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Canadian Auto Sales Expected To Grow In 2010

Fri, 01/29/2010 - 5:35am

TORONTO (CP) -- Resource-rich Alberta and British Columbia will lead the rebound in car and light truck sales in Canada this year, a new report predicted Friday.

Higher oil prices in Alberta are expected to boost car and light truck sales to an annualized 198,000 units in that western province, up from 184,000 in 2009, Scotiabank said in its Global Auto Report.

In addition, the bank predicts purchases in British Columbia, where the Winter Olympics and strong energy markets are boosting the economy, will rise to 158,000 this year from 150,000 units in 2009.

Overall, the bank said global car purchases surged 22 percent year-over-year in December. Meanwhile, North American sales ended 2009 on a strong note, enabling automakers to enter 2010 with renewed confidence.

Senior economist Carlos Gomes said the bank expects Canadian purchases to climb to 1.53 million units in 2010, up from a decade low of 1.46 million last year.

In 2009, weak consumer confidence and tight credit markets that made it more difficult to finance vehicle purchases squeezed the car sales market across North America. However, economic conditions are improving and the U.S. and Canadian economies are recovering from the painful recession.

"In Canada, car and light truck sales climbed above a year earlier in December, the first increase since October 2008, before the sharp fall-off in global economic activity," said Gomes, a senior economist at Scotiabank.

In breaking down provincial car sales prospects, Scotiabank said:

-- Alberta led the downturn in 2009, but is expected to outperform this year, as higher oil prices lift car and light truck sales. Oil and gas drilling, the key driver of economic activity and vehicle sales in the province, bottomed last summer, and is up nearly 20 percent year over year in the early weeks of 2010.

-- Car purchases in British Columbia will be bolstered by the Winter Olympics and Paralympic Games. Vehicle sales in British Columbia have dropped a cumulative 25 percent since the 2007 peak of 198,000 units, including a 15 percent slump in 2009 to 150,000 units, but are expected to increase to 158,000 this year.

-- Saskatchewan's vehicle sales have also started to rebound from an eight percent decline in 2009, and are expected to total 46,000 units in 2010, up from 44,000 last year. Growth in the prairie province has outpaced the national average for the last three years.

-- Sales in Manitoba are expected to climb to 45,000 units in 2010, from 43,000 last year, as the province benefits from ongoing infrastructure projects, such as the expansion of the Winnipeg airport and construction of the Waskwatim hydro-electric dam.

-- Ontario's car sales are expected to climb to 557,000 units in 2010, up from 535,000 last year. Sales will be bolstered by the end of a four-year cyclical decline in North American vehicle output, as sales bounce back in the key U.S. market.

Ontario, the centre of Canada's auto assembly sector, is also recovering from a streamlining of its manufacturing, automotive and forestry sectors during the recession.

-- Car and light truck sales in Quebec will increase a moderate three per cent in 2010 to 402,000 units, as the province has more new vehicles than other parts of the country.

In addition, while the hard-hit sectors in other provinces have started to rebound, the downturn in the global aerospace sector is still putting downward pressure on the province's largest manufacturing industry.

The Montreal area is home to big aerospace companies such as aircraft maker Bombardier, jet engine builder Pratt & Whitney Canada and pilot training technology company CAE Inc.

- In Atlantic Canada, higher base metal prices have encouraged mine operators to ramp up production in Newfoundland and Labrador, helping to lift sales in the region to 119,000 units this year, up from 115,000 in 2009.

Construction projects, including the building and renovation of sports arenas in preparation for the 2011 Canada Winter Games in Halifax, will boost auto sales in Nova Scotia. As well, the province will benefit from a thriving finance, insurance and real estate sector in Halifax.

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