Canadian vehicle sales down in July: Scotiabank

Vehicle sales in Canada fell 3.0 per cent year-over-year (y/y) in July, a new report from Scotiabank said, which marks the fifth consecutive month of year-on-year declines and its steepest annual contraction since October 2016.

“Units sold below 2 million autos for the first time since early-2017, on a seasonally-adjusted annualised basis, to 1.96 million units equivalent to a 3.4 per cent decline,” Scotiabank said in its latest Auto News Flash. “The July drop is nearly all attributable to a 33.3 per cent y/y plunge in Fiat-Chrysler (FCA) sales which recorded their worst month since early-2014.” FCA has posted fourteen consecutive months of year-on-year sales declines for both cars and trucks, the report added.

The drop in car sales is parallel to that experienced across most automakers in line with shifting consumer preferences. “The fall in FCA truck sales, however, is seemingly endemic: FCA light truck volumes have contracted by 12 per cent y/y year-to-date, compared to a 6.9 per cent y/y year-to-date expansion for the remaining automakers,” the report said. “So far in 2018, FCA has sold 17 per cent fewer Dodge RAM pickup trucks relative to the same period last year – the Dodge RAM was the second highest-selling vehicle in Canada in 2017 – and has also been hit by fading demand for the aging Dodge Caravan minivan.”

Excluding Fiat-Chrysler, Canadian vehicle purchases rose by 0.8 per cent y/y in July, Scotiabank said, which contributed to a modest year-to-date increase of 1.4 per cent y/y.

“We forecast total sales in 2018 to tick down to 2.0 million units from 2017’s record of 2.04 million vehicles sold,” Scotiabank said.

In the U.S., meanwhile, auto sales fell below analysts expectations of flat growth with a 1.0 per cent y/y decline in July, to 16.54 million units on a seasonally-adjusted annualised basis. “Data for July show a 4 per cent month-over-month decline from June’s 17.2 million units, when sales expanded at by 2.6 per cent y/y,” the report said. “Total vehicle purchases in the US have risen by 0.8 per cent y/y so far in 2018, though largely on the back of a low base in the first half of 2017 owing to depressed fleet sales.”

Scotiabank forecasts total US auto sales to edge down slightly this year to 17.1 million units, practically unchanged from 2017’s total, but a touch lower than 2015’s record-high of 17.5 million units. “A sharp rise in demand for Fiat-Chrysler autos lifted the Detroit Three’s combined sales above last July’s figures, while the rest of the market experienced a decline in vehicle transactions,” Scotiabank said. “FCA saw a 5.9 per cent y/y increase in auto deliveries in July, compared to a minor 3.2 y/y estimated decline for General Motors and an even steeper 6.4 per cent y/y contraction in Ford auto sales.”

The Detroit Three have benefited from increased demand for trucks which has boosted their combined sales to a 1.7 per cent y/y increase so far this year, Scotiabank added, nearly doubling the 0.9 per cent y/y pace set by the remaining automakers.