Minivan and Honda Expected to Lead Car Sales Into 2003

Led by the Chrysler Minivan and the Honda Civic, vehicle sales in Canada are expected to continue to build on this year’s advance in 2003, climbing to a new high of 1.66 million units.
This forecast total, up from 1.65 million this year and 1.57 million in 2001, is according to the latest Canadian Auto Report released today by Scotia Economics.
“While some moderation is expected in coming months, economic fundamentals remain much stronger in Canada than south of the border,” says Carlos Gomes, Scotiabank’s auto industry specialist. “The Canadian economy has created 386,000 new jobs so far this year – the best eight-month performance on record. Vehicle affordability also continues to improve, with solid income growth and flat vehicle prices, and is currently at the best level in eight years.”
This year’s sales figures, just released, have indicated that the Chrysler Minivan line is the top selling vehicle in Canada and the top selling passenger car, by a long shot, is the Honda Civic, followed by the Mazda Protege and, in third, the Chevrolet Cavalier.
According to the Scotiabank report, Canadian and U.S. passenger vehicle sales are expected to total 18.2 million units in 2003, only marginally below this year’s 18.4 million. A much sharper fall-off in sales is unlikely, because purchases will continue to be underpinned by low interest rates and hefty incentives. The explosion of leasing since the mid-1990s was a key factor behind stronger-than-expected auto sales in the United States and Canada in 1999- 2000, and will continue to bolster new vehicle demand going forward. Expanded demand from households returning off-lease vehicles will help to limit the decline in U.S. new vehicle sales next year and will also boost car and light truck purchases in Canada.
“After five consecutive years of leasing more than 500,000 vehicles annually, we estimate that there are still more than 1.5 million vehicles on Canadian roads that will come off-lease over the next several years,” comments Gomes. “In the United States, more than four million off-lease vehicles will be returned to dealers in 2002 and even more will come off lease next year.”
After a sharp decline this year, fleet purchases in the United States by rental companies and businesses are expected to bounce back with stronger economic conditions in 2003. Fleet volumes accounted for nearly 50% of overall sales in the late nineties, but have slumped to an estimated 36% this year – the lowest since 1990. Stronger fleet sales next year will offset slower U.S. consumer demand.
Turning to recent market conditions, U.S. motor vehicle sales accelerated to an annualized 18.7 million units in August – the highest level since last October’s record 21.1 million. In Canada, purchases set a monthly record for an August, and year-to-date volumes have advanced 9.6%, led by a 50% surge in sales of entry-level luxury vehicles.