Toronto, Ontario — Canadian auto sales may continue to decline throughout 2020 according to Scotiabank’s Global Economics | Insights & Views report.
Scotiabank observed a 3.2 percent decline in 2019, which marked a second consecutive year of lowering auto sales in the country. Additionally, the company says it expects Canada to return to the highs of 2017—which saw 2.04 million auto sales—“but not anytime soon.”
The report claims that auto sales in 2019 were still benefiting from the 2017 peak that followed an eight-year expansion.
“In this latest peak, sales surged above trend replacement rates for several years; in fact, 2019 levels still sit modestly above fundamental levels,” read the report. “The peak was fueled by an environment of strong economic growth, recovering oil prices, easing policy rates and escalating house prices in 2017. Subsequently, a tightening monetary stance, an oil price decline, and a policy-induced housing cool-down all put the brakes on auto sales in 2018. This slowdown continued through 2019 as consumers faced a variety of headwinds.“
Scotiabank’s report looks to the road ahead with a prediction of 1.91 mn units over this next year.
“Consumer confidence and spending remain the biggest downside risk, with no shortage of factors that could knock off these traditionally lagging indicators. With the Canadian job market dynamic shifting in the fourth quarter of 2019 and wage growth moderating, further softening in consumption ahead can be anticipated.”