The strength of the light vehicle markets in the Western provinces softened for the first time in recent months – although some of the weaker percentage increases were because of very strong comparables. Absolute sales levels were still very healthy. Year-to-date, the action is still in the West with Manitoba up 10.9 percent, Alberta up 7.3 percent, Saskatchewan up 5.3 percent and British Columbia up 3.9 percent.
A more important story this past month was the strength in Ontario. Without Ontario it’s possible to have a good year but impossible to have a ‘great’ year. For a number of years now Ontario has lagged behind the rest of Canada’s automotive sales recovery. In August, we reported strong Ontario numbers and September was the best month in a couple years with sales up 6.7 percent. This brought Ontario’s year-to-date sales number up to an increase of 3.1 percent just slightly below the Canadian average.
We also have every Atlantic province performing above the national average and particularly strong in September. PEI led the nation up 12.9 percent, Newfoundland was up 10.4 percent, New Brunswick was up 9.7 percent and Nova Scotia was up 9.4 percent.
Keeping Canada from a ‘blow out’ year is Quebec. Although Canada is solidly on track for record sales this year, Quebec is still underperforming the overall market and has for a number of years. In September, Quebec was up 2.1 percent in a market that grew nationally by 4.2 percent. Year-to-date Quebec is down 0.4 percent in a national market that is up by 3.5 percent.
As we head into the fall season, a number of important themes have emerged. First, Ford’s F-series pickup truck is up 27.4 percent in September and up 15.3 percent year-to-date. The F-series is expected to reach the 100K mark in October. Last year, Ford sold 100K pickup trucks over the span of one year for the first time. The Chrysler Ram is growing slightly faster on a year-to-date basis (up 19.4 percent) but trails the F-Series significantly on unit volume. The huge success of both the F-Series and the Ram is causing GM some headaches with the launch of their new C/K pickup truck. Year-to-date, the GMC Sierra is up only 5.4 percent and the Chevrolet Silverado is up only 3.3 percent. Both have lost share to Ford and Chrysler in this important segment.
Second, large pickup trucks are the second fastest growing segment in the market (second to luxury SUVs) and industry experts wonder just how much longer pickup trucks can maintain this pace. Sales in this segment fell well below trend during the financial crisis in 2008 to 2010 and this created a lot of pent-up demand, but sales have been well above trend line the last four years. DesRosiers believes there are three other more important drivers factors: the demise of the small pickup segment, the strength of Canada’s resource sector, and growth of pickup trucks being used as personal vehicles.
Third, the continued incursion into the top ten light trucks by import brands. DesRosiers says after 10 years of top ten reports, one would rarely see an import brand listed on the light truck side of the equation. This year, three import brands are consistently in the top ten for the month, and the same three hold a solid position in the year-to-date totals. On YTD basis, the Honda CRV is in seventh place, the Toyota RAV4 is in eighth place and the Hyundai Santa Fe Sport is in tenth place. None of these models threaten the top of the list, but all are now solid best-selling middle players.
Fourth, the Honda Civic remains the best-selling passenger car for, but for the first time in many years it’s being threatened for the top position by the Hyundai Elantra. DesRosiers says sales titles are mostly about bragging rights, a rallying cry for troops in the factories and at dealerships, and executives are quick to say that profit is more important than mere volume. Still the battle cry over Civics’ leadership is a window into something broader … how carmakers all over the world, including Detroit, now make competitive entry-level vehicles, the biggest part of the Canadian market. Honda may choose to defend the Civic’s position with aggressive incentives but we wonder whether the profit given up is worth the kudos that comes with being the best-selling passenger car.
Lastly, just like the import brands have entered the light truck market, Detroit now consistently penetrates the top passenger car list. There was always a Detroit passenger car in the top ten and occasionally two, but this year Ford has both the Fusion and Focus and Chevrolet has the Cruze on the list.
Total light vehicle sales of 145,460 represented the best October on record – and by some margin. Sales were up 7.4 percent from October 2012, drawing the 2013 YTD total to 1.496 million (up 3.8 percent). The SAAR for October reached a heart pounding 1.9 million.
Sales of trucks have been strong all year and this trend continued in October with 81,292 units sold (up 9.6 percent). What has really pushed the market on in the last couple of months has been a return to growth in the passenger car market. Car sales rose 4.7 percent in October 2013 to 64,168 units with the car market now up 1.1 percent on a YTD basis at 664,117 units.
From a brand perspective Ford continued to lead the pack with sales of 22,635 units in October (up 10.1 percent). A number of companies considerably outperformed the market with Nissan’s 36.6 percent gain (to 7,696 units) of note, as was Honda’s strong October (up 18.8 percent to 13,770 units). Chrysler slipped a little from its earlier pace, but with sales up 3.9 percent from October 2012, continued with its 47th straight month of year over year sales increases. Kia and Hyundai on the other hand continue their troubled 2013 with sales down 13.8 percent and 4.7 percent respectively for the month.
The luxury market saw widely divergent performances. Jaguar grabbed the attention percentage wise with a 150 percent gain (albeit to only 95 units). Mercedes (up 25.1 percent), Land Rover and Porsche also strongly outperformed the market. At the other end of the spectrum Acura (-18.8 percent) and Audi (0.2 percent) had a more challenging October, as the luxury segment continued to exhibit widely varying brand performances.