North America’s auto industry accelerates into a smoother ride
In 2010, the U.S. experienced a better year for auto sales growth than Canada. According to industry statistics provider Autodata Corporation, total light vehicle sales in the U.S. were +11.1% year over year. Light truck sales (+17.9%) outperformed passenger cars (+5.0%).
U.S. total light vehicle sales in 2010 were 11.6 million units. With a few months of backsliding, they increased fairly steadily throughout the year. Seasonally adjusted and annualized December sales were 12.6 million units. February was the weakest month at 10.5 million units.
In 2009, total U.S. light vehicle sales came in at a 27-year low of only 10.4 million units.
In Canada, total vehicle sales in 2010 were +6.6% versus 2009, comprised of passenger cars at -5.2% and light trucks at +18.9%, according to Desrosiers Automotive Reports. General Motors, Ford and Chrysler sales combined were +12.4% while all other brands recorded a sales advance of only 2.0%. For the first time in 15 years, the Detroit Three together picked up market share.
Canadian auto sales peaked in 2002 at 1.733 million units. In 2010, they were 1.570 million.
The auto sector, despite significant problems in 2009, remains a big part of the economy of the U.S. and Canada. Among provinces, Ontario is particularly auto assembly and parts focused.
Insolvency leading to government bailouts of Chrysler and General Motors made 2009 a difficult year for the sector north and south of the border. However, 2010 saw a significant improvement in the fortunes of what has come to be termed the Detroit Three (GM, Chrysler and Ford).
In 2010, it was the recall problems of the foreign-owned nameplates, especially Toyota, which garnered the majority of headlines. The other notable feature about last year’s car market was the record-setting level of incentives packages (as much as $10,000) that were available to prospective buyers. Finally, 2010 was also a year of downsizing adjustments for many.
In Ontario, besides major Detroit Three operations in Windsor, Brampton, Oshawa and St. Catharines, Toyota and Honda each has a large presence in Woodstock and Alliston.
Canadian auto production is about double the level of domestic demand, with the enormous difference destined for the U.S. market. Total North American demand is factored into new- facility investment decisions, which is the issue most important for the construction industry.
In terms of Canadian domestic demand, Ford experienced a 19.1% sales gain year over year in 2010, moving its unit sales into first place ahead of GM (-2.1%). This was the first time in 50 years that GM has been supplanted as the overall market leader in terms of unit sales.
Chrysler (+25.7%) remained in third position. Among other brands, unit sales by Toyota occupied fourth place, although they were down more than 10% year over year.
Honda stood in fifth position, but lost market share with a +0.7% sales performance. Hyundai (+14.8% year over year) recorded unit sales that fell only marginally below those of Honda.
Full Article by: Alex Carrick – Chief Economist, Reed Construction Data