Analysts at vehicle valuation company Canadian Black Book say they expect new car retail sales to end the year down 25% from 2019 levels.
More than halfway through 2020, sales are 34% lower than the same time in 2019.
In its latest market update, released July 28, the company says disruption of new car supply will remain one of the key stories in the market for the balance of 2020.
CBB anticipates “a significant reduction” in Canadian new vehicle sales in 2020 (both retail and fleet sales) due to weaker overall demand. This is the result of several factors, including fewer kilometers driven due to remote work arrangements and lockdown initiatives, high unemployment, and a severe erosion of consumer confidence.
“July and August will be telling months,” the company newsletter states, “as there is expected to be fewer units sold due to pent-up demand in the monthly sales results.
In the company’s base economic scenario (Scenario A), new car sales are projected to drop 25% drop (compared to pre-COVID-19 projections) to 1.436 million units.
If the economic recession cuts deeper (Scenario B), Canadian Black Book projects a 40% drop in new sales in 2020 to 1.149 million units.
“The deep recession, if it were to occur, would be brought on by extended lockdown measures due to multiple waves of COVID-19,” the company says. “In the longer-term, we expect new sales volume to return to pre-COVID-19 levels within five years. At this point in time, it appears that our Scenario A is the more probable one, unless of course there is a large resurgence of the virus in the coming months.”