New vehicle sales off to strong start

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February 15, 2023 by Adam Malik

New vehicle sales off to strong start​

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Like last year, new vehicle sales in Canada are off to a strong start. In fact, both sides of the border are reporting a solid January. But time will tell if 2023 cools off and plays out similarly to 2022.

Sales in January 2022 got out to a hot start in Canada with the highest seasonally adjusted annual rate of any month last year at 1.67 million units. With an estimated 98,259 units sold in January 2023 — up 7.5 per cent from last year — the pace is stronger this time around at 1.79 million, according to DesRosiers Automotive Consultants.

Last year, though, saw sales tail off to finish at 1.49 million units. The hope is that the market will avoid the spring drop-off this year, using the January start as a strong building block for growth, said Andrew King, Managing Partner at DesRosiers.

“Significantly, we are seeing signs of improved vehicle availability at a growing list of manufacturers and — while there are still some noticeable gaps — the breadth of the recovery in inventory has definitely spread,” he said.

Meanwhile, U.S. numbers are also off to a promising start — though watchers are being warned not to get too excited.

S&P Global Mobility projected sales down south at 1.015 million units, putting it on a sales pace of 15.5 million. The U.S. ended 2022 with 13.9 million in sales.

Though the group cautioned that we’ve seen this play before — things look great to start while underlying issues are keeping the industry in flux.

U.S. sales followed a similar path to Canada’s: A strong start and a sputtering end.

“Auto consumers continue to be impacted by an uncertain purchase environment. While positive developments regarding mildly retreating vehicle prices and rising pockets of inventory bode well, interest rates remain high and economic headwinds persist,” said Chris Hopson, principal analyst at S&P Global Mobility. “None of these issues will be resolved quickly as we move through 2023. The January 2023 expected SAAR reading may have jumped from the month-prior reading of 13.3 million units, but the unsteady combination of consumers, inventory and economic conditions will dictate monthly new vehicle sales levels.”

As for its outlook for the year, S&P projects 14.8 million units sold, which would still represent a 7 per cent increase from last year.

“The advancing production levels, along with reports of sustained retail order books, recovering stock of vehicles, and a fleet sector that remains starved for product should provide some impetus to auto demand levels even as an economic recession looms,” its announcement said.
 

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But as the economy continues to stumble more each day, and many people finance, instead of being able to buy, those sales figures may drop off.
 
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