While automakers are experiencing shrinking market shares in the United States, the Canadian auto market is expected to reach record sales for this year. According to The Financial Post, more Canadians are buying cars and light trucks than what was expected by analysts at the start of the year. In fact, the number of auto buyers expected to purchase new cars this year can drive sales to a record high.
The reason pointed out for this trend is the healthy Canadian economy. Even with the fear of an economic slump, there are still many Canadians enjoying success in their respective field. According to figures quoted by The Financial Post, Canadians are buying new vehicles at a rate of 1.7 million vehicles per year. According to reports, the last time that the said figure was posted in the Canadian auto market was in 2002.
"Consumers are well-positioned to continue to spend," Craig Wright said. Wright is a chief economist at RBC Financial Group. "If you get a new job or your existing job prospects look more encouraging, and the economy's doing well and your company's doing well, maybe you're more inclined to make that purchase you delayed," he continued.
Initially, it was expected that Canadians will buy less cars this year due to an anticipated economic slump. But contrary to predictions, the Canadian economy remained healthy. From 1999 to 2006, the number of cars bought by Canadians reached staggering numbers. This is the reason why experts expected that this year will be the first of many years to come when car purchases will go down. Apparently, Canadians are still interested in buying new cars.
The healthy Canadian economy also allowed automakers to offer better financial options to customers. With better financing offered, consumers are grabbing the chance to buy a new car. This trend is expected to pump up the sales in the Canadian auto market. The strong Canadian economy also benefits automakers. With light truck sales going down in recent months and with production still heavy, they are burdened with light trucks on their inventories. But with the economy staying healthy, they can offer better deals for the light trucks thus enabling them to get rid of it.
Earlier this month, both Canadian arms of Ford and the Chrysler Group announced that they will be offering discounts on their vehicles. The move taken by the two automakers only increased the number of Canadians buying new autos. The result of the strong economy of the country resulted to an increase in first half sales for the auto industry.
From January to June this year, 862,589 vehicles have been sold. That figure is 5.8 percent higher than the number of vehicles sold in Canada for the first six months of 2006. Last month, the Canadian auto market posted the highest number of vehicles sold on the month of June. This follows the record sales for the month of May.
With the increase in new car sales, it can be expected that other sectors of the auto industry will be benefited. Auto parts shops like is expected to post higher sales in the near future.
While in the United States, Toyota leads automakers in sales increase, in Canada, the list comprises of Mitsubishi, Nissan and Volkswagen. Of the Big Three, only Chrysler posted significantly higher sales for the first half of the year. Same as in the United States, the problem of the Big Three in Canada is that they still offer large vehicles contrary to the demand.
