Auto sales set record

Cana­di­ans bought nearly 1.9 mil­lion new ve­hi­cles in 2015

The Guardian (Charlottetown) - - BUSINESS - THE CANA­DIAN PRESS

“Now con­sumers are less brand loyal, they’re more will­ing to shop around, and those com­pet­i­tive pres­sures are brought to bear on the prod­uct qual­ity and on the prices that con­sumers pay.” Michael Hatch, chief econ­o­mist, Cana­dian Au­to­mo­bile Deal­ers As­so­ci­a­tion

De­spite the slug­gish econ­omy, Cana­di­ans snapped up nearly 1.9 mil­lion new ve­hi­cles in 2015, making it a record year for auto sales, ac­cord­ing to fig­ures com­piled by a lead­ing au­to­mo­tive con­sul­tant.

And DesRosiers Au­to­mo­tive Con­sul­tants says man­u­fac­tur­ers can thank a big in­crease in sales of light trucks — a cat­e­gory that in­cludes SUVs, mini­vans and pickup trucks — for the im­prove­ment.

Cana­di­ans bought nearly 1.2 mil­lion trucks in 2015, up 8.8 per cent from 2014, enough to push over­all sales up 2.5 per cent to 1.898 mil­lion ve­hi­cles even as car sales slipped 6.3 per cent to 715,719, DesRosiers says.

“Con­sumers, de­spite the eco­nomic head­winds, are look­ing at the value propo­si­tion avail­able in the new car mar­ket and they’re re­spond­ing with record lev­els of de­mand,” noted Michael Hatch, chief econ­o­mist for the Cana­dian Au­to­mo­bile Deal­ers As­so­ci­a­tion.

Ex­perts cite a num­ber of rea­sons for the strong sales, in­clud­ing new ve­hi­cle prices that have re­mained roughly the same for a num­ber of years, while in­fla­tion and wages have risen. That means new ve­hi­cles have be­come more af­ford­able for Cana­di­ans, said Hatch.

Com­pe­ti­tion has also been heat­ing up in the Cana­dian auto in­dus­try in re­cent years, which has com­pelled au­tomak­ers to hold the line on prices, he added.

“Whereas in the past a rel­a­tively small num­ber of brands would have rep­re­sented a very large chunk, the lion’s share of the mar­ket, that’s no longer the case,” he said. “There’s more brands avail­able to con­sumers in Canada. The mar­ket is more frag­mented.”

Mean­while, con­sumers have be­come less loyal to brands, ac­cord­ing to Hatch.

“My par­ents al­ways drove the same brand of ve­hi­cle,” said Hatch. “Ev­ery time they went back they bought the same brand from the same deal­er­ship and there was a great de­gree of brand loy­alty. .

“But now con­sumers are less brand loyal, they’re more will­ing to shop around, and those com­pet­i­tive pres­sures are brought to bear on the prod­uct qual­ity and on the prices that con­sumers pay.”

Dina Ign­ja­tovic, the auto sec­tor econ­o­mist at TD Eco­nomics, cited rock-bot­tom in­ter­est rates as the driv­ing force be­hind the stel­lar sales fig­ures.

“In­ter­est rates are ex­tremely low and loan terms have been length­ened, so af­ford­abil­ity for con­sumers has im­proved a lot,” Ign­ja­tovic said.

Auto in­dus­try con­sul­tant Den­nis DesRosiers said lower gas prices have also en­ticed buy­ers by re­duc­ing the cost of own­ing a ve­hi­cle.

Im­prove­ments in the prod­ucts on the mar­ket is an­other fac­tor lur­ing buy­ers, he said.

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