New forecast for Canadian automotive sales by Scotiabank

Scotiabank is sharing some good news in regard to Canadian vehicle sales. In fact, sales advanced to an annualized rate of 1.65 million vehicles in July, raising the full year forecast to 1.565 million vehicles sold in Canada.

Early in 2010 our full year sales forecast was 1.525 million vehicles sold. However, with car scrappage incentives expiring in European countries and sales slowing in the United States, will sales fall here in Canada?

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Senior Economist at Scotiabank, Carlos Gomes says the following, "While global car sales softened over the summer, purchases in Canada have rebounded alongside strong employment growth, as well as enhanced incentives, such as 'employee pricing for everyone', helping to lift new vehicle sales to the highest level in nearly three years.”

Job creation is the number one factor driving vehicle sales in Canada. Approximately 43,000 jobs are being created each month, which is three times that of early 2010.

Incentives by auto makers have also enticed Canadians to purchase new vehicles. “Contrary to expectations, enhanced incentives have led to higher, not lower, average vehicle transactions prices, as Canadians take advantage of enhanced incentives to buy larger and more expensive model,” Gomes added. This resulted in Canadians shifting away from small cars, with the segment declining two percent from 2009 figures.

We will watch and see how Canadian sales will perform for the rest of the year as sales incentives will moderate in the coming months.

Source:[Newswire]