TORONTO – Despite the sluggish economy, Canadians snapped up nearly 1.9 million new vehicles in 2015, making it a record year for auto sales, according to figures compiled by a leading automotive consultant.
And DesRosiers Automotive Consultants says manufacturers can thank a big increase in sales of light trucks — a category that includes SUVs, minivans and pickup trucks — for the improvement.
Canadians bought nearly 1.2 million trucks in 2015, up 8.8 per cent from 2014, enough to push overall sales up 2.5 per cent to 1.898 million vehicles even as car sales slipped 6.3 per cent to 715,719, DesRosiers says.
“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,” noted Michael Hatch, chief economist for the Canadian Automobile Dealers Association.
Experts cite a number of reasons for the strong sales, including new vehicle prices that have remained roughly the same for a number of years, while inflation and wages have risen. That means new vehicles have become more affordable for Canadians, said Hatch.
Competition has also been heating up in the Canadian auto industry in recent years, which has compelled automakers to hold the line on prices, he added.
“Whereas in the past a relatively small number of brands would have represented a very large chunk, the lion’s share of the market, that’s no longer the case,” he said. “There’s more brands available to consumers in Canada. The market is more fragmented.”
Meanwhile, consumers have become less loyal to brands, according to Hatch.
“My parents always drove the same brand of vehicle,” said Hatch. “Every time they went back they bought the same brand from the same dealership and there was a great degree of brand loyalty. . . .
“But now consumers are less brand loyal, they’re more willing to shop around, and those competitive pressures are brought to bare on the product quality and on the prices that consumers pay.”
Dina Ignjatovic, the auto sector economist at TD Economics, cited rock-bottom interest rates as the driving force behind the stellar sales figures.
“Interest rates are extremely low and loan terms have been lengthened, so affordability for consumers has improved a lot,” Ignjatovic said.
Auto industry consultant Dennis DesRosiers said lower gas prices have also enticed buyers by reducing the cost of owning a vehicle.
Improvements in the products on the market is another factor luring buyers, he said.
“There’s a dizzying array of new products and most are jam-packed with advanced technologies that consumers are embracing in a very big way,” said DesRosiers, citing lane-changing technology and entertainment technology as examples.
“I would put that at the top of the list as to why the market performed so well.”
Fiat Chrysler Canada claimed the top spot for 2015 with sales of 293,061 vehicles, up 1.1 per cent from the previous year. That was slightly ahead of Ford Canada, whose annual sales were down 4.6 per cent at 278,437, while General Motors Canada saw its sales climb 5.4 per cent to 263,335.
Hatch said he expects another record-breaking year in 2016.
“But the rate of growth of new vehicle sales probably can’t continue to outpace economic growth forever,” he added.