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Auto worker Valerie Stades works on a Chevy vehicle at the General Motors Oshawa assembly plant in 2013.Moe Doiron/The Globe and Mail

Vehicle sales surged to a record in Canada last year as the best December yet propelled auto makers to deliveries of 1.849 million amid forecasts that 2015 could be even better.

The end-of-year battle for industry sales leadership and the effort by many companies to hit sales records helped auto makers shatter the 2013 record of 1.743 million sales by more than 100,000 vehicles.

In the United States, car companies had their best year since 2006, with sales hitting 16.5 million vehicles and more growth projected for that market this year.

It's not quite the golden age for the Detroit-based auto makers and their Asia- and Europe-based competitors, given that the companies also reported record levels of recalls in 2014, which helped send profits falling, but they're brimming with optimism about 2015.

Toyota Motor Sales USA, for example, forecasts sales of 16.7 million in the U.S. market this year, a number that vice-president and general sales manager Bill Fay called conservative.

"That would be the industry's best year since 2005 with plenty of room for upside," Mr. Fay said.

In Canada, industry analyst Dennis DesRosiers forecasts an increase of 1 to 2 per cent in 2015.

"Canadians are finally coming back to the marketplace and buying at levels they probably should have been at long term," Mr. DesRosiers, president of DesRosiers Automotive Consultants Inc., said in an interview Monday. "For quite a long time – it could stretch to a decade and a half to two decades – Canadians actually underbought."

That was, he believes, in part because of a series of crises ranging from governments slashing debts to the recession of 2008-09 that sapped consumer confidence.

Now however, such factors as the age of vehicles on the road, high prices for used cars and, for the moment, low interest rates are sparking record deliveries.

Sales could reach two million annually, Mr. DesRosiers said, although he's not expecting the market to hit that number in 2015. Low gas prices should help boost 2015 sales, he said.

Carlos Gomes, a Bank of Nova Scotia economist who specializes in the auto industry, is forecasting sales of 1.855 million in 2015.

As Chrysler Canada Inc. and Ford Motor Co. of Canada Ltd. battled for the top spot in the sales race, they each increased December sales by 40 per cent from year-earlier levels. Ford took the title with sales of 291,951, compared with 290,004 for Chrysler.

The Ford total was its best year since 2007, while Chrysler posted its best year yet for sales in Canada.

Another dozen auto makers or their divisions also posted record Canadian sales.

U.S. sales are forecast to fall just short of the 17 million level this year, at record average transaction prices, which indicates a healthy market, instead of the incentive-driven years of the early 2000s when the industry set volume records but racked up tens of billions of dollars in losses.

"When we look at transaction prices broadly in the industry, which are very robust, it's been very solid compared to year-ago levels, a portion of that – it's difficult estimate how much – is due to consumers wanting new features, content and products in the marketplace," John Felice, vice-president of U.S. sales for Ford Motor Co., said during a conference call with analysts and reporters Monday. "So great products in the industry and consumers are showing a willingness to pay."

Average transaction prices in the U.S. market were about $1,600 (U.S.) higher last month than a year earlier, and about $1,100 higher than they were in November, Ford said.

"We suspect easy credit is playing an important role, augmented by unique deflationary forces at work in the U.S. auto market," Morgan Stanley & Co. LLC analyst Adam Jonas said in a note to clients.

Mr. Jonas noted that 90 per cent of cars purchased by Americans are bought with monthly payments in mind, which means decisions affected by the length-of-loan terms, interest rates and assumptions about the values of vehicles when leases end.

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SymbolName% changeLast
BNS-N
Bank of Nova Scotia
-0.68%47.02
BNS-T
Bank of Nova Scotia
-0.52%64.63
F-N
Ford Motor Company
-1.16%11.94
GM-N
General Motors Company
-2.46%47.66
MS-N
Morgan Stanley
-0.58%95.1
TM-N
Toyota Motor Corp Ltd Ord ADR
-3.53%198.4

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