With the Canadian dollar falling to its lowest in nearly two decades and the Canadian economy struggling to recover from the impact of the global financial crisis, auto shoppers are now taking a wait-and-see approach.
In a market that has seen almost twice as many sales than in 2016, analysts are warning that auto sales in Canada are likely to be in the red in the months ahead.
While it is possible that some of the recent weakness could be attributed to the federal government’s decision to suspend the purchase of the country’s auto industry by the end of next month, many experts have cautioned that the auto sector remains vulnerable to a downturn in the U.S. and other markets.
According to the auto industry’s biggest trade group, the Automotive Association of Canada, auto sales fell 5.7 per cent in December, the steepest drop since January, while sales of trucks, SUVs and light trucks declined 6.3 per cent, marking the biggest one-month decline since June.
The association said the downturn could accelerate if the U, S. and Europe all slow down, adding that “a slowdown in Canada will be particularly challenging for a country that is already struggling to cope with the consequences of the crisis.”
Ahead of the Christmas shopping season, analysts have been warning of the risks posed by a slowdown in the Canadian auto market.
The auto industry has been hit by a string of crises and turmoil, including the closure of a factory in Oshawa, Ont., in June and the shutdown of a GM assembly plant in Mississauga, Ont.
In addition to the potential impact of a slowdown on Canada’s auto sector, the downturn in demand for new vehicles has prompted auto makers to cut their orders for the coming year.
While some analysts said the current downturn in sales is more of a natural consequence of the financial crisis and the prolonged economic crisis, some economists have argued that the downturn is a direct result of the auto crisis.
A strong dollar, weak demand and weak demand from consumers all contribute to a drop in the value of the Canadian currency, which makes it more expensive for foreign buyers to buy Canadian vehicles.
In the past, Canadian consumers have often been willing to pay higher prices for vehicles imported from the U to lower-cost areas.
However, analysts say that as demand for Canadian vehicles has dropped in recent years, consumers have been more reluctant to pay high prices.
As a result, the value and price of Canadian-made vehicles have dropped sharply, according to the Association of Automobile Manufacturers.
The Canadian auto industry is expected to report its second-quarter results on Monday, with the results likely to show an even stronger performance than in the first quarter, according the Association.
With sales of new vehicles, vehicles in the third quarter, and sales of passenger vehicles all expected to be lower than the previous quarter, analysts expect the auto market to report a disappointing fourth-quarter.
As a result of declining demand, the Association has warned that the Canadian Auto Sales Association could lose $1 billion in its 2017 budget, according a statement posted on its website.
While many Canadian auto manufacturers are looking for ways to offset the losses they will incur in the near term, there are signs that auto makers are preparing for the worst.
According the Association, a handful of auto brands are planning to cut production in the coming months, including Ford, Honda, Hyundai and Toyota.
With fewer cars being built, manufacturers are likely looking to lower the cost of their vehicles.
According to a study by The Conference Board, Canada is expected lose more than $2 billion in revenue due to the global recession.