Canadian vehicle sales down in December: Scotiabank
But auto purchases in the U.S. recorded their highest one-month total since October 2017, the new report from Scotiabank said.
Canadian vehicle sales fell sharply by 7.4% month-over-month (m/m) in December to 1.76 million units in seasonally adjusted annualised (SAAR) terms, a new report from Scotiabank says, which continues a pronounced downward trajectory that started in early 2018.
Auto purchases also contracted for a tenth consecutive month in year on year terms in December by 8%, Scotiabank’s newest Auto News Flash said. Although the year ended on a downbeat note, in total, 2018’s 1.98 million units sold sit below only 2017’s all-time high of 2.04 million deliveries.
“Sales declined in 2018, as expected, owing to slower overall economic growth, subdued employment gains, and rising interest rates,” Scotiabank said. “Purchases also stabilized in those provinces Saskatchewan and Alberta that experienced strong economic rebounds in 2017. The headline figures for 2018 were also aided by growing fleet purchases that offset a retracement of sales to individuals.”
“We forecast Canadian auto sales to dip to 1.93 million units sold in 2019 amid a continuation of the Bank of Canada’s tightening cycle and muted job gains with the economy sitting near full employment,” the report continued.
Fiat Chrysler’s (FCA) decline continued in December, Scotiabank said, with another steep year on year drop of 32.5% for a cumulative annual contraction of 15.8% in 2018. “FCA’s sharp fall in sales during 2018 stands in contrast to Ford’s and GM’s respective declines of 3.4% and 4.8% for the calendar year, and pales in comparison to sales increase of 1.2% for all remaining automakers,” Scotiabank said. “Aside from a plunge in minivan and sedan sales, which have fallen out of favour with buyers, FCA faced setbacks in production of the ever-popular Ram pickup, with sales of the truck down by 14% in 2018. After a combined drop of 7.7% in 2018, the Detroit Three’s share of Canadian auto sales declined to 40.9% from 43.1% in 2017.”
Auto purchases in the U.S., meanwhile, recorded their highest one-month total since October 2017 at 17.54 million annualised units delivered in the final month of 2018. “December sales closed 2018 strong, combining for four consecutive months of 17 million plus annualised units purchased,” Scotiabank said. “At 17.2 million in 2018 as a whole, vehicle deliveries in the US topped the previous year’s total of 17.1 million units and, in turn, recorded their second highest year on record below only 2016’s peak of 17.5 million units.”
Against forecasts earlier in the year calling for a slight contraction in sales in the U.S., stronger-than-expected economic growth on the back of increased public spending and tax cuts and reforms under President Trump helped to lift auto sales a tick higher in 2018, Scotiabank said. “Last year’s expansion was driven by strong demand from businesses against declining auto purchases from households,” the report said. “The U.S. economy is poised for a slowdown in growth toward more a sustainable pace close to its underlying potential in 2019 and 2020. We do not anticipate that the U.S. will enter into a recession in the foreseeable future. As the economic expansion winds down, we project US vehicle sales to fall in 2019 below 17 million units for the first time since 2014.”