An increase in Canadian auto sales in July has the industry on track for its best performance in five years, according to BMO Economics.
Canadian auto and light truck sales increased 4.7 per cent year-over-year in July, lifting the gain for 2012 to 6.7 per cent year-over-year. To date, 1.01 million units have been sold. The annual record of 1.73 million was set in 2002.
"Every month this year, except April, sales have been higher than a year ago. While most other areas of consumer credit have slowed, auto financing remains strong because of aggressive incentives by dealers. Steady job growth in Canada this year has also played a role," said Sal Guatieri, Senior Economist, BMO Capital Markets.
While Guatieri expects Canadian auto sales to slow in the year ahead as a result of elevated household debt, improving sales in the United States should support Canadian auto production and economic growth.
Robert Sadokierski, Head of Dealership Financing for BMO, expects auto manufacturers will continue to offer more incentives for consumers. "There is good news for prospective buyers as companies roll out redesigned models in the compact, mid-sized and luxury segments."
Recently, Oshawa-based General Motors of Canada Ltd. announced it will significantly increase spending on research and development over the next five years. Toyota's Canadian manufacturing arm also said it will invest more in its Cambridge, Ontario plant, with plans to hire 400 workers. The investment will increase the production of the company's Lexus RX models.
Canadian Auto Sales - July (Year-over-Year)
Ford + 2.2 per cent
Chrysler + 3.4 per cent
General Motors - 5.6 per cent
Toyota + 31 per cent
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $525 billion.