Auto sales bounced back last month from a dismal May and a dreadful June, 2009, as the shift to trucks from cars in Canada benefited the Detroit Three.
Canadians drove 154,565 new vehicles off dealers’ lots last month, up 12 per cent from a year earlier and a better performance than the flat sales in May.
“This highlights that the Canadian market still remains relatively resilient,” said Bank of Nova Scotia economist Carlos Gomes. “The weakness in May was probably a one-month issue and given that several auto makers have introduced enhanced incentives over the last several weeks, you’ll see probably even a stronger July and August.”
The seasonally adjusted annual rate in June snapped back above 1.5 million vehicles, Mr. Gomes noted, compared with 1.4 million in May.
Among the major companies, the gains were led by the Detroit Three. Chrysler Canada Inc., Ford Motor Co. of Canada Ltd. and General Motors of Canada Ltd. clawed back more than 10 per cent of market share to grab 49 per cent of the market last month.
That number is skewed, however, by unusually low sales figures for Chrysler and GM because most of their North American plants were shut down a year ago, which meant availability of new vehicles for Canadian dealers dried up almost entirely.
Ford, which stayed out of Chapter 11 bankruptcy protection in the United States and did not need financial assistance from Canadian and U.S. taxpayers to survive the crisis of 2008-2009, enjoyed its best sales month in 10 years to retain its hold on top spot in the Canadian market. A 15 per cent jump enabled GM to hang on to second, while Chrysler sales more than doubled from year-earlier levels.
The shift in the market to trucks – 53.2 per cent share versus 48 per cent in June, 2009 – plays directly to the strengths of the Detroit Three, which dominate pickup truck sales and built on that domination in last month by throwing cash incentives of as much as $9,000 a vehicle at pickup truck buyers.
Pickups claimed 15 per cent of the market in the first five months, which was their highest market penetration since 1998. Final figures for pickup sales for last month will not be available until later in July.
The truck category also includes sport utility vehicles and crossover utilities.
“The reality is that if you look at the Canadian marketplace right now, that’s where the core strength is–whether it’s crossover utilities or pickup trucks that’s really where the market is at the moment,” Mr. Gomes said.
That market shift has hurt the two leading Japan-based auto makers in Canada – Honda Canada Inc. and Toyota Canada Inc. – although Toyota sells a full-sized pickup and both auto makers offer crossovers.
But their traditional strength is on the passenger car side of the ledger, where they took a hit last month and have been underperforming the market all year.
Honda’s car sales slid 16 per cent last month from year-earlier levels and fell 17 per cent in the first six months of the year.
Toyota’s car sales plunged 22 per cent in June and fell 13 per cent in the first six months of the year.
