Scotiabank Report: New Vehicle Sales Post Declines in November

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New vehicle supply shortages, continue to temper sales and push up prices. PHOTO Stellantis

Supply shortages, price increases, and COVID-19 continue to disrupt production and demand.

Scotiabank has released its latest Global Economics News Flash.

According to data from DesRosiers Automotive Consultants, Canadian vehicle sales were down in November, with predictions of 110,000 units sold, versus modest gains seen the previous month.

The 110,000-unit total represents a Seasonally Adjusted Annual Rate (SAAR) of 1.45 million vehicles (a 13.9% decline, year-over-year).

The report did acknowledge, however, that a change to quarterly instead of monthly reporting of sales figures does account for some variability in the monthly totals, though it does appear that sales have, and will likely continue fluctuating for the foreseeable future.

Supply/demand imbalance

Although many government support programs have now wound down; strong demand and a shortage of vehicle supply continue to hamper both OEMs and dealers.

The supply situation continues to drive vehicle prices higher—the report revealing that according to the Consumer Price Index (CCPI), vehicle prices were up 6.1% year-over-year in September.

While new vehicle sales are expected to increase over the next several years, the Scotiabank report predicts a total annual volume of 1.67 million units by the end of this year.

With that increasing to 1.77 million for 2022 and 1.93 million in 2023, a lot of that will depend on how the economy recovers and supply increases to meet demand.

Additionally, with the onset of the latest Omicron strain of the novel coronavirus, disruptions could likely persist with regards to economic activity and supply chains, at least until well into 2022.

In the U.S., while auto production increased during November, the road to recovery remains a bumpy one.

Demand was down in November with annualized sales hovering at 12.9 million units, following an uptick the previous month.

Further dampening demand were inflation-driven price hikes which were up by 9.8% year over year, based on data from the Conference Board. As a result, forecast sales for the end of the year have been reduced, down to approximately 15 million units.

While overall new vehicle sales are expected to improve to 16.1 million units in 2022 and 18 million in 2023, there are still indicators that these totals could be revised downward in due course.

High prices set to continue

According to the Scotiabank report, high prices are likely to continue negatively impacting demand for new vehicles going forward, as are continued supply chain disruptions.



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