Auto sales have surged for the past several years, thanks in large part to record low borrowing rates, with 2015 extending the record run.
Numbers out from the automakers this week confirmed it. For all of last year, Canadian auto sales “easily” hit yet another all-time record high of almost 1.9 million units, up 2.5 per cent from 2014, noted Doug Porter, Bank of Montreal’s chief economist in a research brief on Wednesday.
“Consumers, despite the economic headwinds, are looking at the value proposition available in the new car market and they’re responding with record levels of demand,” said Michael Hatch, chief economist for the Canadian Automobile Dealers Association.
Looking a bit closer at the numbers though revealed something of a slowdown last month. Sales actually dipped 1.9 per cent compared to December 2014 – the first time that has happened (a year-on-year decline in sales) in 32 months.
“It had to happen eventually,” Porter said.
The BMO economist and other experts have been anticipating such blips to materialize in light of the sluggish economic and employment backdrop that’s unfolding across many parts of the country.
Porter also pointed to another fissure that’s appeared of late that suggests a potential slowdown among households looms: sagging real estate markets in Alberta.
Calgary home sales are down 18 per cent year over year, and average prices have dipped 2 per cent, Porter noted, “a trend that looks set to continue in 2016 amid struggling oil prices.”
Porter wonders if the two developments could be some of the first signs of “cracks” emerging in the Canadian consumer after a long run that’s been a primary driver of the economy since the last major recession.
WATCH: Inventory is up 66 per cent and sales are down nine per cent in 2015 compared to 2014 in Edmonton. Kendra Slugoski reports.
— With a file from The Canadian Press