‘Grim’ outlook for Alberta car dealers as demand evaporates

A record run in car sales in Alberta is running on fumes.

That’s the opinion of experts who heard late last week from AutoCanada Ltd., the country’s largest publicly traded dealership owner. AutoCanada said sales were surprisingly strong to end 2014, but that strength won’t last.

Weakening car sales are the latest casualty from the sharp retreat in oil prices, which have fallen by about 50 per cent since the early fall. Consumer confidence has taken a hit as major oil firms have announced hiring freezes, layoffs and a pullback in investment in recent months.

Analysts say they expect new car sales to contract sharply – by 12 per cent, according Derek Dley at Canaccord Genuity. Dley called the outlook for Alberta’s car market “grim”.

MORE: Oil’s plunge could mean bumpy ride for auto sales in Alberta

Edmonton-based AutoCanada has 48 dealerships spread throughout eight provinces, but counts Alberta as its biggest market.

“The company commented that it has witnessed a major slowdown in new car sales in the Alberta market,” Dley said in a new note on Monday.

The analyst said total sales in January in Calgary were down by nearly 10 per cent, according to automotive consultant R.L. Polk.

Alberta has led the country in economic growth in recent years, something that’s helped fuel a record run in auto sales. Stronger economic conditions in Alberta have also fueled a faster pace of borrowing, though, with Albertans toting the highest levels of non-mortgage debt in the country – something that could weigh further on a rebound in new demand for vehicles, experts say.