Are you as curious as I am about how sales of new vehicles can be so strong at a time when the big story in personal finance is households struggling to pay the bills?
A report from DesRosiers Automotive Consultants says sales in seven of 10 provinces last month came in ahead of levels for January 2019, before the pandemic. Total sales of new cars, SUVs and pickup trucks last month were up almost 15 per cent on a year-over-year basis.
Sales are flying, and so are prices. The average transaction price for a new vehicle is around $47,000, the latest numbers from J.D. Power say. No wonder the average monthly loan payment for a vehicle is close to $890.
One reason why vehicle sales are strong is that dealers are catching up on sales postponed or deferred because of the pandemic. Vehicle production suffered because of a shortage of parts, and dealers had little to offer customers who ended up keeping their old cars and SUVs longer.
But strong vehicle sales also speak to the big divide between financially secure and struggling households. A recent report from TD Economics said spending levels adjusted for inflation are falling everywhere except the top 20 per cent of households as measured by income. “This is not surprising, given that higher-income families’ were less affected by the termination of government pandemic support, and their net investment income was boosted by higher rates thanks to a lower debt burden,” the report says.
TD expects personal spending to grow at a subpar pace into next year, weighing down the economy. But the wealth of the top 20 per cent of households will keep things interesting in certain sectors. Vehicle sales show little sign of slowing, and the housing market has staged a surprisingly strong rebound in recent months. Travel is another area where those with money will spend.
There’s nothing new about haves and have-nots in the economy. It’s just that the pandemic seems to have widened the gap between the two groups.
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Rob’s personal finance reading list
Fix up your house before selling? Not so fast
Five situations where it does not make sense to spend money upgrading a home before sale. A good reminder here about the limited return on big remodelling projects.
Just try finding out how much you’re paying your bank
A ranking of big banks, online banks and credit unions on how well they disclose fees and interest rates. This is basic disclosure, but some banks don’t seem to agree.
Is it finally time to try bitcoin?
A veteran personal finance blogger stands by his initial skepticism about cryptocurrency. I was inspired to check on the 32 shares of a bitcoin exchange-traded fund I bought a couple of years ago as part of my duties as a personal finance writer to stick my nose into almost everything happening in the world of money. Up 65.5 per cent. I’m fully prepared to be down 65 per cent at some point.
About that leftover wine in your fridge
Thoughts on the storing and consumption of leftover wine. The latest thinking is to store it in an air-tight container.
Reader comment
A recent newsletter looked at where to get a 4 per cent interest rate on savings. A couple of readers pointed out that EQ Bank offers 4 per cent interest if you have your paycheque automatically deposited. Otherwise, the rate is 2.5 per cent.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
How to cancel an e-transfer before it’s claimed
Watch this
Thoughts on how to talk to your partner about money. Start early in a relationship – that’s one takeaway here.
The money-free zone
Rising Canadian talent alert. William Prince, a folk-country singer from Winnipeg, has been doing concerts across the country and recently appeared in Nashville. Get out to see him if he comes to your town. His deep voice is special, and he can flat out write songs. Here are two he played in a concert in Ottawa that my wife and I caught recently. The second tune, Can’t Stop It, was the last song of the night, and it sent the crowd home on a massive high.
ICYMI
What I’ve been writing about
- You built a great credit score – how worried should you be about it falling?
- What’s the bigger risk to your retirement – cuts to the CPP or declines for stocks and real estate?
- Weddings present a problem: How much do you spend for a gift in these trying times?
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be childfree or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You're not bad at money – you're suffering from money shame • Retirement might look different for Gen Z and millennials. Here's how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home downpayment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
