TORONTO, Feb. 23, 2018 /CNW/ - For the first time ever,
Canadian auto sales exceeded two million units in 2017, climbing to
an annual record of 2.04 million units. Purchases last month set an
all-time high for January by surpassing an annualized 2.1 million
units; however, full-year 2018 sales are expected to fall to two
million units alongside an expected moderation in economic
growth.
"Driven by slower job creation and weaker gains in household
wealth, Canadian sales volumes in 2018 are projected to end five
consecutive annual records," said Carlos
Gomes, Senior Economist and Auto Industry Specialist,
Scotiabank. "Ontario is expected
to account for most of the decline in purchases, but we anticipate
a further small increase in sales out of Alberta."
Car and light truck sales in Ontario climbed to a record 847,000 units in
2017, but are expected to decrease to 821,000 units this year,
pressured by nearly an 80% drop in household savings over the past
year. The savings rate in Ontario
has plunged to only 0.6%, nearly 80% lower than the national
average of 2.6%. Sharp gains in home prices across Southern Ontario helped boost auto sales in
recent years, as many Ontario
households tapped into home equity loans to boost purchasing power.
Slower employment growth will also contribute to an expected 26,000
unit decline in auto sales across the province this year,
accounting for two-thirds of the overall Canadian decline.
Alberta led the sales gains
last year, with full-year volumes jumping 12% to 245,000 units, the
fourth-highest level on record and only 9% below the peak in 2014.
For 2018, an increase of 248,000 is expected as employment growth
has picked up to 2% y/y. Business purchases of new vehicles are
also on the upswing in Alberta,
accounting for more than half of the increase in overall sales last
year. While companies will continue to renew their vehicle fleets,
drilling activity has begun to flatten out and will not provide
much upside support in 2018.
Vehicle sales in British
Columbia jumped 7.5% last year to a record 235,000 units,
bolstered by the strongest job growth since 1994. For 2018, new
vehicle sales are projected to decrease to 231,000, with service
sector employment, which accounts for 80% of the provincial total,
starting to soften. Meanwhile, the percentage of B.C. households
that purchased a new car or light truck last year was the highest
in nearly three decades.
Other highlights:
- Quebec's auto purchases are
anticipated to ease to 445,000 in 2018, compared to 453,000 units
in 2017.
- Sales in Saskatchewan and
Manitoba for 2018 are expected to
be largely flat as job growth slows.
- In Nova Scotia, record auto
sales of 143,000 in 2017 more than offset declining purchases in
the rest of Atlantic Canada;
however, sales are expected to edge down to 138,000 in 2018.
Read the full Scotiabank Global Auto Report online at:
http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/GAR_2018-02-23.pdf
Scotiabank provides clients with in-depth research into the
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public policy issues.
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SOURCE Scotiabank