One of the big reasons why 2017 has been a good year for the Canadian economy is the strength of automotive sales lately. Now new data shows that in May, the all-time record for monthly sales has been beaten once again.
After sales broke records several months in a row, April sales cooled. It was especially disappointing considering that April 2016 was the single best-selling month the country has ever had — until now. 216,861 vehicles were sold in May according to Desrosiers latest monthly sales report. That’s an increase of 11.2% year-over-year. Sales are on track to outpace 2016, which itself was a record year. Looking at the year-to-date total, sales are 5% ahead of where they were in 2016.
The strong sales numbers indicate that Canadians are still confidently spending and borrowing, driving a healthy economy that shows no signs of slowing down anytime soon.
As for the top-selling brands, Ford took the top spot with 34,475 sales, followed by Fiat Chrysler and General Motors with 33,186 and 31,149 respectively. In Canada, the Big Three make up 40.8% of the market share. The big Japanese brands Toyota, Hyundai-Kia, and Honda rounded out the list. Toyota with 23,893 sales; Hyundai-Kia with 22,948; and Honda with 20,975.
Luxury brands continue to lead the charge for sales growth with Alfa Romeo sales going up 871% year-over-year, while Jaguar sales grew 166%. It was a surprisingly good month for FCA’s Ram brand. Sales were up 61% in May — the biggest sales jump in a non-luxury auto brand for the month.
In his daily report, BMO’s Benjamin Reitzes makes note that auto sales have performed better than expected considering the huge dropoff in housing sales in the GTA in May, thanks to new policy measures in Ontario. Strong housing activity tends to drive auto sales, and though the GTA is just one small area of the country, its high population tends to impact national sales. This shows that while demand for housing may have slipped in recent months, consumer confidence is as strong as ever.
The growing economy is a sign that monetary policy may have to change soon, and that means a rate hike. The C.W. Howe institute recommended that the Bank of Canada begin raising rates this summer, and the Bank of Canada has switched from preaching caution to hinting that a hike could come soon.