An improving labour market and vehicle affordability could help Canada best its recently notched record setting new vehicle sales performance in 2014.
The prediction, courtesy of Scotiabank economist Carlos Gomes, called for a sales peak of 1.76 million units this year compared to the 1.75 million in 2013.
Gomes said the strength in sales here this year should mirror the experience globally as volumes around the world should grow due largely to strengthening employment growth, rising consumer confidence and ongoing low short-term interest rates.
His forecast also calls for synchronized expansion in global purchases for the first time since 2005 as volumes in Western Europe stabilized over the last half of 2013.
“China will continue to be the main driver of global volumes,” he said. “The most populous nation has accounted for nearly half of the increase in global car sales over the past decade and more than 60 per cent of the improvement this year .”
Scotiabank said it expects a double-digit increase in vehicle purchases in China this year nearly hitting the 18 million mark.
“Furthermore, recognizing the importance of China’s market, automakers plan to introduce more than 200 new or upgraded models in China in 2014. By way of comparison, the entire U.S. market has less than 300 different models for sale.”
The picture is sunny south of the border, too, as an accelerating U.S. economy could push the annual total to north of 16 million units – the highest since 2007.
Figures show the average age of the U.S. fleet has jumped to a record 11.4 years. At a time when U.S. household balance sheets are the healthiest in more than a decade and no sign of ultra-low, short-term interest rates leaving, American dealers could be in for a boom year.
Exactly how that volume breaks down amongst automakers in Canada is the big question. Market share remained flat for General Motors at year-end while Chrysler made a minimal gain to 14.8 per cent from 14.5 per cent in 2012.
The majority of brands finished in positive figures last year with just Kia, MINI, and Volvo dropping in annual sales (Saab and Suzuki were also down for obvious reasons).
Will 2014 be another year of the truck? It was light-duty trucks, after all, that really drove the market last year with 978,730 sold. That tally marked a gain of 6.9 per cent besting passenger car totals by nearly 215,000 units.
High-level market share totals didn’t sway much with 44.6 per cent for the domestics and 55.4 per cent for import nameplates compared to 44.5 and 55.5 per cent respectively in 2012.
That needle could change a little more this year with Chrysler and Ford both planning major product offenses.
Perhaps the most interesting economic story globally in 2014 is where Europe is headed. Volumes across Western Europe bottomed to a 19-year low in early 2013 and only started improving throughout the middle of last year.
Analysts are calling for wide gains in Europe this year and Gomes said three months of consecutive year-over-year growth to close 2013 could be a step in the right direction.
“Improving consumer confidence, some labour market stabilization and an easing in credit conditions have lifted our leading indicator of western European auto sales to a seven-year high, leading us to forecast a three-per cent increase… the first annual gain since 2009.”