It seems to have been a long time coming, but there is definitely some good news in Canada’s new-vehicle sales figures for July. Estimated sales of 165,020 units are just 4.9% below last year’s July figures. Indeed, according to DesRosiers Automotive Consultants (DAC), July 2020 sales were the seventh-best ever for the month.
That modest decline from a year ago is all the more remarkable given that preliminary estimates suggest fleet sales remain significantly negative, according to Rebekah Young, director of fiscal and provincial economics at Scotiabank.
Following the dramatic crash in sales due to the Covid-19 pandemic in April — down almost 75% from the year before – they have rebounded at an impressive pace since then. On a month-over-month basis, May’s sales improved by 147.0% from April, June’s by 37.3% from May, and now July’s by 6.2% from June.
Does that progression mean the market will be back to normal for the balance of the year? Year-to-date sales of 809,518 new vehicles through July are now down 29.8% from the same period in 2019.
“The long-term implications of COVID-19 on the economy and the automotive market are far from clear and will likely include more twists and turns,” said Dennis DesRosiers of DAC.
Among other factors, the extent to which this month’s sales success reflected pent-up demand from “lost” spring sales versus a more sustainable recovery remains to be seen, according to DesRosiers.
On the basis of SAAR (Seasonally Adjusted Annualized Sales Rate), as calculated by DAC, July’s annualized rate of just 1.8-million was still well below established norms – the lowest figure for the month since 2015.
For now, however, the sales picture is strong and the automotive industry has some much-needed positive news, concluded DesRosiers.
As for the full-year picture, on the strength of this early rebound and an expectation of continued momentum through the summer, Scotiabank has “modestly” revised its annual sales forecast upward to 1.6-million units (from 1.5-million) for 2020, while noting that considerable downside risk remains, particularly with respect to pandemic-related developments in the US.
Limited results for individual brands
Given that the majority of automakers no longer report monthly sales figures, not much can be determined with respect to individual brand performance. Of those that did report, however Volvo and Subaru led the way, in terms of relative performance, with 11.8% and 10.1% increases, respectively, from the same month last year.
Mazda’s July sales were also up by 6.2%, Kia’s by 3.7%, and Hyundai’s by 1.7%. Both Kia and Mazda reported best-ever July sales for the brands. Genesis sales were down by 19.0%.
All automakers are scheduled to report third-quarter results at the end of September, so those figures will provide a better sense of relative market performance.
