January sales up from 2009 but down from historic norm
There was good news and bad in Canada’s new-vehicle sales results for January. While overall sales were up 6.2 percent from the very low base of January 2009 (which also had two fewer selling days), they were down 6.5 percent from the average for the month over the past five years.
That equates to a seasonally-adjusted annual sales rate (SAAR) of just 1.45 million units, according to Scotiabank chief economist, Carlos Gomes – well below the near 1.6-million peaks reached in the July-October period last year and the 1.5 to 1.53 million range of forecasts for 2010. It’s even behind 2009’s final figure of 1.46 million, making for a shaky start to the new year and the new decade.
It also reversed the trend that saw Canada outperforming the U.S. market for the past year plus. Sales south of the border in January were equally up by 6.0 percent over the same month in 2009, but their SAAR was also up, to 10.7 million from 10.4 million for the past year.
Much of the weakness in the Canadian market is attributable to double-digit declines by Honda (-12.1%) and Toyota (-14.8%) – the latter beset by the fallout from two much-publicized recalls and a sales freeze on several of its most-popular models.
Chrysler (+6.1%), Ford (+5.9%) and General Motors (+5.1%) improved close to the market average, giving the ‘Detroit Three’ 46.8 percent of the market – their best combined share in a year and a five-percent surge in two months.
The real high fliers among mainstream brands, however, were Subaru (+45.8%), Kia (+32.8%), Hyundai (+32.1%) and Volkswagen (+23.2%). Among luxury brands, (Audi +127.8%), Lexus (+62.1%), Volvo (+38.5%) and Mercedes-Benz (+36.2%) led the way, with Acura (-34.8%) and Jaguar (-12.5%) falling behind. With Saab currently in limbo, there were no sales for the brand during the month
While it was a very good month for some, in terms of overall numbers it was disappointing, says industry analyst Dennis DesRosiers of DesRosiers Automotive Consultants. “If this (SAAR trend) were to hold it would be very bad news for the automotive sector in Canada,” he says. “We expected better numbers. A year ago the January sales were down by about 25 percent and the lowest sales in a decade so most believed that this January would be back to more normal sales levels for this time of year (in the 90K to 110K level ). But at least sales were up slightly and January is the lowest absolute sales month each year so you can’t read too much into this early market performance. March to June are the make or break months.”
Three-month and longer-term picture
Given that year-ago figures were so low, a year-over-year comparison for the three-month period, November 2009-January 2010 looks hugely positive for most brands. Several were up over 30 percent for the period, including: Volvo (+46.5%), Audi (+43.3%), Subaru (+40.6%), Land Rover (+40.5%), Kia (+38.2%), Hyundai (+31.2%), Lexus (+31.2%), and
Toyota (+31.1%).
The only decliners for the period were Saab (-67.5%), Suzuki (-13.6%), General Motors (-13.4%), Acura (-11.6%) and Chrysler (-11.6%).
As was the case for January’s figures, however, while the situation is much approved over a year ago, it looks less favourable when compared to historic norms. Total sales for the three-month period were down 9.0 percent from the average for the same period over the previous five years.
That decline suggests that 2010 is shaping up to be very similar to 2009. Most analysts seem to agree, suggesting only a slight uptick for the year, into the 1.50 to 1.53 million range.
Interviews with several automaker executives at the Canadian International Auto Show confirmed that assessment. “Cautious optimism” was an oft-heard phrase and while some have much higher hopes for their own brands, most see 2010 as only a slightly better year than 2009 for the industry as a whole.
