Ford and Lincoln vehicles are parked outside the Oakville Assembly Plant in Oakville, Ont. Ford Motor Co. of Canada Ltd., and General Motors of Canada Co., which finished first and second in the sales rankings, reported declines of 20 per cent and 34 per cent respectively in passenger car sales but big gains in sales of light trucks, a category that includes crossovers.CHRIS HELGREN/Reuters
Auto makers sold more than two million vehicles in Canada in 2017 for the first time ever as drivers snapped up crossovers and large pickup trucks and pushed the market to its fifth straight record tally.
Among the 2,038,798 vehicles that left dealers' lots last year were just 639,823 passenger cars, the lowest level for cars since 1964 and another sign that the mid-sized crossover has replaced the sedan as the vehicle of choice for families.
The question is whether the overall pace of sales can be maintained in 2018, said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc.
Mr. DesRosiers is forecasting a slight decline this year to slightly less than two million, but noted: "Does it really matter if we buy 2,050,000 or 1,950,000? Traditionally if 1.5 million, 1.6 million was considered a spectacular market, why would losing 50,000 units off a well over two-million market not be considered a good market?"
He said data show about 100,000 new vehicles were sold to export markets, helped by the value of the Canadian dollar, which was below the 80-cent (U.S.) level for much of 2017.
There are several reasons for the strength of the market in Canada, said Carlos Gomes, a Bank of Nova Scotia economist whose specialty is the auto sector.
"The main one was in the fact that the Canadian economy performed better than anybody was expecting for the year," Mr. Gomes said. "We surpassed two million units for the first time ever largely because we had stronger economic activity, stronger employment growth and we started to finally see some improvement on fleet activity as well – the fleet segment had lagged for quite a number of years."
The double-digit increases in sales of large pickup trucks is a strong signal, he said, indicating that businesses are starting to feel more comfortable with refreshing their fleets.
His forecast is also for a slight decline in sales this year to about two million units, although he noted that two consecutive years of sales at or above two million is unheard of in the Canadian market.
The continued surge in Canada contrasts with a softening of demand in the United States, where sales dipped last year on an annual basis for the first time since the 2008-2009 recession and are expected to slide below the 17-million unit annual level in 2018.
"Something that doesn't get as much attention as it should is the fact that with calendar year 2017 sales over the 17-million unit total, this will be the third consecutive year of 17-million-plus sales," said Tom Libby, manager of loyalty and industry analysis for consulting firm IHS Market. "This is the first time this has happened since the inception of the industry more than 100 years ago."
Mustafa Mohatarem, chief economist of General Motors Co., forecasts U.S. light vehicle sales will fall to the high 16-million unit range in 2018.
"This year, many consumers will see their take-home pay rise because of tax reform," Mr. Mohatarem said in a statement. "That will keep the broad economy growing and help keep sales at very healthy levels even as the Fed increases interest rates."
In Canada, several auto makers set annual sales records, while others reported declines in sales of cars and increases on the truck side of the ledger.
Ford Motor Co. of Canada Ltd., and General Motors of Canada Co., which finished first and second in the sales rankings, reported declines of 20 per cent and 34 per cent respectively in passenger car sales but big gains in sales of light trucks, a category that includes crossovers.
That trend is evident in the U.S. market as well. Ford Motor Co. said U.S. passenger car sales dropped 14 per cent, while sales of trucks rose 4 per cent. Crossovers are hot for Ford, but sales of its full-sized F Series pickups hit 896,764 last year, compared with sales of 867,909 for its entire lineup of crossovers and sport utilities.
GM said U.S. sales of crossovers jumped 17 per cent.