Canadians are suddenly pulling back on their new vehicle buying binge. Statistics Canada (Stat Can) data shows new vehicle sales grew on an annual basis in May. Sadly, it wasn’t because the market was experiencing robust growth. It was due entirely to the base effect of comparing sales to an early pandemic month. Zooming out, it was the second slowest May since 1997.
Why Do I Care About New Vehicle Sales?
New vehicle sales are a huge signal for the economy. For someone to buy a new vehicle, they have to be confident in their ability to pay for it. If someone is confident about their ability to buy an expensive item, they have job stability. People confident in their future income continue to spend and borrow.
A similar observation can be made about truck buying and the housing industry. In a building boom, more contractors need more vehicles. If they’re being squeezed on margins because, oh, I don’t know, lumber made it unprofitable. They tend to stick with their own vehicle. That’s in addition to auto manufacturing being a large industry. A slowdown (or ramp up!) of new vehicle sales can actually tell us a lot.
Canadian New Vehicle Sales Had The Second Weakest May Since 1997
Canadian new vehicle sales are slowing, though the base effect muddles the numbers. There were 151,912 new vehicles sold in May, down 8.9% from a month before. Compared to a year before sales are 30.8% higher, though last year was extremely low, due to the pandemic…read more.