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Canadian, U.S. car sales hit record levels in 2016

New Ford vehicles are parked, ready to ship at the Oakville, Ont., assembly plant. Ford was the top-selling brand in Canada in 2016.

CHRIS HELGREN/REUTERS

Canadians and Americans wore out the showroom floors of car dealerships in 2016, driving auto makers to record sales years in both markets.

Auto makers sold 1.95 million vehicles in Canada, the fourth consecutive year that sales have hit a record. The 2016 level was achieved despite a plunge in oil prices that sent sales tumbling in Alberta, the third largest market in the country.

The U.S. market hit a record 17.539 million, a fraction higher than the 2015 level.

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What may be even better news for auto makers that sell in the two countries is that from the current peak, industry analysts expect any decline on the horizon is likely to be modest.

Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc., is forecasting a dip back below 1.9 million vehicles in 2017, but acknowledges that if the stars align, deliveries could hit two million vehicles this year.

He expects higher interest rates and noted that the decline in the value of the Canadian dollar versus its U.S. counterpart has to be reflected soon in prices, which could put the brakes on the market.

However, "we're not calling for a free fall because the fundamentals are quite strong," he said.

Real consumer spending has exceeded GDP growth by about a percentage point in each of the past two years, noted Bank of Montreal chief economist Douglas Porter.

"Even as the broader Canadian economy has struggled in the past two years, the consumer has just kept chugging along," Mr. Porter said.

But he is also expecting sales to "simmer down" in 2017 although only by a maximum of 5 per cent.

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Similar economic fundamentals in the United States are expected to keep that market buoyant.

"We believe the U.S. auto industry remains well-positioned for sales to continue at or near record levels in 2017," Mustafa Mohatarem, chief economist of General Motors Co., said in a statement. "Key economic indicators, especially consumer confidence, continue to reflect optimism about the U.S. economy and strong customer demand continues to drive a very healthy U.S. auto industry."

All the factors that led to the U.S. record are still in place, Mark LaNeve, Ford Motor Co. vice-president of U.S. marketing sales and service, said on a conference call Wednesday with analysts and reporters.

U.S. interest rates are still relatively low as are gas prices, while consumer confidence is strong and the age of the vehicle fleet is high, Mr. LaNeve said.

The shift in consumer tastes away from passenger cars and toward trucks and crossover utility vehicles – a major structural change that is affecting investment decisions in Mexico and elsewhere and jobs at U.S. factories – continued in 2016.

Nissan Motor Co. Ltd. noted that its Rogue crossover was its best-selling vehicle last year, surpassing the Altima mid-sized car.

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Sales of Ford's F-series pickup truck surpassed sales of its entire passenger car lineup.

Ford Motor Co. of Canada Ltd. sold three times as many F-series pickups as cars.

In Canada, crossovers, pickups and traditional sport utility vehicles grabbed a record 70 per cent of the market in December, said David Adams, president of the Global Automakers of Canada, which represents Asia and Europe-based manufacturers.

Ford Canada captured first place in the Canadian sales race in 2016, with a 9-per-cent increase in deliveries that pulled it ahead of FCA Canada, which took first place in 2015.

Several Asia and Europe-based companies reported company records for the year.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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