Canadian car sales rebound in 2012

Calgary Sun - From the Maritimes to the B.C. coast and almost everywhere in between, Canadians are reacquainting themselves with that new car smell at a record pace.

After months of brisk sales that happily forced many industry insiders to readjust their forecasts for 2012, the Canadian Automobile Dealers Association (CADA) has confirmed it: New car sales aren't just up — they're way up.

According to the association's chief economist Michael Hatch, new vehicle sales between January and May are up more than 8% over the same time in 2011, which clocked a 2% sales hike over 2010.

The banner years for new car sales belongs to 2002 when 1.7 million units sold across Canada.

"If we keep that pace this year for the rest of the year, we're going to be looking at a record sales year in Canada for new vehicles," Hatch said.

"It's a huge jump.

"We stared observing this in the first part of the year — January and February — and we thought at that time it might have been a bit of anomaly.

"Obviously that strength has continued."

A report released earlier this year by BMO Financial Group found new and used car and truck sales were up 15% in January.

The surprising break-out start for an industry still clawing its way back from a recessionary slump forced one of the country's leading automakers to up their forecast for projected sales in Canada.

Dianne Craig, president of Ford Motor Company of Canada, told the Sun while auto manufacturers weren't anticipating a return to those heady days of 2002, the market showed signs it was healing better than expected.

With sales that don't include June numbers already cresting the 700,000 mark, Hatch it's more than possible thanks in large part to affordability.

"Statistics Canada data shows the average price of a new vehicle hasn't moved in 20 years," he said.

"When you take into account inflation, it's a 40% real reduction in the average price of a new car overt the past two decades.

"That's obviously a big factor driving sales."

Canadians are also warming again to leasing as an option.

"Most people don't walk into a dealership and buy a vehicle with cash, usually it has to be financed," Hatch said.

Leasing was one of the favoured ways in which Canadians got into new vehicles, representing nearly half the new car sales in 2005 alone before the economy collapsed in 2008 and 2009 and those numbers dropped to around 10%.

Those numbers have recently been inching back up.

"It's great, the dealers I've spoken to, they're happy with the way things are going," Hatch said.

"Obviously the recession was a brutal time for a lot of them and we did lose a lot of dealers during that downturn ... but we're slowly getting back to where we were before, before the recession."