Everyone knows there continues to be a shortage of new vehicles for sale in Canada and around the world, for that matter. But no one knows when the inventory crunch will end.
The microchip crisis and — now rising interest rates, too — are eating away at sales volumes month after month.
DesRosiers Automotive Consultants (DAC) estimates Canadian auto sales were down 16.2 per cent in July compared with a year earlier because of a shortage of available vehicles.
Monthly sales figures are now estimated because so many automakers have turned to quarterly reporting. DesRosiers uses its own proprietary method to estimate sales.
The consultancy estimates automakers sold 130,480 new light vehicles last month as automakers continue to struggle with semiconductor supply chain issues.
DesRosiers called July sales “depressingly weak.” It was the worst July since 2001 and sales were 24.8 per cent below the 173,519 units sold in pre-pandemic July 2019.
DesRosiers says the recovery from the chip shortage will be “uneven and unequal,” but didn’t say when the shortage might end.
“We’re hopeful that as the year progresses … more and more players will get improved supply,” DAC Managing Partner Andrew King said in an interview. “It’s not going to be smooth, it’s not going to be sort of a nice economist’s straight line that we’d all like to see. It’s going to be jiggy-jaggy and it’s going to be some companies sooner than others.”
King said supply will be “concentrated initially in select OEMs, and improve in fits and starts rather than at a consistent rate.”
Earlier in July, Stefan Hartung, global chairman of Robert Bosch, the world’s largest auto parts supplier, told sibling publication Automotive News that the crisis will last deep into 2023.
“You can’t solve it this year. It’s impossible. It will be better at the end of this year than now, but it can’t be fully solved until beyond then,” he said. “Hopefully, at the end of next year, we’ll have a much clearer view of how to move ahead with the demand growth.”
Scotibank Economics said in its late-July Global Auto Report that Canadian demand for new vehicles “should remain resilient over the course of 2022 and 2023.” But, there aren’t enough vehicles to meet consumer needs.
Scotiabank estimates automakers will sell 1.65 million new vehicles in 2022, down from the 1.66 million sold a year ago.
King has a similar estimate.
“We think the market is probably going to be around 1.6 [million] this year and there’s lots of variables that we’re monitoring for next year,” he said. “There’s lots of forces at play, in terms of the interest rates, the potential recession, supply — which is still the dominant factor right now — and we’ll see where it all works out. It’s going to be a really interesting time.”
Scotiabank warned that persistent inflation pressure and rate hikes could push borrowing costs higher, “creating more hurdles for large-ticket consumption including for automobiles.”
Of the 10 brands that still report monthly sales, Hyundai’s luxury Genesis line reported a sales gain. All others posted declines of 15 per cent or more. A year ago, only four brands posted losses in July.
Total sales last month by Honda were down 49 per cent, with Acura sales were off nearly two thirds at 64 per cent. Kia sales, which had been weathering the storm early in the chip crisis, saw its sales fall 36 per cent. Subaru sales were nearly halved, down 48 per cent.