Record-setting vehicle sales trend interrupted in May: Scotiabank
Weak fleet purchases dampen U.S. vehicle sales, Scotiabank also said.
Vehicle purchases in Canada in May 2016 edged down below the May 2015 total, the latest Auto News Flash from Scotiabank said, as double-digit declines at two automakers interrupted the record-setting trend of recent months.
“We estimate that sales fell to an annualized 1.88 million units in May — the lowest level since last July,” the report said. But the news isn’t all bad. “Despite the fall-off, purchases remain on track to climb to a new annual record, with volumes averaging 1.97 million units so far this year, well ahead of the 2015 annual total of 1.90 million,” the report continued.
Turning to the U.S., the report said that vehicle sales were also softer than expected last month, held back by weak fleet purchases and fewer selling days than a year ago when industry volumes climbed to record highs for the month of May. “We estimate that sales totalled an annualized 17.3 million units last month, marginally below the 17.4 million units that had been expected,” the report said. “The fall-off was broad-based, with car sales accounting for most of the weakness. In particular, car purchases at the two largest North American automakers slumped 25% below a year ago, as consumer preferences continue to shift towards crossovers.”
The report predicts that May’s softer-than-expected results in the U.S. will prove temporary, as household fundamentals and purchasing power continue to improve. “For example, the U.S. labour market remains solid, income growth has accelerated, and consumer confidence remains elevated,” the report said. “In addition, the number of households indicating that this is good time to buy a new vehicle continues to move higher.”