Car sales in Canada are forecast to slow this year due to moderate economic growth and slow job creation, according to a new Scotiabank Economics report released on Friday.
Despite the forecast of slower car sales, new vehicle purchases in Canada are still expected to reach two million in 2018, states the Scotiabank report. In 2017, automakers surpassed the two million sales mark for the first time, selling 2.01 million new vehicles in Canada, as drivers opted to purchase more sport utility vehicles and trucks over traditional passenger cars.
That trend is expected to continue in 2018 even as the pace of new vehicle sales slows. Vehicle affordability, combined with moderate economic growth due to slower job creation and weaker household wealth, will reduce sales in Canada to two million units, according to Scotiabank’s Global Auto Report. Price increases for new cars and light trucks have reduced vehicle affordability to its lowest level in 10 years, which may weigh on sales, the report said.
Ontario, Canada`s most populous province, is expected to post the biggest decline in new vehicle purchases this year, driven largely by pressures of a slower housing market and plunging savings rate. According to the report, Ontario’s savings rate has dropped to 0.6%, 80% lower than the national average of 2.6%.
Last year, Ontario sold a record 847,000 vehicles, but that total is expected to drop to 821,000 in 2018, states the Scotiabank report. While Alberta led the way last year in new vehicle sales growth, posting double-digit gains that signalled the market was finally poised to recover after years of decline, new vehicle purchases in the province are expected to be more moderate this year.
In Manitoba and Saskatchewan, sales are expected to be flat as job growth slows. After posting declines last year, Quebec is expected to have flat sales in 2018 as well.