Not surprisingly, given the multitude of confounding factors currently affecting the Canadian marketplace, new vehicle sales in February fell below year-ago levels for the month by almost 10%.
DesRosiers Automotive Consultants (DAC) estimates total Canadian sales of 112,654 new vehicles during the month, a decline of 9.9% from February, 2020. This will be the last month to which such “normal” year-over-year comparables are possible, given that sales nosedived by 48% in March 2020, as the economic impact of COVID-19 swept across the country with tsunami force.
Mitigating this February’s decline to some extent, it was an improvement from January’s 17.4% shortfall. Plus, the SAAR (Seasonally Adjusted Annualized Sales Rate) for the month was “a reasonably strong 1.84-million,” according to DAC’s Managing Partner, Andrew King. That’s the highest SAAR achieved since last October and a significant improvement from January’s 1.66-million level.
The ongoing effects of COVID-19 undoubtedly contributed to February’s overall decline, as several major markets — including the Greater Toronto Area, which accounts for 20% of the country’s sales volume — remained under tight restrictions, if not full lockdown. In addition, a global chip shortage resulted in multiple plant shutdowns or slowdowns, further depressing already-tight inventories.
There are positives to the situation however. Transaction prices are on the upswing and, according to Rebekah Young of Scotiabank Economics, “a resilient economic recovery supported by elevated household savings and extended employment benefits (not to mention vaccines on the horizon) should further underpin new vehicle demand until supply constraints are resolved.”
The net result could be a five-to-10% erosion of sales over the next few months that could impact full-year forecasted sales of 1.8-million units if serious shortages persist in the second quarter, Young suggested. However, “a stronger-than-anticipated economic outlook for 2021 should support a more robust rebound in the latter part of the year,” she added.
“Light-Truck” penetration continues to climb
The seemingly unstoppable onslaught of customer defection from passenger cars towards so-called light trucks, which now include SUVs and crossovers that might previously have been classified as station wagons, continued apace in February. “Light trucks” captured an estimated 83.5% of the market, according to DAC. That figure compares 78.9% in February 2020.
Of those automakers that reported sales figures for February, most outpaced the industry average, while still experiencing declines from a year ago. The two most positive results reported were from Genesis — up by 87.0%, thanks largely to the arrival of its new GV80 crossover — and Volvo, which continued its relentless sales climb with a 10.1% gain.
