AutoCanada Inc. (TSX:ACQ) is an Edmonton-based company engaged in the operation of franchised automobile dealerships. The stock was up 0.23% in early afternoon trading on April 27, and shares have climbed 1.6% week over week. The company released its fourth quarter results in March.
AutoCanada posted record revenue of $3.1 billion in 2017. This was not unexpected as automobile sales hit another record in Canada, although this was largely powered by the light truck segment. The months of January and February were also positive for the broader market, but sales dipped year-over-year in March. Will this slump continue once we receive April auto numbers in May?
Rising rates and record consumer date have sparked skepticism among analysts that the auto industry will be able to sustain the pace it has set. Automobile sales have hit records for four straight years in Canada now. AutoCanada sold 43,773 new vehicles in 2017, up 9.3% from 2016. Much of the momentum will continue to rely on the light truck segment.
In March sales of passenger cars were down 12.4% year over year to 53,932. Light truck sales were up 5.2% to 132,515. The light truck segment accounted for almost three-quarters of vehicle sold in the first quarter. Overall sales in the first quarter were up 1.8% from the previous year.
Investors should be watching the month of April, which may prove crucial for determining the trajectory of auto sales in Canada as we enter the month of May.
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