Impact in Kelowna of the robust new vehicle sales market across Canada is evident by local auto dealerships relocating to new premises along Highway 97. - Image Credit: Barry Gerding/Black Press

New car sales booming

Thirst for new vehicles still high for Canadian consumers judging by record-setting sales

Stable product pricing over the last 20 years has helped fuel four consecutive record-setting years for new car sales across Canada, says the chief economist for the Canadian Automobile Dealers Association.

Michael Hatch says the car sales’ industry exceeded 1.7 million vehicles sold in 2016, and is on target to reach the two million level this year.

“On a provincial level, western Canada remains very strong and in particular in B.C., helped by a strong provincial economy, sales are up six per cent over last year, where the national average increase is tracking at about 4.7 per cent,” Hatch said.

Hatch believes there are several explanations for the continuing car sales boom—technological advances, fuel efficiency, engine performance and vehicle engineering quality among them.

But he cites pricing as a key reason, saying the value in real dollars of a new car hasn’t changed that much dating back to 2000.

“Back then, the average price of a new vehicle was in the $24,000 to $26,000 range. Now in 2017, the average price has moved to the $26,000 to $27,000 range. That is a nominal price increase over the last 16 years,” Hatch explained.

“The price of new vehicles has really defied inflationary pressures. In other areas of things people buy, from energy prices to food to clothing, those have increased significantly over time.”

But Hatch is mindful of the cyclical nature of the automobile industry, saying an economic recession hiccup or rise in interest rates could negatively impact new car sales numbers.

“We usually get a recession every decade so we are probably due for one pretty soon, but right now the economy is quite strong in western Canada, and you guys in B.C. are in a good place right now for the short-term ahead,” he said.

He said the digital technology evolution has also impacted the automotive industry just like most other facets of the economy, from how car-buyers do their homework via social media to decide on what car to buy, to car dealers relying on new marketing methods to reach their customers.

“Buying a vehicle is still a significant investment and people are generally not comfortable doing that without seeing the car first-hand, being able to look it over and test drive it. It’s not a transaction most of us would be comfortable carrying out in a purely online environment.”

On the manufacturing side, technology continues to impact the evolution of building new cars. Hatch cited the announcement by Volvo that all its vehicle fleet starting in 2019 will include electric models.

Hatch called that a bold move by the Swedish automaker, but one that reflects a tiny share of the overall sales market.

“Electric cars are about .5 per cent of the new car sales’ market right now, and even if it triples in a year, that is still only 1.5 per cent,” Hatch said.

“At that rate, it will be decades before electric cars become a more important segment of the market. Consider that there are 24 to 25 million cars on the road in Canada today, and the electric vehicle share of that is about 16,000 to 20,000.

“A lot of people assume that conversion to electric cars is going to happen in a few years but the reality is internal combustion engine vehicles will continue to be the dominant vehicles on the road for the next 15 years.”

Contributing to that as well, Hatch added, was the regulatory changes demanded by governments for vehicle fuel efficiency standards and a shortage of electric car battery recharge stations.

“Infrastructure is an issue for servicing electric cars but it’s a bit of a chicken and the egg thing. You need more people buying electric cars to raise the priority for infrastructure enhancements, but you won’t have people buying those cars if the infrastructure isn’t in place.”

Just Posted

Successful program marrying arts and business groups in Kelowna comes to an end

But city officials say knowledge learned from artsVest program will continue to help local groups

Resources for victims of sexual violence to be made available at Hedley concert

A gathering is planned for outside Prospera Place on the date of the concert,

Knox Hill Climb set for another year

Popular and long-running event is ready for its 61st year in Kelowna

No resolutions for unhappy for north Westside residents

Self-governance hopes remain distant dream

Better information needed in emergencies

Lake Country - Suggestions were made to better communicate with tourists during emergencies

Salvation Army thanks community for fundraising

Local group helped many families over Christmas and the funds will keep going

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

Canadian support split on Trans Mountain pipeline debate: Poll

Angus Reid poll surveying Canadians on pipeline stance finds no clear winner

Tired of ‘big city life’? One-stoplight town hosts contest to lure in city slickers

Contest by BC Rural Centre hopes to attract city folks to a small town in the Kootenays

Student protest outside White House a snapshot of American gun debate

Demonstrators take part in a student protest for gun control legislation in front of the White House

Feds can’t do much to fight fake news in Canada

Federal government can’t do much to fight fake news: Canadian Heritage documents

Canada’s Boutin wins silver in women’s 1,000 short track

Women’s 1,000-metre short-track speedskater Kim Boutin wins silver the Pyeongchang Winter Olympics Thursday

Ry Cooder coming to Vancouver Island MusicFest

American music icon to play in Comox Valley July 14

Team USA beats Canada 3-2 on the shootout to take home Olympic gold

Americans win their first gold medal since 1998

Most Read