With closed dealerships and consumers not wanting to take on additional financial risk, the auto industry has taken a heavy decline in sales.

  • Total first half sales reached 643,604 units sold during June, down 34% from the previous year
  • As provinces embark on a gradual reopening of their economies, the vehicle market in Canada is showing signs of slow recovery, negative sales are trending upward

Source:  DesRosiers Automotive Consultants Inc., GAC and CVMA

* DAC Estimates

Consumer Spending Is Slowly Returning

Consumer spending is steadily re-igniting across the country, as economic activity reboots and more Canadians return to work

Not Out Of The Woods Yet

Better and brighter days are ahead for the automotive industry

  • There is a consensus among experts and economists that recovery will be slow and uneven across Canada, given the severity of the current crisis
  • GDP is projected to drop by 7 to 8 per cent for 2020
  • Uncertainty around the risk of a second wave would put some additional pressures on production and consumption
  • In order to save jobs and inject much-needed stimulus into an industry reeling from a fundamental lack of consumer confidence, the federal government needs a comprehensive recovery plan
    • Incentivizing vehicle purchases in Canada
    • National scrappage program (get older vehicles off the road)
    • Support dealers and auto manufacturers
    • Stimulate the economy

Positive Sales For Some Vehicle Segments

A few relative winners in the market can be identified when market share is considered

Large pickups accounted for 19.1% of total light vehicle sales in the second quarter of 2019 and this share grew to 23.1% amidst the lockdowns and uncertainty of the second quarter of 2020.

Small pickups presented a perhaps even more remarkable story with their share rising from 2.1% to 3.5%. New entries are ready to launch in this segment

SUV saw a market share increase from 45.3% to 47.1%

Luxury vehicle market share rose by nearly a half percent despite the economic downturn

Source: DesRosiers Automotive Consultants (DAC)    * DAC Estimates

How Are Oem’s Responding To The Crisis?

  • OEM’s are offering existing customers financial assistance with existing leases and loans
  • At the same time, special coronavirus car deals attempt to persuade consumers that now is a good time to buy a vehicle They range from long-term, low-rate financing to deferred payments for up to six months
  • For service, most automakers are offering touchless drop-off and return, making sure to sanitize the vehicle before the customer retakes possession of the vehicle
  • Online shopping, vehicle purchase, and at-home vehicle delivery are also more popular, with several automakers rapidly ramping up their efforts on this front

“We had a plan to get back in the market to take advantage of the spring selling season with heavy media focused on a number of key products in our lineup. And obviously, with the current situation with COVID-19, we had to rethink that strategy completely.”

Ted Lalka, VP of Product Planning and Marketing at Subaru

“Consumers are doing more of their shopping activities online, which means they are also more willing to be a little bit more remote in terms of their car-buying behaviours.”

Lawrence Hamilton, Director of Marketing at Hyundai

“The auto industry is a critical contributor to restoring the Canadian economy after the country-wide shutdown, and TMMC is proud to be playing a role in that recovery,” said Voss. “The time is right to re-start – and Toyota is ready.”

Frank Voss, President Toyota Canada

“The extraordinary health emergency we are going through requires everyone’s commitment.”

“We want to do anything we can to help the community.” So the company is making both vehicles and drivers available as part of a new program to collect PPE from those who have it but don’t need it now to those who need it urgently right away.

Wolfgang R. Hoffmann, President of Jaguar Land Rover Canada.

More Consumers Are Open To Buying Cars Digitally

  • While some consumers haven’t changed their stance about shopping for a car online, others have altered their views about it since the coronavirus pandemic
  • Nearly 30% of US car shoppers who weren’t originally open to buying a car digitally have since changed their minds,
  • Interestingly, 9% of respondents who were previously open to doing so are even more interested than before
  • While most automotive brands don’t have such capabilities yet, digitizing the car shopping experience should be top-of-mind as consumers continue to adapt to this new normal
digtal car shoppers

Source: RBC Economics

Canadian Auto Trends Show The Demand For Cars Hasn’t Gone Away — It’s Gone Digital

The COVID-19 crisis has sped up the industry’s digital transformation, auto marketers have awoken to the importance of reaching car buyers online and need to act quickly

  • In April, global searches for “dealerships near me” grew by over 30% in a single week, and in Canada there are spikes in interest for “is it a good time to buy a car”
  • The pandemic is causing people to rethink their modes of transportation, a University of Toronto study found one-quarter of people say they will not return to transit until there’s a vaccine for COVID-19 1
  • Over 60% of Canadians looking to buy a car said they would use an online purchase option, while 17% would buy a vehicle sooner if there was an online purchase option
  • A Google Consumer Survey found 66% of people viewed digital experiences and interactions as a good alternative to a dealer visit.7An at-home test drive was considered the best alternative to a dealer visit with 33% of Canadians seeing it as the most preferred option. This was followed by car review videos, an online configurator, a digital showroom, VR test drives and video conferences

Source: Think with Google. June 2020​|  University of Toronto: Public Transit and COVID-19 Survey 2020, Preliminary COVID-19 Financial Impacts for the TTC 2020​