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

Trail military exercises provide crucial training

Exercise Sapper Crucible: ‘The nuts and bolts of what a soldier is’

VIDEO: SPCA ushers in new era with Castlegar facility

$2.69-million project had ribbon cutting on Friday

Thrums, Riondel, and Slocan, revisited

Place Names: Scottish author delighted by Thrums name origin

Last stand for Silver City summer

Fall officially arrives in Trail at 6:54 p.m. on Saturday

Tell the Times

Web Poll: Will you be attending a candidates forum in the Trail area?

VIDEO: SPCA ushers in new era with Castlegar facility

$2.69-million project had ribbon cutting on Friday

VIDEO: Inside an eerily empty mall in Canada

Only seven of 517 retail spaces are open for business as the grand opening postponed to next year

B.C. wildfires burned large areas affected by mountain pine beetles: Experts

The mountain pine beetle epidemic affected more than 180,000 square kilometres in B.C.

Tens of thousands without power following tornado in Ottawa region

Hydro Ottawa says more than 170,000 customers were without power early this morning

BALONEY METER: Do Liberal policies mean a typical family is $2,000 richer?

MPs took to Twitter to talk how ‘typical’ Canadian families have more money due to Liberal policies

B.C. premier apologizes for removal of 1950s totem pole at Canada-U.S. border

First Nations say pole was raised at Peace Arch but removed to make way for tourism centre

Tornado touches down in Ottawa and Gatineau, Que.

Environment Canada says cars and homes have been damaged by severe thunderstorms and high wind gusts

An unexpected sight: Bear spotted eating another bear in central B.C.

Cheslatta Carrier Nation Chief finds bear eating another bear’s carcass

RCMP confirm death of missing BC teen Jessica Patrick

No details on cause were given. Case is under criminal investigation and police are asking for tips.

Most Read