TORONTO, Feb. 23, 2018 /CNW/ - For the first time ever, Canadian auto sales exceeded two million units in 2017, climbing to an annual record of 2.04 million units. Purchases last month set an all-time high for January by surpassing an annualized 2.1 million units; however, full-year 2018 sales are expected to fall to two million units alongside an expected moderation in economic growth.
"Driven by slower job creation and weaker gains in household wealth, Canadian sales volumes in 2018 are projected to end five consecutive annual records," said Carlos Gomes, Senior Economist and Auto Industry Specialist, Scotiabank. "Ontario is expected to account for most of the decline in purchases, but we anticipate a further small increase in sales out of Alberta."
Car and light truck sales in Ontario climbed to a record 847,000 units in 2017, but are expected to decrease to 821,000 units this year, pressured by nearly an 80% drop in household savings over the past year. The savings rate in Ontario has plunged to only 0.6%, nearly 80% lower than the national average of 2.6%. Sharp gains in home prices across Southern Ontario helped boost auto sales in recent years, as many Ontario households tapped into home equity loans to boost purchasing power. Slower employment growth will also contribute to an expected 26,000 unit decline in auto sales across the province this year, accounting for two-thirds of the overall Canadian decline.
Alberta led the sales gains last year, with full-year volumes jumping 12% to 245,000 units, the fourth-highest level on record and only 9% below the peak in 2014. For 2018, an increase of 248,000 is expected as employment growth has picked up to 2% y/y. Business purchases of new vehicles are also on the upswing in Alberta, accounting for more than half of the increase in overall sales last year. While companies will continue to renew their vehicle fleets, drilling activity has begun to flatten out and will not provide much upside support in 2018.
Vehicle sales in British Columbia jumped 7.5% last year to a record 235,000 units, bolstered by the strongest job growth since 1994. For 2018, new vehicle sales are projected to decrease to 231,000, with service sector employment, which accounts for 80% of the provincial total, starting to soften. Meanwhile, the percentage of B.C. households that purchased a new car or light truck last year was the highest in nearly three decades.
- Quebec's auto purchases are anticipated to ease to 445,000 in 2018, compared to 453,000 units in 2017.
- Sales in Saskatchewan and Manitoba for 2018 are expected to be largely flat as job growth slows.
- In Nova Scotia, record auto sales of 143,000 in 2017 more than offset declining purchases in the rest of Atlantic Canada; however, sales are expected to edge down to 138,000 in 2018.
Read the full Scotiabank Global Auto Report online at:
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 Canada's international bank and a leading financial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacific. We are dedicated to helping our 24 million customers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of more than 88,000 employees and assets of over $915 billion (as at October 31, 2017), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges (NYSE: BNS). For more information, please visit www.scotiabank.com and follow us on Twitter @Scotiabank.
For further information: Carlos Gomes, Scotiabank Economics, (416) 866-4735, [email protected]; For media enquiries only: Debra Chan, Global Communications, Scotiabank, (416) 866-6443, [email protected]