Canadian auto sales were down in December, report says
The new report by Scotiabank also notes that U.S. auto sales dipped even more sharply in December.
Canadian auto sales were down by 4.1% on an annual unadjusted basis in December, a new report from Scotiabank says.
Sales also dipped on a seasonally adjusted basis by 3.7% month-over-month (m/m), Scotiabank’s Auto News Flash said, despite prior month weakness. “Preliminary estimates for fleet sales are relatively flat,” the report said. “This brings total annual sales to 1.92 million for 2019 – a 3.2% drop relative to 2018 – marking a third year of decline in Canadian auto purchases.”
Overall, the report said, a cautious consumer is likely driving weaker auto sales. “Soft readings in October’s GDP (latest available) likely sparked December’s ten point drop in consumer confidence levels, bringing the Conference Board metric to a three-year low,” Scotiabank said. “This preceded weak job growth reported for November.”
While financing costs have been relatively stable over the Fall (above summer lows but well-below last year’s highs), high debt service costs along with low savings rates may also be curbing consumption, the report added. “Our present forecast for 2020 projects continued, but decelerating, weakness in auto sales with an expected 1.915 million units for 2020.”
In the U.S., the report continued, auto sales dipped sharply in December by 6.2% year-over-year (y/y) (nsa). “Sales were also down on a seasonally adjusted basis by 2.3% m/m,” the report said. “Total auto sales for the year stand at 17.0 million units, 1.4% below 2018 levels.”
There was a substantial weakening of auto sales in the final quarter of the year, Scotiabank said, exacerbated by the General Motors strike. “In particular, GM sales were down by an estimated 6% in December following November’s flat sales, dampening expectations of deferred purchases from the October strike,” Scotiabank said. “Otherwise, consumer fundamentals have been relatively resilient over the Fall including solid job and wage growth, along with record incentive spending for auto sales.”
U.S. consumer confidence has been relatively flat over the Fall according to the Conference Board, Scotiabank said, while University of Michigan reports a pick-up in levels for December, likely underpinned by a perceived tapering of trade tensions on the U.S.-China trade front. “We predict a relatively flat sales year ahead for 2020 with a projected 16.9 million sales unit forecasted.”