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Canada Smitten by Economic Crisis, Auto Sales Fell 10.3%
Jan 19, 2009

Canadian automakers have started to feel the adversities of the global recession as its  auto market reported a slump of over 10% in November following two successive gains.

According to the Association of International Automobile Manufacturers of Canada, after reporting modest profit for two months, Canadian domestic automobile sales slumped 10.3% in November, as financialpost reported. This is an indication that Canadians are now experiencing the “buying fear” Americans have felt for over a year.

The automobile industry recorded nationwide car and truck sales of 105,221 Units in November 2008 as compared to 117,284 Units a year ago. As the economic downturn finally started to knock the Canadian automobile industry, buyers stayed away from purchasing big ticket items. They thought that fresh investment may swap away their financial stability if country heads for recession as the global financial crisis tightened its grip on the country.

However, it is believed that the Canadian automobile market is fundamentally stronger than that of its neighboring countries. For instance, Canadian automobile sales remained stronger than that registered in the US. Initially, Canadians preferred to buy vehicles in the US as it had an exchange rate advantage over loonie. But recent depreciation in loonie against the US dollar washed out such kind of purchases in the last two months. Although it is a good sign for the domestic automobile industry of Canada, it may not be profitable as the global recession is fast expanding its reach to all countries of North America.

According to an analyst at RNCOS, “The worsening North American economic fiasco has finally driven Canada’s auto market into ditch. Canadian industry conditions indeed remain substantially better than those in the US at this point, but lower consumer confidence may erode the industry’s profitability in coming times.”

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