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Cars sales down in May, 10% rebound for June

Canada’s vehicle sales dropped in May erasing gains made over the past four months, but preliminary data for June points to a rebound.


July 18, 2011
by PLANT STAFF

OTTAWA: Canada’s vehicle sales dropped in May erasing gains made over the past four months, but preliminary data for June points to a rebound.

Statistics Canada reports today that new motor vehicles sales dropped 6.1% in May to 126,479 units, and North American-built passenger cars – down 17.6% – accounted for most of the decrease. Sales of cars made offshore fell just 4.5%, despite disruptions to Japanese auto production, said Shahrzad Mobasher Fard, an economist with TD Economics.

“This is not surprising given the fact that a portion of Japanese vehicles are assembled in Canada and that data compiled by Wards Auto suggest that the decline in Canadian light vehicle sales in May was linked to Japanese brands,” he said in an industry observation note.

But preliminary industry numbers show sales increasing by 10% in June.

Fard said if this figure materializes, new vehicle sales will have risen by 2.3% on a year-to-date basis for the month.

Sales recorded since the beginning of the year remain well below the expectations of most auto industry analysts, which Fard attributes to a combination of factors such as rising gasoline prices, auto supply disruptions caused by the Japanese earthquake and an increase in household indebtedness over the past months.

However, he said the effects of the supply disruption and household debt should subside over the next two months to fuel the rebound, which will be helped along by greater price competitiveness as production recovers, and as auto platforms are expanded in North America.