TORonTO — According to a new report from BMO Economics, Canadian auto sales had another banner year in 2013 and could be poised for another solid year in 2014.
Preliminary numbers from the report indicate that light vehicle sales jumped to 1.74 million units in 2013, which was an increase of 4 per cent since the previous year (1.68 million units sold), and a 10 per cent increase since 2011 (1.59 million units sold).
A solid model lineup and new offerings from manufacturers at very generous financing terms will continue to generate interest from the Canadian consumer, said Alex Koustas, Economist, BMO Capital Markets.
Sales activity will remain brisk, but will likely dro off last years pace given rising ownership rates and more elevated debt levels. Nevertheless an overheating is unlikely as long as financing terms remain balanced.
Mr. Koustas predicts that auto sales will slide marginally from 1.78 million units in 2013 to 1.71 million units in 2014. Despite this dro in projected volumes in 2014, projected auto sales for the year are still expected to mark the third best performance on record.
The report also listed a variety of factors that were encouraging the growth of auto sales. Koustas noted that continued investments in the auto industry are helping to fuel growth, and technological advancements — particularly improved fuel economy — have helped with the continued growth.
There has also been a boom in auto loans. Since 2009, Canadian automotive loan balances have increased by a 165 per cent, which is dramatic when compared to the 35 per cent in total consumer loans and the credit momentum is expected to continue.
Leasing has also rebounded from major lows. Before the financial crisis began in 2007, the leasing market accounted for nearly half of all auto sales but, by 2009, the number had sunk to below 10 per cent. However, lease activity has made a comeback, climbing to more than 20 per cent of sales.
Another factor cited in the report is increased competition amongst automakers. Redesigned vehicles boast greater amenities, performance and value than those of previous generations. For example, fuel efficiency has improved by nearly 20 per cent across the board in the last five years and the evolving technology, size, safety and functionality of these vehicles have also expanded.
As manufacturers look to strengthen their brand and attract new customers, said Robert Sadokierski, Head of Automotive Finance, BMO Financial Group.
Prospective buyers can really benefit from attractive finance offers and the competitive nature of the industry.
