New vehicles sales stall
New vehicle sales in January were pointing to a better year in 2020, but are likely to fall in the months ahead.
By ATB Economics 16 March 2020 2 min read
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New vehicle sales help us assess consumer confidence and overall economic activity. Given the sluggish economic conditions in the province last year, it’s no surprise both the number of vehicles sold and the total amount they sold for were down in 2019.
The number of new vehicles sold in Alberta last year fell by 6.1 per cent (14,522 units) while the total value of the vehicles sold shrank by $480 million (4.3 per cent).
Sales in January were pointing to a better year in 2020, with the number of units sold up by 4.9 per cent compared to January 2019 and the total dollar value up by 9.6 per cent.
However, with the economy reeling from COVID-19 and low oil prices, new vehicle sales are likely to fall in the months ahead. If the 2015-2016 recession is any indication, annual sales could be off by 10 per cent or more this year.*
Lower borrowing costs in the wake of the Bank of Canada’s decision on Friday to cut its trendsetting interest rate to 0.75 per cent will help slow the downward slide in sales as will lower gasoline prices. At the same time, already high levels of consumer debt and unemployment among Albertans will work in the opposite direction.
Nationally, the annual number of new vehicles sold (excluding Alberta) was down by 3.3 per cent last year while the total value of sales (also excluding Alberta) was essentially flat. The number of units sold in Canada peaked in 2017 compared to 2014 in Alberta.
*While the annual number of vehicles sold in 2015 fell by 12.7 per cent, we need to keep in mind 2014 was a peak year for sales and 2019 posted the lowest level of sales since 2010. As a result, the expected reduction in sales volume may not be as large as it was during the first year of the 2015-2016 recession.