Global financial meltdown has taken its toll on car sales in Canada, with an estimated 20% sales decline in the month of October 2008.
DesRosiers Automotive Consultants Inc., a consultancy and market research firm in Canada, said the new car sales in the country are expected to decline by 150,000 Units in 2009 from the projected figure of 1.65 Million Units for the current year, reported The Windsor Star.
The evaluation of nearly two-third of the total market in the initial twenty days of October 2008 revealed that the sales plunged 25% over the same period previous year. However, new vehicle sales during January-October 2008 increased 1.4% primarily due to 11% rise in sales of imported vehicles. Moreover, the Canadian auto industry is set to sell 1,646,000 Units this year against 1,653,000 Units in 2007.
The global economic slowdown on account of financial crisis is considered to be the major reason that will be responsible for decline in car sales next year. Moreover, the current financial crisis is likely to impact large purchases of the Canadian people. Liquidity crunch in the credit market is also one of the main reasons hampering car sales in Canada.
Besides, the depreciation in the Canadian dollar has aggravated the situation by raising the sticker prices of cars; correspondingly, cost-conscious consumers are postponing their plans of large purchases. In fact, Canadian consumers are increasingly buying vehicles from the US, where vehicles are cheaper by thousands of dollars because of lower taxes.
Canadian consumers are price sensitive and increase of 3% to 5% in prices of imported vehicles will restrain around 100,000 consumers from investing in the new vehicle market next year. However, there will be some improvement in sales later next year, when several manufactures launch a large number of new models, particularly in small car segment. These models will attract consumers who are till now reluctant to spend as they were looking for a wide margin.
According to a Research Analyst at RNCOS, “Auto dealers and manufacturers in Canada are expected to see a fall in their sales in coming months as the economic slowdown that began in the US is engulfing the whole world and affecting every business. The impact of the economic slowdown has been noticed recently in Canada, it is believed to carry on till last of next year.”
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