saying it would trim the 25-percent vehicle import tariff “as soon as possible” — which could change the landscape there and prove beneficial to the U.S. and other nations, as 95 percent of Chinese car sales currently are vehicles that were built in country.

China only imported 1.1 million cars in 2017, with over 45 percent coming from Western Europe and close to 30 percent coming from elsewhere in Asia, Scotiabank said.

“North America exports nearly 300,000 vehicles, mostly European brands manufactured in the US, to China each year, and will also benefit from tariff reduction,” the report notes.

Digital, mobility growth in Latin America

Another area potentially poised for growth is Latin America. Frost & Sullivan anticipates 5.8 million car sales there this year, up from 5.31 million a year ago.

That spike is being spurred by a rise in areas like e-commerce. The region is ripe for automaker investment in artificial intelligence and vehicle advancements, as well as opportunities in online retail and mobility, the company said in a news release about its Latin American Passenger Vehicle Market Outlook, 2018.

“With the increasing internet and smartphone penetration in the region, OEMs are disrupting the way they connect with customers and focusing on offering eCommerce platforms and new service models. OEMs must develop artificial intelligence, Industry 4.0, and advanced features to improve productivity and enhance upselling service possibilities,” Frost & Sullivan mobility research manager Yeswant Abhimanyu said in the release.

Abhimanyu added: “Domestic currency devaluation against the US dollar is a big challenge for most LATAM markets that are heavily dependent on vehicle imports or auto parts for vehicle assembly, such as Argentina or Colombia. To mitigate this challenge, companies, together with local governments, are investing in the development of local Tier 1, 2 and 3 suppliers.”