Canadian auto sales soared to record levels in the first-half of 2017, surging past the previous record performance in 2016 thanks to booming SUV/crossover sales and a lively pickup truck market.
Breaking sales records isn’t easy. Doing so after the Canadian auto industry reported records in 2013, 2014, 2015, and 2016 is even more challenging.
Four years ago, automakers were collectively reporting record sales. But sales through the first six months of 2017 are 17 percent higher than they were in 2013.
Yet even compared with 2016’s record performance — which bested 2015, which was an improvement in 2014, which was superior to 2013 — the growth experienced by the industry in 2017 is substantial. A 5-percent year-over-year improvement equals 50,000 more sales in the first six months of this year than there were at this stage of 2016.
But how? Where are these sales coming from? Which automakers are capitalizing on the Canadian consumer’s willingness to acquire a new car?
Mostly, the Canadian auto industry’s growth has been powered by North America’s two top-selling automobile manufacturers. Of the 50,000 extra new vehicles sold in the first-half of 2017 in Canada, 60 percent sold through Ford Motor Company and General Motors dealers.
In fact, of the roughly 30,000 extra auto sales in Canada so far this year at Ford and GM, nearly 60 percent have occurred in the pickup truck corner of the showroom.
Largely on the strength of those pickups, therefore, the Ford Motor Company and General Motors have seen their combined market share jump to 30 percent, up two points from last year.
At Ford Canada, the automaker’s Lincoln division is up 7 percent, bolstered by strong sales of its MKX best seller and a modest amount of new Continental sales. Ford’s car sales are plunging, not unpredictably, but SUV/crossover volume is up 15 percent.
Ford’s truck lineup, the vast F-Series network, accounts for half of Ford brand sales, nearly 8 percent of the entire Canadian auto market, and is on track to top 150,000 annual sales — easily — for the first time ever. 2017 is set to be Ford Canada’s eighth year of growth in the last nine years.
At General Motors, Canada’s third-ranked automaker year-to-date (just behind Fiat Chrysler Automobiles) but the leader in March and April and the second-ranked automaker in June, car sales are actually up compared with 2016. SUV/crossover sales, however, have risen far more substantially, jumping 19 percent in 2017’s first six months thanks mainly to big clear-out efforts for the outgoing Chevrolet Equinox and GMC Terrain.
And then there are those pickup trucks: twin midsize trucks which combined to outsell the class-leading Toyota Tacoma between January and June plus the full-size twins that earned 11,022 more sales in early 2017 than in early 2016.
Of course, Ford Motor Company and General Motors aren’t the only automakers posting growth numbers in Canada in 2017. Audi, BMW Group, Honda Canada, Jaguar-Land Rover, Kia, Mazda, Mercedes-Benz, Nissan Canada, Porsche, Subaru, Toyota Canada, and Volvo are all on the upswing, as well.
But it’s the growth at Ford and GM that’s so substantial, with both companies easily exceeding the growth rate of the industry at large.
And how are Ford, GM, and other automakers spurring such high demand? According to J.D. Power Canada, the typical incentive on a new vehicle acquisition in Canada during the first-quarter of 2017 jumped to $5,900. That means the average vehicle is discounted by 15 percent.
Of equal consequence, automakers are permitting buyers to finance vehicles over much longer terms. More than half of the vehicles financed in Canada are paid over seven years or more.
It won’t be easy for automakers to blend, in the long-term, a high level of incentivization and a high level of profitability. Besides, automakers may be decreasing future demand by locking buyers into long-term payment plans.
For the time being, however, Canadian auto sales are higher than they’ve ever been before. Most of the credit belongs to Ford and General Motors.