Canadian auto sales fell back “modestly” in October, report says

Canadian auto sales fell back modestly by 0.6 per cent year-over-year (y/y) (nsa) in October, a new report from Scotiabank says.

“Financing costs may have provided some headwinds with the ten-year government bond elevated for most of October – and on par with September’s peak – relative to the summer lows that spurred accelerating sales,” Scotiabank’s latest Auto News Flash said. “Preliminary estimates also suggest fleet sales were flat in October, therefore not providing much offset to the decline in retail performance.”

Nevertheless, the report said, base effects may be obscuring some modest strength in this month’s sales figures as last October’s sales stood out as the only relatively decent month in an otherwise very challenging Fall of 2018. “This month’s seasonally adjusted selling rate in fact picked up by 4.5 per cent month-over-month (at a pace of 1.95 million saar units), providing some symmetry around high month-to-month volatility,” the report said. “Market fundamentals otherwise remained solid, namely job and wage growth remain strong, housing markets are surging again, and consumer credit growth remains healthy. The year-to-date sales rate sits at 1.94 million saar units, in line with our 2019 sales forecast.”

In the U.S. meanwhile, auto sales posted another decline of 1.8 per cent y/y (nsa) in October – this follows last month’s sharp pullback of 11.3 per cent y/y (nsa) with year-to-date sales down by 1.2% (nsa). “On a seasonally adjusted basis, the monthly selling rate also weakened by 3.4% m/m (at a rate of 16.55 million saar units),” Scotiabank said. “The GM strike likely impacted the final tally through sales deferrals as its U.S. sales were down by almost 14 per cent y/y (nsa) in October relative to its year-to-date sales performance (at -1.5 per cent).”

Otherwise, Scotiabank said, indicators of household health were solid in October, including job growth that beat expectations and continued wage acceleration at 3 per cent. “Consumer confidence retreated a notch, but still remains elevated,” the report said. “Nevertheless, waning indicators around business activity amid heightened uncertainty on trade and political fronts weigh on the outlook. The year-to-date sales rate stands at 16.9 million saar units. We expect a modest pick-up to close out the year at 17.0 million units.”