Canadians really do like SUVs and pickups
Account for about 70% of 2017 total sales
Canada has a population of just over 36 million people and by the close of this year, annual sales of new vehicles will be about two million. Estimates put used vehicle sales at about three million for the same time period. We buy a lot of cars. Light trucks, actually. For all the jabber after the last economic crash a decade ago, the one that took the leasing industry with it, we’ve left behind the promise of subcompact vehicles, become bored with sedans and continue to shun the hybrids and electrics that dominate headlines but little else.
“Sixty- eight to sixty- nine per cent of the market this year is light trucks,” says Dennis DesRosiers, of DesRosiers Automotive Consultants. “In fact, for four of the past 12 months, it’s been over 70 per cent, and this will stay positive for another year, at least.”
DesRosiers crunches numbers; he cares little about what ad campaigns and headlines say we should be buying, and instead reports on what we actually are buying. “The used car numbers are actually the most revealing,” says DesRosiers. “In 1990, there were 600,000 vehicles on the road that were over 10 years old. Today, there are 11 million, and over the next two years that will grow to 12 million.”
There were two million used car sales in 1990; DesRosiers predicts that will leap to 3.5 million over the next couple of years. It’s the fastest-growing part of the market, and all for one reason. “Quality, quality, quality,” he remarks.
Even with the resurgence of leasing — which reached a high of about 40 per cent of sales before the 2008 meltdown and now has rebounded to about 30 per cent — about half of current lessees are choosing to buy out their vehicles at the end of the lease. So why is a group that traditionally leased to make sure they could have a continuing new car smell now keeping the old one?
“A lot of people lease to lower an initial monthly payment,” says DesRosiers. “At the end of that three- or fouryear term, they like their cars, they trust their cars, and the refinance amount is still very manageable.”
When I offer that I think extended-term vehicle loans for seven, eight or even nine years are dangerous, DesRosiers shoots me down.
“Consumers were just doing that anyway, when they leased while intending to buy. Keeping their monthly payment where they wanted it, then refinancing down the road. It makes no difference for people keeping their cars,” he argues.
It’s true we’re keeping our cars longer, and our cars have longer lives even after we release them into the wild. DesRosiers suggests the life cycle of a new car today is close to 30 years before it will finally leave the road. But John Raymond, a consultant with the Automobile Protection Association ( APA) hesitates over that figure.
“Twenty years- plus, with regular maintenance and some level of corrosion treatment. The cost of repair generally drives the scrap- age rate,” Raymond explains.
There is also the lure of a rapidly changing technological landscape that pushes a significant number of buyers to chase after the newest, shiniest thing.
“I call it the new-car erection,” DesRosiers says with a laugh.
There will always be a segment of the car- buying public who have to have the latest upgrades, much like the phone you’re reading this on, or that is at least not far away. The extended lifespans of today’s cars is also complicated by another factor: fuel economy. “Vehicles are getting at least two- percent more efficient each year; that means today’s model will be 20- or 25- per- cent more fuel efficient than the same one from a decade ago,” says DesRosiers.
My 10- year- old paid- for car is running like a top, but a new one would provide much greater fuel economy and better environmental factors. Which naturally leads the discussion in an electrifying direction — or doesn’t.
“Electrics are up, but they comprise a blip in the sales numbers. Hybrid sales are down for the fifth year in a row,” he says. “When sales of electrics comprise just 5,000 vehicles out of that two million, the OEMs have a headache.”
He’s right. And that 5,000 was almost entirely triggered by rich rebates in three provinces — Ontario, Quebec and B.C. — and if those enticements disappeared (as some say they should), even those gains would disappear in a blink. Raymond lists three barriers to electric sales.
“The cost of entry, despite heavy subsidization, is still high. Range anxiety is still very relevant, and thirdly, the ability to consistently charge the vehicle remains an obstacle. Not everybody lives in a house,” he says.
So if the statistical reality is that hybrids and electrics are more like the last mosquito in the room at night instead of the elephant, why is that all we hear about?
“I blame you guys,” DesRosiers says. “The media play it hard and the OEMs are taking a huge risk on technology that — look at the numbers — nobody wants.”
I ask DesRosiers if we’re starting to mimic American buyers, the numbers and the flash. He laughs again.
“Canada is pretty boring,” he says. “We buy the least amount of vehicle we need; Americans buy the most.”
And everybody wonders why Canada loves hatchbacks.