February auto sales down amid lockdowns, supply chain disruption

Canadian auto sales were down almost 10% in February 2021 year-over-year, according to a monthly report from sector specialist Desrosiers Automotive Consultants.

Last month’s auto sales reached 112,654 units, down from 125,059 units in February 2020 – the last month before the Covid-19 pandemic caused lockdowns throughout the country.

Canadian auto sales hit a nadir of 45,858 units – the lowest sales total since 1951 – in April 2020 at the height of the lockdown. The market high, in comparison, was 200,381 units sold in April 2016.

The nearly 10% February year-over-year sales decline is linked to continued lockdown restrictions, which were in effect throughout much of the country. There are also new supply chain disruptions due to semiconductor chip shortages.
Covid shutdowns and intense demand for computers and consumer electronics during the pandemic have led to a global microchip shortage. This has, in turn, hampered the production of new vehicles – which rely on microchips for areas such as infotainment systems, power steering, and brakes.

Consulting firm AlixPartners expects the chip shortage will depress global automotive industry revenue by approximately $60.6 billion in 2021. 

The shortage has led to production delays in Canada, where auto manufacturing has already been worn down in recent times. The country last year produced the fewest light vehicles since 1982, as auto firms have steadily moved production south to the US and Mexico.

The Desrosiers report also noted that consumer preference for light trucks has continued. In February, light trucks (SUVs, vans, pickups) accounted for a whopping 83.5% of the market compared to 78.9% a year ago. Sales of light trucks have ballooned from a 45.3% share in 2009, as lower gas prices, better fuel efficiency, and consumer preference for larger/”safer”/more comfortable cars have driven the segment upwards.

The light truck segment has also been more resilient during the pandemic sales downturn. In April 2020, small pickups sales fell by 55.4% – well below the 75% overall decline for the month. Subcompact car sales, meanwhile, dropped 88.2%.