Canadian New Car Sales Surge 9%


According to The Star [via Wheels.ca], Canadian new-car sales rose a bit over nine percent vs. the previous financial quarter. This represents the strongest single-quarter sales gain since way back in the middle of 1998. Analysts attribute the growth to lower prices, incentives and a one percent reduction in the goods-and-services tax (GST). The largest gains (17.8 percent) came from sales of passenger cars. Meanwhile, driving.ca reports on April sales, noting that GM's share of the Canadian pie slipped 13.5 percent. GM said "the drop was a planned reduction in low-profit sales to daily rental fleets." The company spun the news by pointing out that retail sales of The General's passenger cars went up by 23.8 percent in the month of April. Anyway, Ford's Canadian sales slipped by 4.5 percent last month. Winners include Chrysler, up eight percent in April, thanks to a 38 percent increase in the number of minivans driving off the lots. Chrysler Canada adds that it enjoyed its 21st consecutive increase in monthly sales, noting that (just like GM), the company deliberately cut back on fleet sales. Not bad, eh?
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A truly unique Canadian phenomenon is the penetration of leasing in the Canadian market which is at least 50% and higher on the more expensive models. Canadian sales have been very strong for the first 4 months of 2008, since prices have been adjusted downward, incentives are aggressive. One item pundits forget to mention with 50% penetration of leasing many of the sales are a simple replacement of the leased vehicle coming to term for a new vehicle, often at a lower monthly payment with the adjusted prices. The amount of lease returns owned by captives with deteriorating residual values is also increasing. The Canadian consumer is experiencing a "golden bubble" when it comes to the cost of vehicles. With lower prices for new vehicles, and no downside for value erosion (on a lease return).
Chrysler dealers are running radio ads claiming they'll finance you even if 'your credit is so bad, even your momma won't lend you money'. Also, 10k rebate off a new Dodge Ram. So sales are fine, but how much money are they making here?
I just purchased a new Toyota Rav4, at the dealer in Ontario they showed on there board that in the month of May, they had sold 91 New vehicles, mine was number 90 up to the date I took delivery of my vehicle!
Chanman, If you want to know how much they are making, compare the Canadian price to the US price while adjusting for the currency difference. The difference is pure profit baby.