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Canadian Auto Industry Running Fast on Track
Sep 22, 2008

Vehicles sales in Canada boosted in the second quarter of 2008 because people increasingly purchased low priced vehicles and reduction in interest rates made vehicle financing viable.

Officials at Scotiabank Automotive said that the Canadian automobile industry sales scaled up by 3.8% in the first half of 2008, as reported by
Calgary Herald.

The vehicles (cars and light trucks) sales in Alberta rose 2.8% to a new record of 256,000 Units in H1 2008 compared to H1 2007. An increase of nearly 7% was also recorded in cars sales in Alberta during the period from January to May 2008 against the same period in 2007. The sales forecast on the Canadian automobile industry for 2008 represents good performance, with sales increasing by 2.5% to a record of 1.7 Million vehicles. Moreover, the industry sales in July 2008 increased by 5% compared to June 2008 whereas the passenger cars sales augmented by 10.2% in July 2008.

The Canadian auto industry is riding high on the back of low prices of automobiles, increasing the purchasing power of people. And despite high inflation, Canada is experiencing good growth in its automobile sales. The Bank of Canada cut down its benchmark interest rates making vehicle financing acceptable and viable option. As a result, the demand for vehicles is rising in the country.

Other key factors that are pushing vehicle sales in the country are attractive incentives provided by dealers and an extension in loan payment duration that reduced the burden on the pocket of those people who take vehicles on credit.

However, the industry experts are confident of strong growth in vehicle sales during the second half of this year due to strong demand. However, the industry could face some challenges in coming years due to spiraling gasoline prices, deteriorating employment conditions and a weak energy sector.

According to a Research Analyst at
RNCOS, “The Canadian auto industry saw rise in sales (in H1 2008) primarily due to low prices of vehicles. This concrete growth is also supporting the overall economy of the country as it made up for around 12% of manufacturing GDP and more than 2% of the entire industrial GDP last year. But to sustain the current growth momentum, manufacturers need to focus on hybrid and fuel efficient vehicles to offset the negative impact of rising fuel prices and maintain the demand in future.”

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