Covid-19 sends Canadian auto sales into free fall

Auto sales in Canada fell 48% in March year-over-year, according to a monthly report from DesRosiers Automotive Consultants.

Sales had been up modestly in January and February, before plunging drastically in the second half of March as pandemic restrictions were put in place and dealerships closed. Sales of cars and trucks in March 2020 fell to 95,000, a 48% drop from sales in March 2019.

The March plunge contributed to a 20% year-over-year decline for first quarter auto sales in 2020, dropping from 411,465 in Q1 2019 to 329,108 in Q1 2020.

Maserati (-57.4%), Infiniti (-50.3%), and Porsche (-42.1%) saw the greatest declines in the quarter. The Big Three automakers – Ford, GM and Fiat-Chrysler – saw declines of 13.8%, 12.8%, and 18.8%, respectively. The big Japanese automakers overall saw greater declines than the US manufacturers, with Toyota sales dropping by 18.6%, Honda by 31.2%, and Nissan by 36.4%.

Research and consulting firm DesRosiers’ baseline scenario for the year projects a 25-30% drop in new vehicle sales in Canada. The consultancy expects even greater sales declines in April and May, as pandemic restrictions continue.

Though online sales are still possible, they aren’t not much of a life preserver for dealerships. For one thing, millions of Canadians have filed for unemployment in recent weeks, and a new car purchase may not be feasible for many. Consumer confidence has also declined as people who still have jobs worry about their job security and ability to make payments on a large purchase. Finally, though less the case than with used cars, consumers generally may want to try out the new car they’re purchasing in-person. In any case, Canadians are likely to delay a vehicle purchase until more stable and less movement-restricted times.

Dealerships are coping as they can, laying off staff and shifting to online sales channels. Many are also offering payment deferrals and lower interest rates to entice customers.

“Nothing, not even the wars, not even the Great Depression matches what’s going on today,” sector expert Dennis DesRosiers told the Globe and Mail. “What we still don’t know is how long it will be or what the ramp-up will be once we get through it.”