Canadian car sales dropped by record 75% in April

Canadian sales of new light vehicles (light trucks and passenger cars) dropped by a massive 74.6% in April, according to Desrosiers Automotive Consultants (DAC)’s monthly AutoWatch report.

The April sales decline translated to total sales of 45,858 vehicles; in contrast, the market saw a peak of 200,381 vehicle sales in April 2016.

The steep year-over-year decline for April car sales followed a sizeable 48.3% decrease in March, when social distancing and business restrictions began to arrive midway through the month. Many regions in Canada saw non-essential business closures for much of April, with car dealerships ordered to shutter in numerous provinces. This contributed to the heavy decline in sales for the month, which was the lowest sales total for April since 1951, according to the Desrosiers report.

In the midst of the crisis, the light truck segment (vans, sport utility vehicles, pickups) has continued to grow its share of the light vehicle market, jumping from 73.8% in 2019 to 79.5% in 2020. The market for bigger automobiles has grown rapidly from the 45.3% share light trucks had in 2009, as gas prices have moderated and consumer preferences have shifted away from smaller passenger cars.

The trend has caused many companies to axe numerous models in the “car” category to focus on pickups and SUVs. For example, Ford in 2018 said it would not replace its sedans with new versions because of “declining consumer demand and product profitability.”

Light trucks saw a smaller drop in sales, at -71.6%, compared to passenger cars, which declined -82.6% in April. Subcompact cars saw the sharpest sales decline (-88.2%), while most car categories – compact, intermediate, and luxury variants – fell by between -82% to -85%. Luxury sports cars, considered a seasonal vehicle, saw the smallest drop in the category, at -58.9%.

The pickup truck segment performed well above the market, with small pickups decreasing by 55.4% and large pickups sales falling by 61.9% in April, year-over-year. Large SUVs saw the largest decline in the light truck category, at -87.4%.

“As the economy begins to gradually reopen in a safe and measured manner, it may offer some relief for auto sales,” the report noted. “However, DAC questions if short-term sales will return as Canadians continue to deal with the uncertainties and impacts of the pandemic.”

Canadian employment fell by nearly 2 million in April, following a 1 million drop in March – accounting for a cumulative 15.7% of the pre-pandemic workforce.