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Canada Autos Report Q3 2010
Management Report
Published: June 2010
Pages: 33
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 353.33 Buy Now!
Research from: Business Monitor International
Sector: Automotive
The recovery in Canadian vehicle sales recorded in the latter months of 2009 has been sustained into 2010, although the first signs of a slowdown in the rate of growth are evident. Canada's sales for April were up by just 4%, showing the second consecutive monthly fall in growth since the 24.9% achieved in February. Sales for the first four months combined in Canada are up 11% year-on-year (y-o-y), which is a dip from the 15% growth in Q110. However, this again fits with BMI's forecast for growth of around 5% for the year as we expect stable, but relatively low monthly growth.
The recovery in Canadian vehicle sales recorded in the latter months of 2009 has been sustained into 2010, although the first signs of a slowdown in the rate of growth are evident. Canada's sales for April were up by just 4%, showing the second consecutive monthly fall in growth since the 24.9% achieved in February. Sales for the first four months combined in Canada are up 11% year-on-year (y-o-y), which is a dip from the 15% growth in Q110. However, this again fits with BMI's forecast for growth of around 5% for the year as we expect stable, but relatively low monthly growth.
Production is also on the rise, a trend that we expect to continue throughout our forecast period. Based on the number of carmakers adding shifts and ramping up output in the country, coupled with better-thanexpected output in Q110 of 511,125, we have raised our production forecast for 2010 to show growth of around 19%. However, as this is largely due to the low base effect from 2009 when inventories were heavily slashed, we expect growth to return to an annual average of 5% from 2011 through to the end of 2014 as investment projects come into play and labour agreements ensure that the Detroit Three keep an agreed proportion of North American output in Canada.
Although we believe Canada has proven more stable than the US in terms of returning to natural and sustainable vehicle sales growth, the market ranks much lower in BMI's Business Environment Ratings for the automotive industry in the Americas region. The country ranks eighth with a score of 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.
Sales for April showed that those brands with incentives in place fared best, with Ford Motor, Chrysler and Hyundai Motor, all registering double-digit growth, while General Motors Company (GM), which hung on to its lead, has announced it will introduce incentives in May after its sales fell by 21%. However, GM is now operating with just four brands. For the first four months combined there has been a shift in position, with Ford taking the lead ahead of GM, with Chrysler in third and Toyota fourth.
Production is also on the rise, a trend that we expect to continue throughout our forecast period. Based on the number of carmakers adding shifts and ramping up output in the country, coupled with better-thanexpected output in Q110 of 511,125, we have raised our production forecast for 2010 to show growth of around 19%. However, as this is largely due to the low base effect from 2009 when inventories were heavily slashed, we expect growth to return to an annual average of 5% from 2011 through to the end of 2014 as investment projects come into play and labour agreements ensure that the Detroit Three keep an agreed proportion of North American output in Canada.
Although we believe Canada has proven more stable than the US in terms of returning to natural and sustainable vehicle sales growth, the market ranks much lower in BMI's Business Environment Ratings for the automotive industry in the Americas region. The country ranks eighth with a score of 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.
Sales for April showed that those brands with incentives in place fared best, with Ford Motor, Chrysler and Hyundai Motor, all registering double-digit growth, while General Motors Company (GM), which hung on to its lead, has announced it will introduce incentives in May after its sales fell by 21%. However, GM is now operating with just four brands. For the first four months combined there has been a shift in position, with Ford taking the lead ahead of GM, with Chrysler in third and Toyota fourth.