- Published: 30 March 2009
- Written by Editor
Scotia Economics Sees Double-Digit Decline in Western Canada's Auto Sales
"We have reduced our 2009 Canadian sales forecast to 1.38 million units as the weakness has intensified, alongside a sharp reversal in purchases in British Columbia and Alberta," said Carlos Gomes, Scotiabank Senior Economist and Auto Industry Specialist"Preliminary data through February indicate that sales in these two provinces have plunged 35 per cent year-over-year (y/y), nearly 10 percentage points worse than in the rest of Canada."
Car and light truck purchases in British Columbia have fallen to an annualized 130,000 units in the first two months of 2009, more than 30 per cent below the record of 198,000 set in 2007. The slowdown reflects slowing construction activity, the ongoing retrenchment in the forest products sector and a sharp deceleration in employment prospects in recent months. However, the downturn will be cushioned by a $14 billion investment in infrastructure projects announced in the latest provincial budget.
The sharp decline in oil prices from their mid-2008 peak has led to more than a 30 per cent drop in drilling activity in Alberta and the cancellation of over $40 billion of capital projects, including new oil sands upgrades. This loss of momentum has spilled over to services, with retail sales grounding to a halt, and vehicle
"In contrast, Saskatchewan is proving to be one of the best places to ride out the current economic storm. The province continues to enjoy low unemployment and increased employment opportunities," added Mr. Gomes. "Consumer spending remains a key growth driver - as employment gains approaching 3 per cent y/y will keep vehicle sales at 46,000 units in 2009, well above the 41,000-unit average of the past five years, and only marginally below the 2008 peak of 48,000."
Manitoba has also remained resilient in the face of a weakening external economic environment. The province is expected to post one of the smallest declines in vehicle sales in 2009, with purchases totaling 41,000 units, down from an average of 44,000 over the past five years.
Vehicle sales in Ontario are expected to post the steepest drop since the economic downturn of the early 1980s, undercut by sharply lower manufacturing activity. In particular, auto sector production will drop by close to 30 per cent in 2009, the largest decline on record, and the second-consecutive double-digit annual fall-off. A weaker Canadian dollar and ongoing infrastructure spending are providing some relief, but not enough to offset big cutbacks in manufacturing, mining and steel production, as well as a rapidly cooling service sector.
Car and light truck sales in Quebec are expected to fall by more than 15 per cent this year, as the province's large forest products, manufacturing and growing mining industries all face considerable challenges.
"Retail activity, including vehicle sales, held up reasonably well in 2008, as tax cuts offset a marked slowing in employment growth," said Mr. Gomes. "However, mounting layoffs and a significant erosion of confidence will weigh on purchases in 2009."
Unemployment in Atlantic Canada has increased by more than two percentage points over the past year, undercutting purchasing power at a time of reduced transfers from Atlantic Canadians working in Alberta oilfields. Vehicle sales are likely to fall to about 110,000 units this year from a record 127,000 in 2008, but roughly in line with the average of the past decade. Purchases are expected to hold up better in Halifax, where employment growth remains close to 3 per cent y/y, buoyed by robust hiring in construction, professional and technical services, and the public sector.
Scotia Economics 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.
SOURCE: Scotiabank - Economic Reports
SOURCE: Scotiabank
Carlos Gomes, Scotia Economics, (416) 866-4735, This email address is being protected from spambots. You need JavaScript enabled to view it.; Paula Cufre, Scotiabank Public Affairs, (416) 933-1093, This email address is being protected from spambots. You need JavaScript enabled to view it.
- Scotia Economics forecasts Provincial auto sales for 2009
After a solid performance through October, Canadian vehicle sales began to slump in late 2008 as the previously robust resource economies of Western Canada succumbed to the global economic
