Cain's Segments: Canada Recap April 2014

March 2014’s Canadian auto sales results displayed a further willingness on the part of buyers to gradually forsake cars and turn to smaller crossovers.

Despite the increased strength of the Toyota Tundra and Ram Pickup range, pickup truck sales growth has stalled, and indeed reversed.

Year-over-year, minivans are getting back into the swing of things, but not to the extent that they’re selling as well as they did two years ago.

Although sales at BMW, the second-ranked luxury brand through the first quarter, are down slightly this year, overall premium brand auto sales are up 7% in a market that’s managed less than a 1% improvement over the last three months. BMW, Mercedes-Benz, and Audi own 52% of the market for luxury auto brand vehicles. Mercedes-Benz has the advantage in Canada of not just selling a new entry-level sedan, the CLA, but also the more popular entry-level hatchback B-Class, which accounts for 16% of Mercedes-Benz passenger car sales.

Canadians are very nearly as willing to support traditional Detroit-based brands as their neighbours to the south – GM, FoMoCo, Chrysler/FCA own 45% of 2014’s U.S. market, 44% – but the same does not go for Cadillac and Lincoln. Cadillac is America’s fourth-ranked premium brand, but Cadillac slides to seventh in Canada. Lincoln ranks ninth in Canada, but in the U.S., where Lincoln volume is 19 times stronger, it moves up to eighth. Land Rover sales are 52% stronger than Lincoln sales in Canada, while Lincoln sales in the U.S. are 65% stronger than Land Rover sales. 1.6% of the new vehicles sold in the U.S. in the first quarter of 2014 were Cadillacs and Lincolns; only 0.8% in Canada.

Canadians still made Ford the top-selling auto brand in Q1 of 2014. Ford brand sales tumbled 11% in March and 8% in Q1, however, as first quarter car sales slid 22% and the F-Series, approaching replacement, fell 6%. (YOY, Ford’s share of a pickup truck market that’s down 2.5% has fallen from 38% to 37%.) The Fusion is currently Canada’s second-best-selling midsize car after leading the category in calendar year 2013. In fact, the Mustang is the only Ford car product to record a year-over-year sales increase in Q1.

As a whole, Ford Canada was outsold by the Chrysler family of brands in each of the last three months. (GM Canada outsold Ford/Lincoln in December.) Ford had become the usual leader, but even with the Chrysler Group’s total lack of car success in 2014, Dodge/Ram/Jeep/Chrysler/Fiat have opened up a 7726-unit lead through three months. Chrysler Canada says their car sales are down 21% this year. Even if we exclude the 200 and Avenger (about to be replaced and defunct, respectively) from the equation, the company’s car sales were down 1%.

But the Ram truck lineup, Dodge’s Grand Caravan, and the Jeep brand currently account for seven out of every ten Chrysler Canada sales, and the volume achieved by that group is up 12% in 2014. Minivan sales in Q1, 65% of which came from the Grand Caravan and Town & Country, are up 7%.

Cars are still capable of succeeding in the Canadian auto market. Sales of the best-selling Civic, Canada’s third-best-selling vehicle overall, are up 10% this year. Yet cars are currently responsible for less than 41% of the industry’s volume, and the decline can be spotted in the Civic’s closest rival, the Hyundai Elantra, which is down 9%. Hyundai and Kia, which combine to sell more passenger cars in Canada than any other automotive conglomerate by far, have seen their car sales slide 9%.

As a symbol of the tussle between traditional passenger cars and newfangled crossovers, consider the BMW 3-Series and Audi Q5. No other premium brand products have sold as often as this pair. They’re tied for the lead as Canada’s top-selling luxury brand automobiles through three months. With 1664 sales each, they’re not uncommon: only 53 nameplates have generated greater volume in early 2014.

The Q5 is playing on the winning side. 55% of vehicles sold in Canada in 2014 by Mercedes-Benz, BMW, Audi, Cadillac, Lincoln, and their luxury rivals have been SUVs or crossovers of one kind or another.