Canadian auto sales experienced yet another good year in 2013 as sales of light vehicles grew for the third consecutive time, according to a new report by BMO Economics.
Preliminary numbers show sales of passenger vehicles jumping to 1.74 million units in 2013, an increase of 4 per cent since over the 1.68 million units sold in 2012, and a 10 per cent and a increase over 2011’s 1.59 million units.
“A solid model lineup and new offerings from manufacturers at very generous financing terms will continue to generate interest from the Canadian consumer,” said Alex Koustas, an economist with BMO Capital Markets.
According to Koustas, sales activity is expected to remain brisk, but will likely drop off last year’s pace given rising ownership rates and more elevated debt levels. Auto sales will slide marginally from 1.78 million units in 2013 to 1.71 million units this year. Despite the anticipated drop in volumes, projected sales are expected to mark the third best performance on record.
Koustas also said that continued investments in the auto industry and competitive pressure are helping to fuel growth. Fuel efficiency has improved by nearly 20 per cent across the board in the last five years and the evolving technology, size, safety, and functionality of vehicles have also expanded.
An additional factor driving sales is financing, the report said. Since 2009, Canadian automotive loan balances have increased by 165 per cent compared to 35 per cent in total consumer loans. With rates expected to remain low, BMO said, financing should remain relatively easy to acquire over the next year.
Leasing has also rebounded. Before the 2007 financial crisis, leasing accounted for nearly half of all auto sales but by 2009, it accounted for less than 10 per cent. Since then, lease activity has rebounded to more than 20 per cent of sales, BMO said.