Vehicle sales should fall slightly in Canada in 2003 from the record levels of last year, but production should stay flat, while declining in North America as a whole, according to a J.D. Power and Associates forecast reported in the Kitchener-Waterloo Record newspaper.

Canadian sales will dip slightly to 1.67 million vehicles this year from last year's 1.7 million, as long as there is no strong external shock, such as a prolonged war in Iraq or a long-lasting jump in oil prices, J.D. Power chief economist Bob Schnorbus said.

Production is expected to stay steady at 2.6 million vehicles in Canada, while falling about 200,000 vehicles in North America overall -- to 16.2 million.

Canada outperformed the United States last year with a jump in sales of 8%, compared with a 2% decline in the US market.

A war in the Middle East is not the only risk, Schnorbus said, but it's the biggest one. Others are the Bank of Canada overreacting to rising inflation and tightening the economic screws too much. There's also a danger if car makers scale back rebates, interest-free loans and other incentives, which helped propel sales to the record last year.

"If they pull back on incentives, the industry immediately hits an air pocket," Schnorbus said.

On the sales side, the year will be marked by the appearance of 53 new or redesigned vehicles, compared with 49 last year, said Power's North American production director Jeff Schuster.

Mitsubishi Motor Sales of Canada and Nissan Canada should gain market share this year, Schuster said.

Mitsubishi will benefit from a full year of sales and the opening of more dealerships across the country, while up to 50% of Nissan vehicles will be new or redesigned.

General Motors of Canada should retain the market share gains it made in 2002 and perhaps edge up slightly to 31%, Schuster said.

DaimlerChrysler Canada and Ford of Canada are expected to lose market share this year following declines in 2002, the report said.