"Canada is not the United States" - Auto sales edition

Yet another horrible month for auto sales in the US:

US auto sales 'unsustainably weak': General Motors Corp.'s October U.S. sales plunged 45 per cent, and Ford Motor Co.'s and Chrysler LLC's weren't far behind, as low consumer confidence and tight credit combined to bring the industry's sales to an “unsustainably weak level” that is the worst in 25 years.

Auto makers sold 838,156 vehicles in October, 32 per cent fewer than the same month last year and the worst performance since January, 1991, according to Autodata Corp. and Ward's AutoInfoBank. The seasonally adjusted annual sales rate of 10.6 million vehicles was the weakest since February, 1983.

But October was another month of increasing - yes, increasing - auto sales in Canada:

Canadian auto sales up 1.5%: The results, which showed a 1.5-per-cent gain in overall sales from the year before, contrasted sharply with U.S. sales, which plunged about 35 per cent in October to near 25-year lows.

Auto makers sold a total of 122,711 vehicles in Canada in the month, as sales of import brands rose 8.8 per cent, while sales for the big U.S. auto makers fell 5.4 per cent.

Comments

[Declan]

Are you sure this isn't the "Canada is lagging the U.S. by roughly 24 months - Auto Sales Edition?"

[Stephen Gordon]

No, I'm not at all sure of that. But then again, a 24-month lag would be unusual as well - it's usually something like 6 months. As it is, it's been almost a year since the US went into recession, and Canada is still generating numbers like this. It's a puzzle.

[Nick Rowe]

Car sales also fell in four European countries reporting yesterday: 40% in Spain, 19% in Italy, and 7% in France and Belgium. http://www.guardian.co.uk/business/feedarticle/7981178

It is impressive how well the Canadian economy is holding up so far, but I don't see it lasting. Canadian home prices seem to have peaked earlier this year, about 18 months later than the US peak. My guess is that Canadian construction spending will now begin falling rapidly as a (slightly delayed) consequence, just as in the US. Then there's falling oil and other commodity prices, which peaked in June. Falling demand for our manufacturing exports will be the final straw, only partly offset by the lower exchange rate.

My prediction, for what it's worth, is that Canadian output and employment figures have peaked and will be declining from now on.

[Andrew]

Incentives offered as a result of the strong Canadian dollar will likely also dry up, hurting sales.

[Tony Trepanier]

Don't you think that a lot of this could be do to the fact that a lot less people are buying cars across the border?

[Andrew Knight]

Hi Stephen,

I'm emailing you in regards to a followup email I sent you a month ago in response to a partnership, have you had a chance to think about it?

If you have any questions or would more information, please advise me and we can go from there.

Kind Regards,
Andrew Knight

[Local Car Dealers]

I believe that one of the reasons of the decrease in car sales may be attributed to the fact that oil price kept on increasing on the last few months. And buyers are now opting to buy smaller, cheaper and fuel efficient cars.