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Inside the Numbers

Car sales boom? What sales boom? Add to ...

Canada had a record year for vehicle sales in 2010 and entry-level sales boomed. Unfortunately, sales of new vehicles were pretty tepid.

Huh? What’s going on here? According to DesRosiers Automotive Consultants, Canadians bought a record 4.44 million vehicles in 2010. Overall, vehicle sales in Canada were up 4.6 per cent over 2009.

But dig deeper into the numbers and here’s what you find: Canadians really had a thing for buying used vehicles – at a rate of almost two used for every one new. DesRosiers’ research also shows that about one in five Canadians buys a new ride each year, every year, and have done so for a long time.

The thing is, “new-vehicle sales were up 6.6 per cent to 1.557 million units (in 2010), while used-vehicle sales were up 3.6 per cent to 2.89 million units,” notes DesRosiers in a note to clients. “There is however a slow but sure move to more used product. In the year 2000 used represented 56.6 per cent of the market and now represents 65 per cent of the market.”

Listed: By category, the most popular vehicles in Canada

We’re buying, but we’re buying a different mix of vehicles – and not just new versus used. Analyst Dennis DesRosiers is convinced that many entry-level buyers bought used cars last year, shying away from stalwarts of the Canadian new-car market such as the Honda Civic (sales down 8.2 per cent on the year) and Toyota Corolla (sales down 28.3 per cent on the year).

Why? Entry-level buyers have been hit hard by the economic downturn dating back to 2008. These buyers are shying away from locking in a new-car payment, unsure of the financial future. Instead, they’re buying used.

The truth is, passenger car sales in Canada last year were down 5.1 per cent; and sales of entry-level compacts and subcompacts were down 4.6 per cent and 15.8 per cent, respectively. Meanwhile, light truck sales boomed. Canadians snapped up pickups, SUVs, minivans and crossover wagons at a furious rate, with overall sales up 18.9 per cent.

“The truck market? They were giving them away,” says DesRosiers, referring to the generous incentives auto makers used to keep the big metal moving.

“Canadians aren’t stupid; with those kinds of incentives, Canadians said, ‘I’ll buy,’ “ he added, pointing to pickup truck incentives worth nearly $20,000 a vehicle in some cases and at least $12,000-$15,000 in most instances.

No wonder the Ford F-Series pickup truck was the best-selling vehicle in Canada last year with 97,913 units.

“With one exception [the Toyota RAV4 down 11.5 per cent], all the top 10 selling light trucks had quite spectacular years in 2010,” writes DesRosiers. “All were up at least double-digit from 2009 and some models were up in the high !!! double-digit range. The Dodge Ram was up 74.3 per cent and the Dodge Journey was up 54.5 per cent.

On the other hand, the Civic slumped, along with the Corolla, the Hyundai Accent (down 4.8 per cent) and the Toyota Matrix (down 15.2 per cent). Absolutely, the Civic finished the year as Canada’s best-selling passenger car for the 13th year in a row (1998-2010), but only because sales were juiced with significant incentives by the end of 2010.

“A 13-year streak is impressive for the Civic, although for the first time in a long time [Honda and its Civic] were threatened for the top position in 2010 with the Mazda3 neck-and-neck at least through the first nine months of the year. Strong sales in October and November for the Civic kept them in the top position,” according to DesRosiers.

The Civic, of course, struggled for more than one reason. The current model had been slated to be replaced by an all-new version last year. For various reasons, including cost-cutting, Honda chose to extend the life of the current car for about another year. An all-new Civic range arrives in the spring. The aging Civic had less appeal on its own merits in 2010, in other words.

And even though Honda Canada significantly turned to incentives later in 2010, for much of the year the company was reluctant to pile on sales sweeteners. Executive vice-president Jerry Chenkin points out that Honda actually put more sales incentive money on the Civic in 2009 than in 2010. The sales numbers show it.

One huge oddity in 2010 was the performance of the Chevrolet Cobalt. By late last year, it had been replaced by the new Chevrolet Cruze, yet for the year Cobalt sales were up an astounding 80.9 per cent (25,957). The fact General Motors’ dealers did not have the similar Pontiac5 to sell explains some of that performance. The fact GM Canada loaded up every Cobalt with thousands in cash tells the rest of the story.

Looking ahead to 2011, DesRosiers and other analysts think this year’s list of top 10 sellers will most likely look a lot like 2010’s – which as he describes it is a case of pretty much the “same old, same old.” That is, 2010’s top sellers were much the same as 2009’s and 2009’s were much like 2008’s.

“It does say something about Canadians. We tend to go for the tried and true,” argues DesRosiers.

One gigantic wild card may come into play in 2011, however: gas prices. They were pretty stable last year, but as Dan Neil recently noted in The Wall Street Journal, “gasoline is going through the moon roof: Every car company is bracing for $4-per-gallon gasoline in the U.S. as the global economic recovery drives up demand; and every executive who would venture an opinion thought that price range would be the new normal.”

Indeed, crude oil prices are veering toward $100 (U.S.) a barrel. We’ve seen this before and quite recently. On Jan. 2, 2008, oil flirted with $100 a barrel and by early July 2008, oil crude oil hit a new record of $147.27. The price of a gallon of gas in the U.S. pushed past $4 and in Canada a litre of regular flirted with $1.50.

In the U.S., the so-called “tipping point” arrived somewhere north of $3 a gallon. That’s when car companies noticed a dramatic shift in car shopping behaviour, away from big vehicles and into small ones. We look to be heading that way again here in 2011.

As well, sales sweeteners in Canada on light trucks – pickups and the like – are sure to head downward in 2011, just as fuel prices rise. Now, though, and unlike 2008, auto makers have spent a couple of years downsizing engines and upping the technology designed to improve fuel economy. New models coming to market today have direct fuel injection, turbocharging or supercharging to replace less thrifty engines of more size and cylinders. And four-cylinder engines are showing up in the oddest places, from the Hyundai Sonata to the Buick Regal and even a forthcoming Ford Explorer SUV. More of that is coming.

Oh, and Detroit’s auto makers are better prepared. The Cruze is proving to be a vastly superior car to the lamentable Cobalt and Chevy has a new subcompact Sonic coming to replace the Aveo. Ford’s Fiesta subcompact is already in dealerships and a new Focus is due in weeks. At Chrysler, the Fiat 500 goes on sale this year, though it will be a small volume player.

So take a look at the list of top-10 sellers in Canada for 2010. Even though we Canadians like same-old, same-old, there will be changes to the lists this year. And, of course, if history is any guide, used cars will continue to grow in popularity.

These flicks are guaranteed to satisfy your car cravings



Top 10 Cars



Car

2010

2009

% gain/loss

1

Honda Civic

57,501

62,654

-8.2

2

Mazda3

47,740

46,943

1.7

3

Toyota Corolla

38,680

53,933

-28.3

4

Hyundai Elantra

34,556

30,675

12.7

5

Chevrolet Cobalt

25,957

14,350

80.9

6

Hyundai Accent

24,017

25,220

-4.8

7

Ford Focus

23,452

21,831

7.4

8

Ford Fusion

19,364

16,526

17.2

9

Toyota Matrix

19,093

22,526

-15.2

10

Volkswagen Golf

15,951

12,725

25.4

Top 10 Trucks



Truck

2010

2009

% gain/loss

1

Ford F-Series

97,913

81,396

20.3

2

Dodge Caravan

56,306

40,283

37.3

3

Dodge Ram

53,386

30,621

74.3

4

GMC Sierra

45,457

37,316

21.8

5

Ford Escape

43,038

36,980

16.4

6

Chevrolet Silverado

41,737

36,428

14.6

7

Hyundai Santa Fe

27,882

24,676

13.0

8

Honda CR-V

24,930

18,554

34.4

9

Dodge Journey

23,785

15,390

54.4

10

Toyota RAV4

22,810

25,784

-11.5

 

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