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Customer LoginsCanadian light-vehicle sales increase 2.7% y/y in January−September, Ford takes market lead
Light-vehicle sales in Canada over the first nine months of 2016 grew 2.7% year on year (y/y), as the market cooled compared with the first-half results. As in the United States, car sales are struggling in Canada while sales of sport utility vehicles and trucks are flourishing, according to IHS Automotive data.
IHS Markit Perspective
- Significance: Over the first three quarters of 2016, Canadian light-vehicle sales were up 2.7% year on year (y/y), compared with a gain of 5.4% y/y at the half-way mark. The market is cooling, with July, August and September each showing year-on-year declines. With a sales gain of 10.7% in the year to date (YTD), Ford has overtaken FCA as the top-selling automaker in Canada. In addition, the C-SUV segment has overtaken the C-car segment as the most popular in the market. In the third quarter, C-cars lost a narrow lead held in the first six months of the year.
- Implications: As in the US, passenger-car sales in Canada are struggling in the face of falling fuel prices and increased competition from a more diversified light-truck market, impacted by the expanded market for subcompact and compact crossovers. In the YTD, passenger cars captured only 35.2% of the market.
- Outlook: In January−September, Canada's light-vehicle sales growth y/y was stronger than in the same period of 2015, although the pace of growth cooled from the first half and September's sales declined 1.1% y/y. LCV sales gained while car sales were under pressure. LCV sales were up 9.8% in the YTD, while passenger-car sales declined 8.3% y/y. Total sales in the first half reached 1,508,440 units. IHS Automotive forecasts full-year 2016 sales will grow 3.4% to 1.96 million units, although this will be followed by contractions for several years.
Canadian light-vehicle sales grew 2.7% year on year (y/y) during January−September 2016, up from 2.6% sales growth in 2015. However, the first half of 2016 delivered a stronger result of 5.4% y/y, so over the third quarter, the sales pace cooled. Light commercial vehicle (LCV) sales continue to outperform passenger-car sales and were up by 9.8% y/y in the year to date (YTD), while passenger-car sales declined 8.3% y/y. Light-vehicle sales in Canada surpassed 1.76 million units in 2013, edged past 1.85 million in 2014, and reached 1.89 million units in 2015. The pace so far in 2016 has the stage set for another year of growth.
In 2015, the most popular segment in Canada was the C-car segment, followed by the C-sport utility vehicle (SUV) segment. While that situation remained the case over the first six months of 2016, by the end of September, the C-SUV segment was ahead by just less than 4,200 units. In January−September, Canadian market sales of C-cars reached 294,793 units, compared with 298,982 SUVs. C-SUVs now claim a 19.8% market share, compared with 19.5% for the C-car segment. The C-car and C-SUV segments' combined share of market sales over the first six months of 2016 was 39.3%, compared with 39.9% in the first nine months of 2016.
The Canadian market, however, continues to be dominated by sales of vehicles in the D size segment, rather than the C segment. While throughout the year, aggregate D sales are volatile, the sales in this class were up 2.6% y/y in January−September. Over the first nine months of 2016, D-segment vehicle sales reached 659,349 units, while C-segment sales lagged slightly at 631,944 units. Additionally, the larger D size class has widened its lead over the C segment in 2016. Over the first nine months of 2015, D-segment vehicles outsold C-segment vehicles by 19,956 units, while in the same period of 2016, the D segment was ahead by 27,405 units. The success of the D segment is partly driven by demand for D-segment pick-ups − the Ford F-150 is a top-selling vehicle in Canada as well as in the US, and the second-best-selling product is the Ram 1500, and D pick-up segment sales were up 7.9% y/y in the YTD. The D segment's success is also partly due to demand for D-segment SUVs, which grew by 3.2% y/y over the three quarters of 2016. The C and D segments accounted for 87.9% of Canada's sales in January−September, compared with 86.1% over the same period of 2015.
In terms of manufacturers, Ford has overtaken Fiat Chrysler Automobiles (FCA) for top-selling honours in January−September, although at the six-month mark in 2016, FCA was still in the lead (by 2,967 units). Ford outsold Fiat in March−September, but in January−September, Ford was able to grow its lead over FCA to more than 19,000 units. General Motors (GM) is solidly in third place in the market.
Ford had the top-selling light-vehicle nameplate in the YTD with the F-Series (115,674 units, up 26.2%). The second-best-selling model for Ford in the YTD was the Escape (35,123 units, down 3.8%), with the Edge in third position (16,570 units, up 15.6%). FCA's lead product continues to be the Ram 1500, although sales were down 5.5% to 57,148 units over the first nine months of 2016 − less than half of Ford's F-150 sales. The Dodge Caravan is the company's second-strongest product, sales of which were up 16.5% to 40,488 units in the YTD. Ultimately, the Caravan will be replaced by the Pacifica, but the popularity of the vehicle in Canada will keep the Dodge in production for quite some time. GM also sold more pick-ups than any other models, with the GMC Sierra its top-seller at 39,486 units in January−September, a 3.8% y/y decline. Sierra sales have been slowing, as it was down only by 0.1% y/y at the halfway mark in 2016. The Chevrolet Silverado sold 34,497 units in the YTD, down 0.3% compared with the first nine months of 2015. Although the Cruze's sales declined 21.4% y/y in January−September, it is GM's third-best seller, followed by the Equinox. Additionally, the Cruze's performance has seen some improvement, as inventory of the latest model arrives.
Toyota holds fourth place among automakers in Canada. Toyota's best-seller in the YTD was the RAV4 SUV (38,276 units, up 22.6%), followed by the Corolla (36,268 units, down 7.6%). Hyundai's strongest seller in Canada remains the Elantra, followed by the Tucson, Santa Fe Sport, and Accent. Honda continues to look at the top-five club from the outside, although it increased its sales by 9.4% in January−September.
Outlook and implications
After Canada's light-vehicle sales grew strongly over the first six months of 2016, each month of the third quarter saw demand fall. As a result, the market is up a more modest 2.7% over the first three-quarters of the year, compared with 5.4% at the halfway mark. As is true in several markets around the world, LCV sales are gaining while car sales are under pressure. In January−September, LCV sales were up 9.8% y/y, while passenger-car sales declined 8.3% y/y. Total light-vehicle sales in the first half reached 1,508,440 units. IHS Automotive forecasts full-year 2016 sales will reflect 3.4% growth to 1.96 million units, although this will be followed by contractions in sales for several years.
As in many other markets, Canada's passenger-car sales are struggling in the face of falling fuel prices and increased competition from a more diversified light truck market, impacted by the expanded market for subcompact and compact crossovers. In the year to date, passenger cars captured only 35.2% of the market. Light truck sales, however, posted robust YTD growth across all sizes, although compact light trucks saw the strongest growth as freshened compact models drew share from both passenger cars and from existing light-truck segments. In July, Honda relaunched the Ridgeline in this segment, and the highly competitive new entry is performing well. Luxury vehicles also remain a driver of market growth, and sales are on a pace to capture a 10.5% share of the market in 2016. Overall luxury vehicle sales surged 13.4% in 2015, compared with a market up 2.7%. Consumers are responding well to expanding OEM product line-ups, as manufacturers attempt to move down market in terms of vehicles size and price, as well as into light utility vehicles. Unlike mainstream segments, however, luxury vehicle sales are strong in terms of both passenger cars and light trucks.
After another strong year in 2016, we forecast light-vehicle registrations to decline as the market will have set records in 2014, 2015, and again in 2016. Between 2017 and 2023, we anticipate registrations to hover between 1.76 million units and 1.88 million units. Although another record will be set in 2016, it is now becoming clear that the pace of growth is slowing from 5% gains in 2013 and 2014 to sub-4% growth in 2015 and 3.4% growth expected in 2016. Over the course of the forecast, economic fundamentals will continue to drive consumers' return to the market. Eventually, traditional replacement demand will become the principal driver of the market, replacing the credit-fuelled growth driven by the accommodative policies of the Bank of Canada. Given that Canada is already a mature market, expansion will continue to slow as population and wage growth limit market potential.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.