Canadian auto sales picked up in July: Scotiabank

Canadian auto sales picked up in July with a 3.4% month-over-month (m/m) increase in the seasonally adjusted annualized sales rate (saar), a new report from Scotiabank says.

According to Scotiabank’s latest Auto News Flash, the acceleration in July’s sales rate to 1.95 million saar units likely reflects pent-up demand from a weak Spring sales season despite sound fundamentals such as strong job growth, wage increases, and tax refunds. “Sales were nevertheless down modestly on a year-over-year basis by 1.0% (nsa), reaffirming the trend slowdown with year-to-date sales down by 4.2% (nsa),” the report said. “An incipient economic rebound, a more dovish monetary stance, and low base effects from late 2018 should further offset the trend slowdown as the year advances.”

But the economic rebound is subject to considerable downside risk, Scotiabank said, including external developments. “We presently forecast sales of 1.94 million for 2019, below highs of 1.98 million and 2.04 million units sold in 2018 and 2017 respectively,” the report said.

In the U.S., meanwhile, auto sales decelerated in July, continuing to demonstrate high month-tomonth volatility against a modest trend slowdown for the year. “The seasonally adjusted annualized sales rate dropped by 2.7% m/m in July to 16.8 million saar units following two months of sales at 17.3 million saar units,” Scotiabank said. “On a year-over-year basis, unadjusted July sales growth was positive at 2.2%, but flat on a seasonally adjusted basis.”

A variety of factors dampened U.S. sales earlier this year, Scotiabank noted, including poor weather, the government shutdown, as well as base effects from a particularly strong 2018 sales year. “Easing interest rates going forward should underpin sales for the remainder of the year, but ongoing uncertainty will feed volatility,” the report said. “We forecast 2019 sales of 16.8 million units, down from a high of 17.2 million sales in 2018.”