West Drives Canada Auto Sales

By: Anthony Fontanelle

Strong auto sales in Saskatchewan and Alberta are boosting Canadian sales at a time when acquisitions in both the United States and Mexico are declining.

Over the past few years, Alberta has reported record-setting auto sales. Saskatchewan, meanwhile, have reported increasing sales. According to the country's report, the two provinces drove the Canadian auto market to reach 19 percent increase, up from the average 15 percent over the past decade.

"Rapid sales gains in Alberta, where employment growth exceeds 4.5 per cent, more than double the national average, and in Saskatchewan are buoying overall Canadian volumes," said Carlos Gomes, an economist and auto expert with the Bank of Nova Scotia. "It's being driven by the West."

In Alberta, auto sales have been increasing since 2004. This mirrors the general boom which was proved further by posting the strongest sales gain of any province at 16.2 percent in the previous year. At the same time, high and increasing income and flourishing employment have bolstered interest in big-ticket items like cars.

"In Alberta we are just in an environment that is unique - the strength of the economy," said Bill Watkins, the president of the Alberta Motor Dealers Association.

Gomes said that Alberta's share of the national automotive market has risen from about ten percent in 1998-99 and an average of about 12 percent over the last ten years to about 16.6 percent.

Last year, Alberta car and truck sales increased approximately 11 percent to a record 236,000 vehicles. That figure is likely to gain traction this year. Although sales in Wild Rose Country during the first five months of the year, January to May, were up nearly six percent on a yearly basis. Volumes are expected to increase in the next half of the year, driving annual sales to a record 268,000 vehicles, up about 14 percent from the previous year.

Auto sales, including high-end vehicles, have been strong for some time in Alberta. Earlier this month Statistics Canada reported that new car dealers saw their revenue climb in May alone by 12 percent, and from May, 2006 by 21.4 percent to $1.4 billion. Parts, service and financing are also all strong. and other auto parts also are benefited by the boom.

Vehicle sales are also rising countrywide. During the first six months of 2007, Canadian sales were up by six percent, compared with declines of 2.5 percent in Mexico and two percent in the United States, reported Driving.ca.

Gomes noted that Canadian sales have gotten a boost from somewhat controversial federal budget measures that subsidize the purchase of certain fuel-efficient vehicles. "We estimate that sales of vehicles benefiting from Ottawa's rebate have surged by nearly 90 percent so far this year, single-handedly lifting industry volumes," he added.

Some auto manufacturers have criticized the program, which backs some small cars to the exclusion of all others. Now that the industry has seen the boom, the manufacturers are singing a new tune.

The sales strength in Canada comes at a time when global sales are also on the ascent, led by China. For the first half of the year worldwide sales are estimated to have grown by three percent to an annualized level of more than 53 million vehicles, with purchases in China up 27 percent to top five million. And experts in the industry predict that the market will flourish even more in the coming years.

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