By Dennis DesRosiers
Attached are light vehicle sales for the month of October and year to date. Sales in October were up only 1.4 percent and given the massive amount of incentives in the market this year compared to a year earlier it appears that the vehicle companies are not getting much bang for their buck. That being said October 2010 at 123.2 thousand units was the best October since 2002 ( 134.7K units) and the second best October on record. And this is reflected in the SAAR ( attached ) which came in at 1.61 million units. If you look at the six month trailing average number you will see that each month it is creeping up slightly which is positive for the short term outlook for vehicle sales in Canada.
The 1.4 percent increase for October brings YTD sales up by 6.6 percent to 1.329 million units and puts us on track for about a 1.56 million total this year an increase of at least 100K units about 2006. But again with the amount of incentive money in the market one would have expected better. Indeed I’m beginning to wonder whether to actually lower our forecast for next year. I don’t believe the OEMs who have huge money on the windshield of their vehicles can maintain this pace and I don’t have much faith that the general economy will improve enough to offset any reduction in incentive money. So I can build a case that sales could be actually lower next year than this year. I’m not there yet and would like to see the final two months before formalizing our forecast but there isn’t a lot in these stats to be optimistic about sales for next year. They could and probably will increase but I suspect by relatively modest amounts. We are not out of this auto slump just yet.
Ford remains the number seller of vehicles in Canada in October and YTD and is pulling away from GM slightly as GM continues to see difficult sales month in and month out. GM’s sales in October were actually down 4.8 percent while Ford’s sales were up 8.1 percent. Chrysler is actually close to catching GM with sales up 5.0 percent in October. Indeed the Detroit three ( even with a poor month from GM ) continued to take share from the import nameplate brands. In April of this year the D-3 outperformed import brands as a group for the first time in over a decade and each month since April this has continued. Some of this performance was because of poor comparables from year ago but after seven consecutive months we are beginning to see something more fundamental develop. D-3 performance is rooted in the spectacular year that Ford is achieving, a turnaround at Chrysler especially with their light trucks, stabilization at GM and terrible years at both Toyota/Lexus and Honda/Acura.
Toyota’s sales in October were down by 23.2 percent and are now tracking down 12.8 percent on the year. Lexus sales were down 16.4 percent in October and are now down 7.0 percent YTD. With heavy incentive money Honda was able to increase sales in October by 20.7 percent but are still down on the year by 0.9 percent. Acura sales were down by 17.2 percent on the month and are now down by 3.4 percent on the year.
I also am closely following our friends from Europe and especially from Germany who universally are having great years led by Audi up 25.5 percent for the month and up an astonishing 33.3 percent on the year. Audi now outsells Lexus and is close to catching Acura in the Luxury brands.
VW was up 21.5 percent on the month and are up 12.0 percent on the month. They tell me they can sell every TDI they can get their hands on … yea Diesel ( I’ve always been a big fan of diesel products ).
And then there is the battle between our two luxury giants BMW and Mercedes Benz. On their core brands Mercedes Benz is slightly outselling BMW. MB was up 6.7 percent in October while BMW was up 5.0 percent in October. This allowed MB to maintain their sales edge YTD over BMW selling 24,057 units at MB compared to 22,440 units for their southern countrymen. Both companies deserve a lot of credit. MB is near the top of its product cadence cycle and has resurrected itself as the number one selling luxury marque in Canada. It wasn’t that long ago that Mercedes had fallen to I believe the fifth position amongst Luxury brands. Meanwhile BMW is holding it’s sales levels well considering it is at the bottom of its product cadence cycle. Indeed it is amazing that BMW was been able to maintain sales their current sales pace in a segment that is so much about product and with product that is relatively long in the tooth. And if you add Mini to BMW ( mini is having a good year) and if you add smart to MB (smart is having a terrible year ) then the combined BMW/Mini brands are outselling the combined Mercedes Benz/smart brands ( 24,057 to 22,440 units ).
And speaking of Europe one has to remember Volvo, Porsche and the Tata brands … Jaguar and LandRover … Jaguar is tiny and is down on the year by 4.2 percent but Land Rover is up quite a bit to 2,130 units an increase of 35.9 percent. Porsche is also up nicely to 1,705 units ( up 17.6 percent ) on the year. And finally Volvo is also up slightly … 3.2 percent.
All together European based brands are taking a lot of market share away from the Japanese brands in Canada. Eight of the ten Japanese brands are under performing the market this year and some by a lot. Infiniti and Subaru are the two exceptions.
And I can’t forget our two Korean brands who chug along at a record pace. Hyundai sales in October were up 8.6 percent and Kia’s sales were up 24.6 percent.
With Ford and Chrysler doing so well it also results in a very strong market for light trucks ( Chrysler’s core best products and to degree Ford as well although Ford also has a strong passenger car line up). Light truck sales were up 13.6 percent in October and are now up 19.3 percent YTD. Passenger car sales were down by 10.5 percent on the month and are now down 5.3 percent on the year.
Till next month.