According to a new report by the Conference Board of Canada, auto sales, expected to reach their highest level in a decade this year, are likely to slow in 2013 as pent up demand for vehicles following the Great Recession is largely satisfied.
The report said that Canadian vehicle sales could reach 1.72 million units by the end of the year (representing an increase of more than five per cent from 2012). However it also said that given the high level of current indebtedness among Canadians and inevitable interest rate rises, these factors, along with a greater supply of vehicles, mean that demand is likely to cool off next year.
Honda and Toyota, whose vehicles are particularly popular in Canada, have helped drive the surge in demand this year, largely due to overcoming supply problems in the wake of last year’s natural disaster in Japan, which hampered the availability of popular models, such as the Civic and Corolla.
However, the Conference Board report also said that despite a slowing down of Canadian vehicle consumption, OEMs with manufacturing operations in this country are still set to see output increase, particularly in exports to the U.S., since south of the border, the average age of vehicles is significantly greater (11 years, versus 8 years in Canada) and a huge pent up demand for new cars and light trucks is expected to drive sales in the coming years, as consumer confidence and access to credit grows once more.
In the first eight months of 2012, production at Canadian vehicle plants rose by nearly 20 per cent and is expected to expand at a rate of 8.5 per cent next year, slowing to 4.1 per cent by 2014, when General Motors plans to close another of its assembly lines in Oshawa, Ont.
