Auto sales hit one-mil­lion mark for first time

The Guardian (Charlottetown) - - BUSINESS - BY DAVID HODGES THE CANA­DIAN PRESS

De­spite slump­ing pas­sen­ger car sales, for the first time more than one mil­lion new ve­hi­cles have been sold in Canada by the mid­way mark of the year.

DesRosiers Au­to­mo­tive Re­ports says over­all car and light truck sales in­creased five per cent, with 1,039,068 ve­hi­cles mov­ing off lots from Jan­uary through June com­pared to the same time pe­riod last year.

The mar­ket re­search firm says auto sales in June also set a new record, with 203,486 ve­hi­cles sold, 6.5 per cent more than dur­ing the same month a year ago.

Like in the past, sales of light trucks led the way in June, ris­ing by 10 per cent year-overyear, and eas­ily off­set­ting a 0.1 per cent de­cline in pas­sen­ger car sales. Year-to-date, pas­sen­ger car sales were down two per cent while light truck sales were up 8.8 per cent.

While this is the strong­est start on record for Canada, DesRosiers says a dif­fer­ent pic­ture has been form­ing in the U.S. where new ve­hi­cle sales have been down for four con­sec­u­tive months as of June.

“Sur­pass­ing 2016 as an all­time record set­ting year may not be a fore­gone con­clu­sion should Canada start to fol­low that trend in the lat­ter half of the year,” the firm said in a re­lease.

In­creas­ingly strong sig­nals from the Bank of Canada that rock-bot­tom in­ter­est rates are near­ing an end may also play a role in slow­ing down the fu­ri­ous pace of car sales, says Equifax Canada.

“Higher rates may ac­tu­ally lead to a short term blip as deal­ers and buy­ers look to take ad­van­tage of rates now,” said Bill John­ston, the credit bu­reau’s vice-pres­i­dent of data and an­a­lyt­ics.

“(But) over com­ing months, the cu­mu­la­tive rate hikes will be­gin to slow­down auto sales as man­u­fac­tur­ers will find it more dif­fi­cult to of­fer the long-term promo rates.”

Michael Hatch, chief econ­o­mist at the Cana­dian Automobile Deal­ers As­so­ci­a­tion, says he doesn’t see a rate bump hav­ing a huge im­pact on prospec­tive buy­ers.

“For one thing, any rate in­crease in the short term is likely to be very small, in the 25-ba­sis point ball­park,” he said, adding that the delin­quency rate on auto loans con­tin­ues to sit at his­tor­i­cally low lev­els.

A Tran­sUnion Canada re­port for the first quar­ter of 2017 showed that while av­er­age auto lend­ing bal­ances rose 2.75 per cent year-over-year, at the same time, se­ri­ous delin­quency rates re­mained es­sen­tially flat at 1.70 per cent.

Ge­orge Iny, pres­i­dent of the Automobile Pro­tec­tion As­so­ci­a­tion, said he ex­pects car mak­ers to con­tinue to keep in­ter­est rates low on new ve­hi­cles be­cause it makes long-term car loans of seven to eight years more palat­able to the public.

“It’s a bad loop if they get into it, if they raise rates, be­cause it will then make the long loan unattrac­tive,” he said. “And then peo­ple won’t take the ve­hi­cle at all.”

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.