Record auto sales help drive Canadian economy

TORONTO — Canadian auto sales hit a record in 2013, helping drive the broader economy just four years after the near collapse of the industry.

“It took more than a decade, but finally the previous high of 2002 has been eclipsed,” said Dennis DesRosiers, DesRosiers Automotive Consultants president.

Canadians shrugged off record personal debt levels and a lukewarm economy to purchase 1.743 million vehicles last year, up four per cent year-over-year and eclipsing the previous peak of 1.703 million units sold in 2002, DesRosiers said.

Ford Motor Co. of Canada remained the top-selling manufacturer in the country for a fourth consecutive year with its highest annual sales since 1997.

Ford’s sales increased three per cent in December to 16,161 units during the month, adding to the near three per cent gains it saw year-over-year in 2013 to 283,588 vehicles.

Those gains were aided by the F-series pickup truck once again being the topselling vehicle in the country for a fourth year in a row, the company said.

Chrysler Canada Inc. retained the second spot in the country last year with sales up seven per cent year-overyear to 260,015 units, including a five per cent increase in December to 15,445 units compared to last year.

Chrysler and Ford’s December sales were significantly lower than those of General Motors of Canada Ltd., which spiked 17 per cent year-over-year last month to 17,036 units.

But for the second year in a row, Chrysler managed to outsell GM in Canada with the latter’s sales up only four per cent for the year as a whole to 234,944 vehicles.

Ford finished the year with a Canadian market share of 16.3 per cent, down 0.2 percentage points, while Chrysler’s market gained 0.3 points to a 14.8 per cent.

Strong auto sales have been a significant driver for the broader economy coming out of the recession and after the multibillion-dollar bailouts of GM and Chrysler in 2009 by the U.S. and Canadian governments prevented the collapse of the North American auto sector.

Alex Koustas, BMO Capital Markets economist, noted auto sales amounted for roughly 20 per cent of total retail sales in Canada, or four per cent of the gross domestic product.

He said sales have been supported by attractive financing — with credit growth on auto loans growing at a doubledigit pace. But he added there was little cause for concern that Canadians are digging themselves too far into debt as a result.

“In most cases, you have the interest rates being quite favourable,” he said.

“But there’s a risk if you start to see players come in with longer-term loans and consumers start to take out longer-term loans, you could get into possibly a negative equity situation.”

Koustas noted even in the U.S., when there were some really “funky loans” being handed out, the auto portfolio was still one that incurred far fewer losses than other sectors.

Paul Ferley, RBC Capital Markets assistant chief economist, said the stronger demand in the U.S. has also provided a lift for auto-sector exports although not as strong as historical patterns would have suggested.