Canadian auto sales forecast increased to record-setting pace: Scotiabank

Canada auto sales to reach two million units in 2017

TORONTO, June 22, 2017 /CNW/ - Global car sales fell 2.5% below a year earlier in April, marking the first monthly year-over-year decline in nearly two years. The April fall-off was broad-based, but largely reflects temporary distortions. More recent sales data for May point to a reversal of the April slowdown across many countries, including Canada and Mexico.

Canadian auto sales have exceeded expectations this year as strengthening economic growth has led to a sharp rebound in purchases in the resource-rich Prairie provinces, particularly Alberta, including a recovery in fleet volumes.  Car and light truck sales surged 11% y/y in Canada last month – the largest gain in almost three years.

"We've raised our 2017 Canadian sales forecast to 2 million units, up from 1.94 million due to a stronger-than-expected recovery in the Prairies," said Carlos Gomes, Senior Economist and Auto Industry Specialist, Scotiabank. "The car and light truck sales acceleration in the Prairies this year includes an 18% y/y surge in May—the largest increase in more than four years. In fact, the Prairies are the only region to post double-digit sales gains so far this year, accounting for 37% of the overall increase in Canadian new vehicle sales through May or more than double its historical share of the Canadian new vehicle market."

A double-digit increase in capital spending by the oil patch in 2017 has also led to additional business purchases of new cars and light trucks. Fleet volumes at Calgary dealerships have surged 20% y/y through April, and accounted for nearly 70% of all new fleet activity across Alberta. In fact, the surge in Calgary's fleet volumes represents half of the nationwide increase through the first four months of the year. While Alberta is the key driver of decade-high fleet volumes in Canada in 2017, sales to businesses have also picked up in several other provinces alongside a strengthening corporate profit outlook.

Other highlights:

• Leading economic indicators for the U.S. and Western Europe continue to accelerate.
• Business investment is gaining momentum across both developed and emerging markets.
• New vehicle purchases by U.S. households bounced back in May, lifting industry transactions prices 2% above a year earlier.
• Vehicle sales in Mexico have fully recovered from the April decline, setting a record for the month of May.

Read the full Scotiabank Global Auto Report online at:
http://www.scotiabank.com/ca/en/0,,3112,00.html.

Scotiabank provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.

About Scotiabank

Scotiabank is Canada's international bank and a leading financial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacific. We are dedicated to helping our 23 million customers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of more than 88,000 employees and assets of over $921 billion (as at April 30, 2017), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges (NYSE: BNS). For more information, please visit www.scotiabank.com and follow us on Twitter @ScotiabankViews.

SOURCE Scotiabank

Copyright 2017 Canada NewsWire