Canadian auto sales fell in June, Scotiabank says

Canadian auto sales dipped in June by 7.2% year-over-year (y/y), a new report from Scotiabank said, representing a decline of 2.3% month-over-month (m/m) on a seasonally adjusted basis, as well as the sixteenth consecutive month of y/y declines.

“Despite relatively supportive conditions in May and June – for example, decent weather, unexpected tax refunds, exceptionally strong job growth – auto purchases continue to disappoint with the sales rate dropping to 1.88 million saar units for June bringing the year-to-date sales rate to 1.93 million saar units,” Scotiabank said in its most recent Auto News Flash. “Stronger economic growth in the second half of the year, along with low base effects from late 2018, should reinforce modest sales growth for the remainder of the year. We forecast annual sales for 2019 of 1.94 million units, below highs of 1.98 million and 2.04 million units sold in 2018 and 2017 respectively.”

Turning to the U.S., Scotiabank noted that auto sales continued above-trend growth with June sales tracking at 17.30 million saar units, following an equally strong performance in May. “Monthly sales rates so far this year have experienced considerable volatility with below-trend growth earlier in the year due to a variety of factors – for example, poor weather, government shutdown, and strong base effects – followed by an unwinding of pent-up demand in May’s surge to 17.31 million saar units,” Scotiabank said. “On a year-over-year basis, deliveries contracted by 1.9% (nsa), marking six consecutive months of declines with year-to-date sales down by 2.0% (nsa).”

Scotiabank also said that a slowing economy in the U.S., along with continued policy uncertainty, is expected to weigh on the sales outlook for the remainder of the year. “Easing interest rates may provide some support to auto sales later this year – however, uncertainty could erode its full impact,” the report said. “With an annualized sales rate currently sitting at 16.9 million units, we maintain our year-end-sales forecast at 16.8 million units.”