BMI View: We maintain our view that auto sales across Central America will be relatively subdued in 2017 and 2018. Higher oil prices, weaker government expenditures and political risks stemming from uncertainty over trade and immigration policy in the US and volatile domestic political climates will pose headwinds to household consumption and fixed investment, weighing on sales. That said, sales growth will pick up in most markets during 2018 and could surprise to the upside should political volatility subside.
A shift towards more protectionist trade and restrictive immigration policies in the US will likely weigh on vehicle sales growth by undermining remittance growth and generating greater uncertainty, which will disincentivise big-ticket purchases. Data from H117 reaffirms our view.
Inflation is likely to rise broadly across the region in late 2017 and early 2018, prompting higher interest rates that will create headwinds to consumer purchasing power and demand for passenger vehicles.