Western Provinces Lead Rebound in Canadian Auto Sales, According to Scotia
Economics

TORONTO , Jan. 29 /CNW/ - Global car sales continue to strengthen, with purchases surging 22 per cent year-over-year (y/y) in December, one of the strongest advances on record and the third consecutive double-digit increase, according to Scotia Economics' latest Global Auto Report.

"Sales across North America also ended 2009 on a strong note, enabling automakers to enter 2010 with renewed confidence," said Carlos Gomes , Senior Economist, Scotia Economics. "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.

"We expect purchases to climb to 1.53 million units in 2010, up from a decade low of 1.46 million last year," continued Mr. Gomes .

According to the report, the resource-rich provinces of Alberta and British Columbia will lead the rebound in car and light truck sales across Canada in 2010. Commodity prices have posted a double-digit gain since bottoming last spring, and will continue to be buoyed by the nascent global economic recovery of more than three per cent this year.

Alberta

Alberta led the downturn in 2009, but is expected to outperform this year, as higher oil prices lift car and light truck sales to an annualized 198,000 units, up from 184,000 in 2009. Drilling activity, the key driver of economic activity and vehicle sales in the province, bottomed last summer, and is up nearly 20 per cent y/y in the opening weeks of 2010.

British Columbia

Purchases in British Columbia will be bolstered as consumers come out of a two-year hiatus to welcome the athletes and spectators to the 2010 Winter Olympic and Paralympic Games. Vehicle sales in British Columbia have dropped a cumulative 25 per cent since the 2007 peak of 198,000 units, including a 15 per cent slump in 2009 to 150,000 units, but are expected to increase to 158,000 this year.

Saskatchewan

Vehicle sales in Saskatchewan have also started to rebound from an eight per cent decline in 2009, and are expected to total 46,000 units in 2010, up from 44,000 last year. Despite last year's fall-off, vehicle sales in Saskatchewan remained 12 per cent above the average of the past decade, as economic growth has outpaced the national average by two percentage points over the past three years.

Manitoba

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. Manitoba has a diversified economy that will be buoyed by the global economic upturn. Manitoba also has the lowest vehicle penetration rate in Canada at only 54.5 per cent - four percentage points below the Canadian average.

Ontario

Purchases in Ontario will climb to 557,000 units in 2010, up from 535,000 last year. Sales will be bolstered by the termination of a four-year cyclical decline in North American vehicle output, as sales bounce back in the key U.S. market. Automakers are now increasing output and adding shifts across North America , a significant reversal from a year ago when the industry was focused on cutting production and idling workers.

Quebec

Car and light truck sales in Quebec will increase a moderate three per cent in 2010 to 402,000 units, as the province has one of the youngest fleets in Canada , with less than 40 per cent of the fleet averaging less than nine years old. In addition, while the hard-hit sectors in other provinces have started to rebound, the downturn in the global aerospace sector is still exerting downward pressure on the province's largest manufacturing industry.

Atlantic Canada

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

Construction projects, including the building of new sports facilities and the renovation of existing arenas in preparation for the 2011 Canada Winter Games in Halifax , will support purchases in Nova Scotia. A thriving finance, insurance and real estate sector in Halifax , which added two thousand jobs over the past year, will also buoy sales.

Some pick-up in forest products demand south of the border will help re-open some paper plants and pulp mills in New Brunswick . Forest products account for more than one-quarter of the province's overall exports.

Scotia Economics provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.

For further information: Carlos Gomes, Scotia Economics, [phone], [email protected]; Robyn Harper, Scotiabank Public Affairs, [phone], [email protected]