Canadian auto sales posted modest increase in August, report says
U.S. auto sales also grew at a robust rate in August, according to the latest Auto News Flash from Scotiabank.
Canadian auto sales posted a modest increase in August, a new report from Scotiabank says, although the 0.6% year-over-year (y/y) (nsa) headline boost benefited from a Labour Day-related accounting anomaly.
All Labour Day weekend sales – even those falling in September – are attributed to August totals with the traditionally strong sales weekend falling early this year, Scotiabank said in its latest Auto News Flash, and furthermore, preliminary estimates suggest double-digit fleet sales also lifted headline sales figures.
“Solid job and wage growth in key markets have underpinned retail sales; nevertheless not to the degree to which consumer confidence might suggest,” the report said. “The sales rate picked up by 2.4% month-over-month (m/m) (sa), surpassing the 2 million saar for the first time in more than a year, but the monthly selling rate has been notably volatile.”
While September is traditionally a strong sales month, Scotiabank said, Labour Day weekend may have pulled forward some sales, while other cost-conscious consumers may wait to see where financing rates go with markets pricing a policy rate cut by the Bank of Canada in October.
In the U.S., meanwhile, auto sales grew at a robust 10.5% y/y (nsa), but also benefited from an artificial boost due to an early Labour Day weekend. “Year-to-date sales have shown steady improvement as the year advances and are now on par with last year’s sales to-date,” Scotiabank said. “Solid household finances and lower financing costs have put a floor under the decline in auto sales, with August experiencing a modest acceleration (0.9% m/m) in the seasonally adjusted sales rate to 17 million saar units.”
The policy rate cut by the Federal Reserve in late July, along with market expectations for further cuts, should continue to strengthen auto sales as the year advances, Scotiabank said, although trade uncertainty continues to pose headwinds. “Cracks in consumer confidence began to emerge in August (U. of Mich. survey), with the auto sector particularly caught in the fray,” the report said. “While an alternative consumer confidence metric (Conference Board) paints a more optimistic outlook, particularly for auto purchase intentions, it does not capture the late-August escalation in US-China trade tensions.”