North American car buyers took their feet off the gas pedals in the past two quarters, slowing down a recovery that had been roaring along in overdrive.
Canadians, Americans and Mexicans bought 3.8 million new cars and trucks in the third quarter, a 6-per-cent jump from the same period of 2010, but the second-straight quarter of single-digit gains after robust increases of 18 per cent in the first quarter of 2011 and 13 per cent in the fourth quarter of 2010.
The sales figures – buoyed by an unexpectedly strong September in the U.S. market – underscore the tepid nature of the overall recovery in the U.S. and Canadian economies and bolster the view that they will at best meander along until various domestic and international problems are solved.
Despite the somewhat better health of the Canadian economy than its U.S. counterpart, Canadian car buyers were the laggards in the third quarter. Vehicle sales slid 1 per cent in Canada during the three months ended Sept. 30, dropping to 416,377 from 419,923 a year earlier.
That drop compared with a 6-per-cent rise in U.S. sales and a 14-per-cent gain in Mexico, according to figures compiled by industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc.
“Canadians are saying ‘We’ll just wait it out,’” Mr. DesRosiers said. They are well aware that the U.S. economy is struggling to gain traction, they know about the debt crisis in Europe and most modern vehicles are so well-built that most drivers have no immediate need to purchase new cars or trucks, he said.
In addition, Japan-based auto makers had severe shortages of vehicles in the second and third quarters due to the impact of the March earthquake and tsunami, and consumers appeared to be waiting for redesigned cars such as the Honda Civic to become available, he noted.
The U.S. numbers for the second and third quarters showed growth slowing to single digits from 20 per cent in the first quarter and 14 per cent in the fourth quarter of 2010.
Those numbers are “all about the U.S. economy being in trouble,” Mr. DesRosiers noted. “The No. 1 variable is whether you have a job.”
While North American sales have recovered from the troughs hit during the 2008-2009 crisis that drove Chrysler LLC and General Motors Corp. into bankruptcy protection, they’re a long way from the 20-million-unit annual sales level the industry experienced through the first six years of the 2000s.
Standard & Poor’s Financial Services LLC noted the unexpected strength of the U.S. market in September – Canadian sales fell a fraction – and joined Mr. DesRosiers in saying the return to full production by the Japan-based companies should boost their sales and the entire market.
But S&P’s auto industry credit analyst Robert Schulz is not expecting a strong bounce.
“We continue to believe the pace of recovery in auto sales will improve in upcoming months, but a meaningful and sustained improvement akin to the pace seen earlier this year seems less likely,” Mr. Schulz said in a note on the September sales figures.
Auto makers are also cautious, although they disagree with economists who see a double-dip recession on the horizon.
“One of the things people have to remember is that we are still at historically very low levels of industry,” Don Johnson, vice-president of U.S. sales operations for GM, said during GM’s conference call on the September sales numbers. “So even – as long as things remain relatively stable – in the face of persistently high unemployment, we’re going to continue, we believe, to see slow growth.”