It’s been a common Canadian theme for years. Even as the auto industry soared out of the lows of the recession to post record sales in 2013, 2014, 2015, and 2016, passenger cars formed an increasingly small portion of the overall Canadian auto market.
Granted, there was a time, when auto sales began this streak of record sales in 2013, in which car sales increased. Yet even that year, the percentage of auto buyers opting for a car rather than a “light truck” decreased.
2017, however, appears destined to represent a new low for passenger car market share in Canada. Once again, overall auto sales are rising. Once again, passenger car sales are declining.
But after claiming more than half the market as recently as 2009 and after earning more than four out of every ten sales as recently as 2014, fewer than one-third of the new vehicles sold in Canada in the first-half of 2017 were cars.
Indeed, so undesirable has the conventional car become that Canadians will likely buy and lease 100,000 fewer cars this year than in 2009, when the global economy hit the skids and Canadian auto sales tanked.
Automakers largely appear unconcerned.
Ready for it
Some automakers, however, were more prepared than others for the market’s evolving tastes.
Subaru, for example, long since de-emphasized the traditional passenger car portion of its lineup, eliminating the conventional Legacy wagon to focus on the Outback; adding a Crosstrek model (based on the Impreza). The Outback, Crosstrek, and top-selling Forester now form nearly two-thirds of Subaru Canada’s volume, producing more sales in the first half of 2017 than the entire Subaru brand managed in an entire year prior to the recession.
At the luxury end of the spectrum, where BMW has seen its car sales fall 7 percent this year, the blue-and-white propeller has five utility vehicles, up from two prior to the recession. BMW is poised to squeeze an X2 in between the company’s entry-level X1 and most popular X3 while also adding a three-row X7 to the top of the lineup.
Nissan, which regularly breaks its own Canadian sales records, routinely introduces new utility vehicles. With the brand-new Qashqai contributing 814 sales in June, its first full month on sale, Nissan sold 8,734 SUVs and crossovers in June 2017. A decade ago, the entire Nissan brand averaged fewer than 6,300 total sales per month.
Not ready for it
Not all automakers were so aptly prepared. Kia Canada enjoyed record Canadian auto sales in 2012, when passenger cars still accounted for 46 percent of the overall market. But when the market continued to grow to never-before-seen levels, Kia’s Canadian volume tailed off. The Kia Sorento and Sportage are strong sellers – the brand’s second and third-best-selling models at the moment – but for a mainstream automaker, two is insufficient.
The Kia Soul is popular, but limited in crossover-speak by its lack of all-wheel-drive availability. So, too, the new Kia Niro is a front-wheel-drive-only hybrid wagon. Meanwhile, Kia has no plans for the new Stonic subcompact crossover to disrupt its North American portfolio.
Kia’s corporate partner at Genesis, Hyundai’s luxury offshoot, launched with no SUV to speak of. Genesis markets the G80 and G90 sedans and, to date, has only shown an ungainly utility vehicle concept.
Volkswagen, in attempt to gain a premium position, initially entered the SUV game with the luxury-priced Touareg. Hardly making headway, the Tiguan came next, but while that model gained traction with lower prices in old age, it was never a top seller. Moreover, Volkswagen allowed the Tiguan to wither on the vine, only launching the replacement for the nearly decade-old first-gen model later this year. Together with the three-row Atlas, Volkswagen Canada will surely be propelled forward, but why so late? Gas-powered utility vehicles would have been a fine way to help dealers through post-emissions scandal difficulties, but Volkswagen’s utility vehicle lineup was tiny.
Despite the overall slowdown in passenger car sales, Canadians are buying more copies of their favourite cars. The Honda Civic, Canada’s best-selling car in 19 consecutive years, is on track to potentially break its all-time annual sales record.
Its top-selling rival, the Toyota Corolla, has seen its sales rise 16 percent this year, bolstered by the former Scion iM’s inclusion in the Corolla lineup but also by a 5-percent uptick in Corolla sedan sales. Numerous other top-tier cars (Chevrolet Cruze, Volkswagen Golf, Kia Forte, Honda Accord, Mercedes-Benz C-Class) are selling more often this year than last, as well.
In other words, as the market for cars collapses and fewer than one-third of auto buyers drive away from a dealer in a car, the rich get richer. Popular cars are more popular, and as they gain market share, unpopular cars are being put out to pasture, unable to produce a profit when there are utility vehicles that can attract more buyers and higher prices.