Canada Autos Report

The Canadian vehicle market is showing signs of achieving a natural recovery, as the year-on-year (yo- y) decline in sales for July was less than half that of the previous month. A 4.4% y-o-y increase in light truck sales in July took Canada's total vehicle sales for the month up by 1% compared to June.

Although total sales were down by 6.4% compared to July 2008, the month's sales were the third highest for the year so far and keep the industry on track to meet BMI's sales forecast of 1.437mn units in 2009. July was also the first month to register a single-digit decline in sales compared to the previous year as the market contraction continues to decelerate on a monthly basis.

In terms of production, the impact of closures implemented by major carmakers is evident as output in H109 fell by 47% from 1.13mn units in H108 to 600,872 units. General Motors (GM) has ceded its position as the country's top vehicle producer to Japan's Toyota Motor. Blighted by the closure of its pick-up plant in Oshawa and the closure of all of its North American plants during bankruptcy proceedings, GM recorded a 59% decline in output in H109, compared to a drop of just 11% for its Japanese rival. The closure of GM's pick-up plant in Oshawa wiped 300,000 units from its annual production capacity, while operations at other facilities have been pared back in line with the company's restructuring efforts.

Although Canada has proven more stable than the US, the market ranks much lower in BMI's Business Environment Ratings for the automotive industry in the Americas region. The country ranks eighth on 42.6 out of a possible 100. Despite the lower ranking, the country scores highly for its regulatory environment, reflecting free trade agreements (FTAs) such as the North American Free Trade Agreement (NAFTA). Canada has also won investment projects over the US because it is seen as yielding better results. The market scores lower in the country structure category, however.

Ford Motor Co of Canada held the lead of the total vehicle market in July with y-o-y growth of 47%. Bolstered by a 60% increase in its light truck and SUV sales, Ford registered sales of 26,765 units, compared to 18,131 units in July 2008. For the year-to-date, Ford is still in positive territory with growth of 2.4%, while its market share for the seven-month period has risen to 15.6% from the 12.7% held at the same point last year. This puts Ford within reach of year-to-date market leader General Motors Canada, which posted a 41.6% decline in sales for July and a 31.4% drop for the seven months. GM Canada's market share has fallen from 21.6% for the first seven months of 2008 to 17.7%. Chrysler, which is in a similar post-bankruptcy transition period to, saw its sales fall by 10.1% in July and 36.3% for the first seven months. However, this was Chrysler's best month for sales in Canada for the year so far.