RICK WILKING
Canadian auto sales surged at most of the big car companies in August, a sharp contrast to the scene south of the border where stubbornly high unemployment levels took a toll on automotive purchases.
Year-over-year sales comparisons in the United States were also affected by the "cash-for-clunkers" rebate program, which had boosted sales figures in August, 2009, just before the program ended.
In Canada, all of the big players, except Toyota Canada Inc., managed sales increases in August. Chrysler Canada Inc. led the way with a 12-per-cent boost, followed by Hyundai Auto Canada Corp. at 9 per cent, Ford Motor Co. of Canada Ltd. at 8 per cent, Honda Canada Inc. at 8 per cent and General Motors of Canada Ltd. at 2 per cent.
Ford said the 24,034 units it sold in August is the most sold that month since 1990, while Chrysler said five of its vehicles had their best August ever.
Toyota Canada, which has suffered from recalls and a dent to its reputation for quality, reported a 30-per-cent drop in sales in August.
In the United States, by contrast to the overall picture in Canada, the August-to-August numbers looked abysmal for most of the car companies, with sales falling by as much as one-third. Only Chrysler Group LLC managed to buck the trend with a 7-per-cent increase. Most of the car companies saw sales fall from July, 2010, levels as well.
The key reason for the difference on the two sides of the border, said Bank of Nova Scotia economist Carlos Gomes, is a "much stronger job market in Canada."
Employment is actually growing in Canada, he said, while "in the U.S., the job picture has turned a bit sour in the last few months."
The pace of employment growth is the key economic driver that prompts people to buy cars, Mr. Gomes said, so the different labour markets in the two countries will result in contrasting sales pictures.
Mr. Gomes said incentives are also higher in Canada at the moment, particularly for light trucks, and that is helping to boost Canadian vehicle sales significantly.
Analyst Bill Pochiluk, president of consulting firm AutomotiveCompass LLC, said the poor August showing in the United States, when compared with the previous August, can be blamed primarily on the cash-for-clunkers program, officially known as the Car Allowance Rebate System.
Under that federal incentive, U.S. car buyers got up to $4,500 (U.S.) for dumping their old cars in favour of more fuel-efficient new vehicles. It ran from July, 2009, almost until the end of August of that year, and generated a short but sharp spike in car sales.
At the time, analysts predicted that sales would slump after the deal ended, and that did happen, prompting last September's numbers in the United States to "crater badly," Mr. Pochiluk said. However, this September's year-over-year sales numbers there will probably look good by contrast, he added.
Still, Mr. Pochiluk agreed that the different economic conditions in the United States compared with Canada also contributed to the different sales pictures. "The uncertainty issues in the U.S. are worse," he said.
Looking at the sales more broadly, the winner on both sides of the border is Ford Motor Co., Mr. Pochiluk said. Its numbers were relatively strong in both countries and it has strong brands and new products in the pipeline.
Mr. Gomes, of Scotiabank, said he expects Canadian car sales to reach about 1.57 million vehicles for all of 2010, about 110,00 higher than the 2009 levels. In 2011, there should be a further modest gain to about 1.59 million, he said, roughly equal to the average annual Canadian sales over the past decade. "Essentially we'll be back to what was normal."
By contrast, sales in the United States will likely reach about 12.2 million next year, still sharply lower than the 15.8 million annual average for the period from 2000 to 2009.