Impact in Kelowna of the robust new vehicle sales market across Canada is evident by local auto dealerships relocating to new premises along Highway 97. - Image Credit: Barry Gerding/Black Press

New car sales booming

Thirst for new vehicles still high for Canadian consumers judging by record-setting sales

Stable product pricing over the last 20 years has helped fuel four consecutive record-setting years for new car sales across Canada, says the chief economist for the Canadian Automobile Dealers Association.

Michael Hatch says the car sales’ industry exceeded 1.7 million vehicles sold in 2016, and is on target to reach the two million level this year.

“On a provincial level, western Canada remains very strong and in particular in B.C., helped by a strong provincial economy, sales are up six per cent over last year, where the national average increase is tracking at about 4.7 per cent,” Hatch said.

Hatch believes there are several explanations for the continuing car sales boom—technological advances, fuel efficiency, engine performance and vehicle engineering quality among them.

But he cites pricing as a key reason, saying the value in real dollars of a new car hasn’t changed that much dating back to 2000.

“Back then, the average price of a new vehicle was in the $24,000 to $26,000 range. Now in 2017, the average price has moved to the $26,000 to $27,000 range. That is a nominal price increase over the last 16 years,” Hatch explained.

“The price of new vehicles has really defied inflationary pressures. In other areas of things people buy, from energy prices to food to clothing, those have increased significantly over time.”

But Hatch is mindful of the cyclical nature of the automobile industry, saying an economic recession hiccup or rise in interest rates could negatively impact new car sales numbers.

“We usually get a recession every decade so we are probably due for one pretty soon, but right now the economy is quite strong in western Canada, and you guys in B.C. are in a good place right now for the short-term ahead,” he said.

He said the digital technology evolution has also impacted the automotive industry just like most other facets of the economy, from how car-buyers do their homework via social media to decide on what car to buy, to car dealers relying on new marketing methods to reach their customers.

“Buying a vehicle is still a significant investment and people are generally not comfortable doing that without seeing the car first-hand, being able to look it over and test drive it. It’s not a transaction most of us would be comfortable carrying out in a purely online environment.”

On the manufacturing side, technology continues to impact the evolution of building new cars. Hatch cited the announcement by Volvo that all its vehicle fleet starting in 2019 will include electric models.

Hatch called that a bold move by the Swedish automaker, but one that reflects a tiny share of the overall sales market.

“Electric cars are about .5 per cent of the new car sales’ market right now, and even if it triples in a year, that is still only 1.5 per cent,” Hatch said.

“At that rate, it will be decades before electric cars become a more important segment of the market. Consider that there are 24 to 25 million cars on the road in Canada today, and the electric vehicle share of that is about 16,000 to 20,000.

“A lot of people assume that conversion to electric cars is going to happen in a few years but the reality is internal combustion engine vehicles will continue to be the dominant vehicles on the road for the next 15 years.”

Contributing to that as well, Hatch added, was the regulatory changes demanded by governments for vehicle fuel efficiency standards and a shortage of electric car battery recharge stations.

“Infrastructure is an issue for servicing electric cars but it’s a bit of a chicken and the egg thing. You need more people buying electric cars to raise the priority for infrastructure enhancements, but you won’t have people buying those cars if the infrastructure isn’t in place.”

Just Posted

The end of an Echo

Invermere Valley Echo shuts down operations in Columbia Valley

Creating a new narrative for Canal Flats

Economic development consultant hired, lists vision for next 90 days

UPDATE: Crews battle as wildfires rage in B.C. Interior

Crews brace for another day on B.C. firelines as no let up is likely

VIDEO: B.C. wildfires by the numbers

Wildfires continue to engulf regions of B.C.’s forests and communities.

VIDEO: More than 180 wildfires burning across B.C.

Firefighters from other provinces called in to assist

DTSS Grad March 2017

DTSS Grad March 2017

59 cats seized in Chase

59 neglected and injured cats were seized from a property in Chase

Soundgarden singer Chris Cornell dead at age 52

The singer/songwriter passed away early Thursday morning in Detroit

Paying tribute to a primeval passage

Uninterrupted celebrates the Adams River sockeye run in an extraordinary way.

UPDATE: Pemberton Music Festival cancelled, no automatic refunds

In the past, the music festival located in Pemberton drew large crowds last year of 180,000 fans

Medical wait times cost B.C. patients $2,300 each

New Fraser Institute report places B.C. at second worst in costs associated with long wait times

UPDATE: 22 killed at Ariana Grande concert

Witnesses reported hearing two loud bangs coming from near the arena’s bars at about 10:35 p.m.

One in three Canadian high school students have rode with drinking drivers, study reveals

Nearly one in five rode with a driver who’d been smoking pot

Top court to hear federal government’s appeal on residential school records

A lower court judge ruled to destroy the stories after 15 years unless consent is given to preserve

Most Read