An auto worker screws a component into the cab of a four-door F150 at a Ford assembly plant in Claycomo, Mo.Dave Kaup/REUTERS
Vehicle sales declined in Canada in June and fell in the first six months of 2018, raising doubts about whether the market will hit its sixth straight annual record.
Sales topped 200,000 last month – just the fifth time they have hit that level in a single month – but it was the fourth straight monthly decline and came amid worries that the Trump administration will slap tariffs on imports of vehicles and auto parts as soon as this fall and that Canada will follow suit on U.S. vehicles.
Another record year for vehicle sales in Canada is still possible, but tariffs loom as a notable threat, said David Adams, president of the Global Automakers of Canada, which represents the Canadian units of Asia- and Europe-based automakers.
“There are some significant headwinds, not the least of which are the steel and aluminum tariffs imposed by the Trump administration and the possibility of 25-per-cent tariffs on vehicles imported into the United States from abroad,” Mr. Adams said in a statement.
Some of the most popular cars and trucks in Canada – including the Ford F-Series pickup truck, which is the best-selling vehicle in the market – are made only in U.S. plants. So if the U.S. government were to put in place tariffs of 20 per cent to 25 per cent on imported cars and trucks, and Canada were to retaliate with similar levies, prices on those vehicles would rise and cause an almost immediate hit to sales at Canadian auto dealers.
“If we see auto tariffs come into play, then I think all bets are off in terms of what that might do for getting anywhere close to record sales,” Mr. Adams said in an interview.
Canadians purchased 2.038 million vehicles in 2017, the fifth straight year of record sales. Unless there is a total collapse in the second half of 2018, annual sales should still hit about two million, making it one of the most robust years on record.
Last month’s tally was 200,156, down 1.6 per cent from 203,486 in June, 2017.
On a seasonally adjusted annual rate basis, sales have been above two million in every month except April, when poor weather conditions may have hurt deliveries, Bank of Nova Scotia economist Juan Manuel Herrera Betancourt said.
“We expect sales to edge down slightly in the second half of the year and bring the annual total to just above two million units sold, alongside a moderation in household expenditures in the face of rising interest rates and tighter lending standards,” he said.
Among the major companies, General Motors of Canada Co. and Nissan Canada Inc. eked out 2-per-cent gains in June.
Sales fell for Fiat Chrysler Canada, Ford Motor Co. of Canada Ltd., Honda Canada Inc. and Toyota Canada Inc.
Fiat Chrysler posted the biggest decline, with deliveries down 17 per cent in the month and 11 per cent in the first six months of the year.
The decline in passenger car sales continued as Canadians snap up crossovers and sport utility vehicles.
Passenger car sales slumped 8 per cent and represented just 30.5 per cent of sales. Deliveries of crossovers, sport utility vehicles and pickups rose 1.4 per cent.
GM Canada bucked the trend with a 5-per-cent gain in passenger car sales.