TORONTO, Jan. 30, 2013 /CNW/ - Canadian auto sales climbed 6% last year,
and will edge up further in 2013, advancing to 1.69 million units - the
second-highest level on record, according to the Scotiabank Global Auto
Report released today.
"The resource-rich provinces of Alberta, Saskatchewan, Newfoundland and
Labrador will continue to lead gains." said Carlos Gomes, Scotiabank's
Senior Economist and Auto Industry Specialist. "Purchases in these
provinces set record highs in 2012, climbing above the 2007 peak. In
contrast, even with a moderate gain in the coming year, volumes in the
rest of Canada will remain 6% below the 2002 peak."
For more details about the Scotiabank Global Auto Report, please read
the full report below. Highlights include why Alberta will be the auto
industry's growth leader in 2013, as well as a province-by-province
breakdown of vehicles sales.
Scotiabank provides clients with in-depth research into the factors
shaping the outlook for Canada and the global economy, including
macroeconomic developments, currency and capital market trends,
commodity and industry performance, as well as monetary, fiscal and
public policy issues.
Scotiabank is one of North America's premier financial institutions and
Canada's most international bank. With more than 81,000 employees,
Scotiabank and its affiliates serve some 19 million customers in more
than 55 countries around the world. Scotiabank offers a broad range of
products and services including personal, commercial, corporate and
investment banking. In December 2012, Scotiabank became the first
Canadian bank to be named Global Bank of the Year and Bank of the Year
in the Americas by The Banker magazine, a Financial Times publication.
With assets of $668 billion (as at October 31, 2012), Scotiabank trades
on the Toronto (BNS) and New York Exchanges (BNS). For more information
please visit www.scotiabank.com.
For high-resolution video clips visit http://media.scotiabank.com/cdaen/multimedia/mc-videos.html. For more Scotiabank economic publications visit http://www.scotiabank.com/ca/en/0,,3112,00.html
Resource-Rich Provinces Will Continue to Drive Sales Gains in Canada
Canadian auto sales climbed 6% last year, and will edge up further in
2013, advancing to 1.69 million units - the second-highest level on
record. The resource-rich provinces of Alberta, Saskatchewan,
Newfoundland and Labrador will continue to lead gains. Purchases in
these provinces set record highs in 2012, climbing above the 2007 peak.
In contrast, even with a moderate gain in the coming year, volumes in
the rest of Canada will remain 6% below the 2002 peak.
Labour markets, demographic trends and development activity are
strongest in Western Canada, while a ramp up of several projects on the
east coast will support regional gains. Commodity prices have rebounded
since last summer, and will be underpinned over the coming year by the
recent pick up of economic growth in China and improving global
financial market conditions. Global equity markets have advanced by
more than 20% since mid-2012, including 5% during the first four weeks
Alberta will be the auto industry's growth leader in 2013. Vehicle sales in
Alberta climbed to 239,000 units last year - the second-highest on
record. We expect volumes to advance to 244,000 units in 2013,
approaching the 2007 peak of 249,000 cars and light trucks. Sales will
be bolstered by a buoyant labour market, record population inflows and
continuing, albeit a single-digit increase in energy sector
investments. Unemployment in Alberta has dropped to only 4.5% - the
lowest level in Canada and nearly 3 percentage points below the
national average. Meanwhile, population growth accelerated to 2.5% last
year - nearly triple the advance in the rest of Canada. Alberta's
driving age population is increasing at even a faster pace. Despite
these positive developments, the improvement in vehicle sales will be
dampened by some slowing in energy sector investment. The export price
for Canadian heavy crude has fallen to a substantial discount from
international benchmark prices due to export pipeline constraints. The
sharp widening in the discount for Canadian heavy crude oil is hurting
Alberta's public finances, prompting its premier to warn last week of a
$6 bn revenue shortfall for the 2013-14 fiscal year.
Vehicle sales in Saskatchewan climbed to a record-high 55,000 units in 2012, buoyed by a solid gain
in farm incomes and ongoing expansion of the mineral sector. An
increase in purchases to 56,000 units is projected for 2013, bolstered
by the government of Saskatchewan's commitment to spent at least $2.5
bn on infrastructure over the next several years and the scheduled
start-up of the Cigar Lake uranium mine in late 2013. Despite declining
mineral and natural gas production in Saskatchewan over the past year,
the province still expects investments of nearly $45 billion in major
resource projects over the next decade - a development which will keep
labour and auto markets among the strongest in Canada.
Newfoundland and Labrador also reported record car and light truck sales in 2012, with volumes
jumping to 33,000 units - 29% above the 2001-08 average. Purchases will
be boosted this year by a rebound in offshore oil production and
increased iron ore output. After weakening in the first half of 2012
alongside slowing global economic activity, China's imports of iron ore
jumped to record highs late last year, setting the stage for higher
prices and a ramp up in iron ore production across Newfoundland in
2013. Oil output is also set to rebound, with production resuming at
both the Sea Rose and Terra Nova projects, after being offline for
maintenance last year.
However, longer-term gains in car and light trucks sales will be
constrained by weak vehicle-buying demographics in Newfoundland. In
fact, the demographic outlook is worse for the province than for its
Maritime neighbours. The vehicle-buying population in Newfoundland and
Labrador declined by 0.2% last year and is projected to slump 0.5%
annually over the next five years. In contrast, the number of potential
vehicle buyers is projected to continue to edge higher across much of
Vehicle sales in Manitoba advanced 6% last year, in line with the improvement across Canada. We
expect a further modest gain in 2013, underpinned by increased
agricultural and construction activity. The value of building permits
in Manitoba jumped by nearly 30% last year, nearly three times the
advance in the national average. A gradual pickup in global demand for
the province's diversified exports will also support further gains in
auto sales. In particular, aerospace shipments in Manitoba surged 20%
last year, outpacing gains in other sectors.
Vehicle sales in British Columbia rose 10% last year to 173,000 units - the highest level since 2008.
Volumes will be supported over the coming year by rising exports to
Asia - the destination for more than 40% of the province's
international shipments - and the ongoing revival in the U.S. housing
market. However, despite an improving external environment, offshore
exports account for less than one-quarter of overall economic activity
in B.C. Households are the key drivers of the economy, accounting for
62% of overall activity - nearly 7 percentage points above the national
average. In particular, we expect a slowing labour market and declining
residential real estate prices to weigh on consumer confidence -British
Columbians were the most upbeat Canadians in late 2012 - limiting the
gain in vehicle sales to less than 1%.
Car and light truck purchases in Ontario jumped above 600,000 units last year for the first time since 2006, led
by a 9% increase in fleet purchases. Household volumes improved a more
moderate 4%, but set a decade high of 530,000 last year. Further modest
gains are expected in 2013, as the ongoing improvement in manufacturing
- led by a revival in the auto sector - more than offsets restraint
from both the federal and provincial governments. The auto parts sector
led Ontario's manufacturing employment growth last year, advancing by
5% -the strongest increase since the turn of the millennium. Further
gains are scheduled for 2013, as vehicle production strengthens to 2.6
million units - the highest level since 2005.
Quebec's auto market lagged last year, with volumes advancing by only 1%
alongside sluggish employment growth and increased taxes. Purchases are
expected to edge up to 417,000 units in 2013, supported by rising
private sector investment and a modest improvement in the key aerospace
sector. The largest aerospace company in Quebec recently announced a
near-doubling in aircraft orders last year, and employment in the
sector has begun to reverse a four-year slide.
The increase in vehicle sales across New Brunswick was also smaller than the national average. However, last year's 1%
advance was enough to lift sales to a decade high of 39,000 units.
Further gains will be supported over the coming year by rising exports
to the United States. Cross-border shipments are the main driver of the
provincial economy, with international and inter-provincial exports
accounting for nearly 80% of overall economic activity. Increased
potash production, following the completion of a $1.7 bn investment,
combined with rising lumber exports to the U.S. will boost provincial
spending and help lift vehicle sales to 40,000 units in 2013.
Nova Scotia posted a 7% advance in vehicle sales last year to 48,000 units. A
further small improvement will be underpinned by expansion of the
Halifax Shipyard to accommodate the building of combat ships starting
in 2015. Several other projects, including construction of the Halifax
Convention Centre, will also boost employment and vehicle purchases in
the coming year.
SOURCE: Scotiabank - Economic Reports
For further information:
Carlos Gomes, Scotiabank Economics, (416) 866-4735, firstname.lastname@example.org; or
Devinder Lamsar, Scotiabank Media Communications, (416) 933-1171, email@example.com.