Major auto makers are setting substantial sales-growth targets in Canada this year even as overall sales are expected to be flat, raising the prospect of a fierce incentive battle as they fight for market share.
Companies are banking on a flood of new or redesigned models in the compact, mid-sized and luxury segments to boost their sales from last year's levels, executives said at the North American International Auto Show in Detroit.
Japan-based companies are among the most ambitious. They are seeking big gains after sales were battered last year by vehicle shortages caused by the March 11 earthquake and tsunami in Japan and floods that devastated Thailand.
Takashi Sekiguchi, president of Honda Canada Inc., said Monday the company is targeting an increase of more than 20 per cent – to 150,000 vehicles in 2012 from 123,121 in 2011. Toyota Canada Inc. president Seiji Ichii this week set a sales target of 200,000 this year, or an increase of more than 25 per cent from 2011 levels.
Ford Motor Co. of Canada Ltd. president Dianne Craig said she expects Ford's sales to grow despite the fierce competition.
"I think we all have the expectation that particularly our Japanese competitors are going to come back with the intent to grab back a lot of the share they lost," Ms. Craig said.
"It's going to be a dogfight for Ford," she added. Ford led the Canadian sales rankings last year for the second straight year.
The industry's sales expectations, however, run up against forecasts of minimal growth in the vehicle market and growing evidence that debt-laden Canadian consumers are skittish about major purchases – even with hefty rebates and plenty of low-interest loans from auto makers.
"With the currency likely to remain around parity and the probability that sales will struggle to show any growth at all in 2012, we could see a battle royal on the pricing front," said Doug Porter, deputy chief economist of BMO Capital Markets.
Mr. Porter is forecasting a slight decline in vehicle sales this year –to 1.56 million units from 1.58 million in 2011.
"We have seen some cooling in the Canadian labour market, incomes are struggling to keep up with inflation, consumer confidence is dour to say the least," he said. "All these things do not spell a friendly picture for big-ticket spending in this country."
If all the major companies are intent on boosting sales in a market that is expected to grow only slightly, the question is where each auto maker's increased sales will come from, said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. Mr. DesRosiers is forecasting a modest increase in sales to 1.601 million..
Honda's Mr. Sekiguchi is pinning his forecast on a full year of production of the redesigned Honda Civic, which is the company's best-selling vehicle and the best-selling passenger car in Canada.
The redesigned CR-V crossover, which is Honda's No. 2 seller, began production yesterday at the company's assembly plant in Alliston, Ont.
Chrysler Canada Inc., meanwhile, expects the Dodge Dart compact unveiled Monday in Detroit to contribute to an increase in company sales. The absence of a strong Chrysler product in the compact segment meant it was missing out on 25 per cent of the market in Canada, Chrysler Canada president Reid Bigland said.
Mr. Bigland noted that December was the 25th straight month of year-over-year sales gain for Chrysler. He believes that will continue in January, but would not provide a full-year sales forecast.
General Motors of Canada Ltd. said it expects its sales and market share to grow in Canada this year, but declined to provide specific numbers.
"Our strategy has changed and changed profoundly," company president Kevin Williams said.
"It's not about being big and unprofitable, it's about sustainability."