Canadian carmakers, encouraged by strong sales in April, saw their hopes for a sustained rebound dashed last month as consumers turned their backs on showrooms despite big incentives.
According to Reuters , the major carmakers reported weaker sales in May, deflating expectations that April’s positive figures – the first month over month gain since November 2002 – marked the beginning of a spring recovery.
“Consumers are fed up with the high cost of ownership and the high cost of operating a vehicle,” Dennis Desrosiers, an independent industry analyst, told the news agency. “The very first thing they do when gas prices explode and insurance costs explode and the cost of repairs explode, is they just don’t buy.”
Carmakers reportedly blamed poor weather for last month’s weak sales and noted that May 2003 saw record sales, an explanation that finds some currency among industry watchers.
“We’re comparing May against an exceptionally strong May in 2003,” auto industry consultant Felix Pilorusso told Reuters. “This should be the height of the spring buying season but it doesn’t look like it is this year.”
The report said carmakers had hoped a slew of new products coupled with marketing sweeteners – incentive dollars were at record levels last month, according to industry experts – would entice customers into showrooms.
“The incentives aren’t working, new products aren’t working,” Desrosiers reportedly said. “What you have left is the realisation that the market needs a holiday. It’s hard for companies to swallow, but there actually is some good in consumers buying less.”
According to Reuters, General Motors of Canada said total monthly sales fell 12.2% to 47,364 vehicles in May, as car sales declined 10% and truck sales – which include minivans and sport utility vehicles – were down 15%.
Ford of Canada reportedly said its total sales fell 16.6% to 23,726. Truck sales were down 15.3% while car sales tumbled 19.4%.
DaimlerChrysler Canada reported a 3.4% decline in total sales to 23,095. Car sales were virtually flat while truck sales fell 4.5%, Reuters said.
Toyota Canada, which has been on a record-setting pace recently, reportedly said May sales fell 6.9% to 19,461 vehicles. Car sales slid 2.2% while truck sales retreated 20.5% but the firm still managed to strike a positive note.
“With two fewer selling days than a year ago, (Toyota’s) second best May in history showed a decline of only 6.9% while early reporting suggests an overall industry downturn,” it said in a release cited by Reuters.