Canadian auto sales picked up in July with a 3.4% m/m increase in the seasonally adjusted annualized sales rate.

Canadian auto sales rates improved in July to 1.95 mn SAAR units after a weak Spring sales season despite the promising fundamentals, like strong job growth, wage increases, and tax refunds.

However, overall sales were still down modestly on a year-over-year basis by 1.0% (NSA), repeating the current trend slowdown with year-to-date sales down by 4.2% (NSA).

Still, this trend can be offset during the remainder of the year with a possibly favourable economic rebound, a dovish monetary stance, and low base effects from 2018.

An economic rebound, though, comes with considerable downside risk, including external developments.

Scotiabank forecasts sales of 1.95 mn below highs of 1.9mn and 2.04mn units sold in 2018 and 2017, respectively.