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The stage is set for the Canadian market to crack the two million vehicle sales level for the first time ever.

Patrick T. Fallon/Bloomberg

Vehicle sales by Asia and Europe-based auto makers surged 12 per cent in Canada in September, helping propel the market to another monthly record and keeping sales on pace for an annual record.

Auto makers delivered 186,837 vehicles in Canada last month, surpassing the September, 2016, tally by 8 per cent and setting the stage for the Canadian market to crack the two million vehicle sales level for the first time ever.

"It's just stunning," said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. "This guarantees a two million-plus sales year. It now mathematically will be nearly impossible to sell under two million – we'd have to see a total collapse in October, November, December."

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The seasonally adjusted annual rate (SAAR) hit a record 2.25 million in September, Mr. DesRosiers noted.

The economic indicators, such as unemployment, gross domestic product and interest rates are all strong, he said, but the market is also being buoyed by strong replacement demand and an abundance of new or redesigned vehicles being offered by auto makers.

"The vehicle companies are filling every little niche with great product loaded with technology consumers want," he said.

More than 11.5 million vehicles on the road in Canada are older than 10 years, which is fuelling strong replacement demand.

The increase in the Bank of Canada's key rate last month had little impact on financing, leaving rates for auto loans at about the same level as a year ago, said Cody Green, co-chief executive officer of Canada Drives Ltd., a Vancouver-based company that assists auto buyers in finding financing.

The 12-per-cent gain by Asia and Europe-based companies, several of which reported record September sales, led them to capture 59 per cent of overall Canadian sales.

Ford Motor Co. of Canada Ltd. said its sales hit a record for the month. Sales for General Motors of Canada Co. rose 7 per cent, while FCA Canada said deliveries dropped 6 per cent from year-earlier levels.

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Sales of the Chevrolet Equinox jumped in both Canada and the United States. Workers at GM's Cami assembly plant in Ingersoll, Ont., which is the biggest producer of the crossover, have been on strike since Sept. 17.

The Canadian market has outperformed the U.S. market this year, although U.S. sales rose about 7 per cent last month and topped the 18 million SAAR level.

U.S. sales were given a boost in part by the recovery from Hurricane Harvey. The industry estimates that between 400,000 and 500,000 vehicles were destroyed in Houston because of Hurricane Harvey.

About 20 per cent of those will be replaced by new vehicle purchases, Mark LaNeve, Ford Motor Co. vice-president of marketing, sales and services said on a conference call with analysts and reporters Tuesday. Mr. LaNeve expects those purchases will be made over the next several months, adding 80,000 to 100,000 sales to the U.S. total. He expects about 20 per cent to be replaced by purchases of new vehicles so that will add 80,000 to 100,000 sales over the next three to five months.

It wasn't "a sensational month for the industry absent the Harvey effect, but a very solid month," he said.

Christopher Hopson, manager of North America light vehicle forecasting for consulting firm IHS Markit, said September sales were driven by high incentives, high availability of 2017 model year vehicles and buyers – especially in the Houston area – replacing cars and trucks wrecked during Hurricane Harvey.

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"While this strong level of demand isn't expected to be sustained throughout the fourth quarter, these short-term supports are not likely to drop off in a meaningful way, setting the stage for strong fourth-quarter results," Mr. Hopson said.

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