Automotive sales in Canada are on the decline as tariffs raise prices on popular U.S. brands and hurt consumer demand.
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DesRosiers Automotive Consultants, which compiles monthly vehicle sales in Canada, estimates that 160,000 vehicles were sold during August, down 2.9% from a year earlier and continuing a downward trend that was first seen in February of this year.
Vehicle sales in Canada during August were well below pre-pandemic levels seen in 2019 before the outbreak of Covid-19 upended automotive production and sales. The current slump in Canada comes amid trade uncertainty with the U.S. and as counter duties imposed by the Canadian government raise the prices for vehicles made by Ford (F), General Motors (GM), and Stellantis (STLA).
Weakening Economy
DesRosiers Automotive Consultants said that Canadian consumers appear to be treading water when it comes to big purchases such as a vehicle. The lack of demand also comes as data shows the Canadian economy contracting in this year’s second quarter, raising fears of a potential recession.
Recently released data showed that Canada’s economy contracted 1.6% on a year-over-year basis in the second quarter after growing an annualized 2% in the first three months of this year. A big drag on the economy during Q2 was exports of passenger cars and light trucks, which fell 25% year-over-year, registering one of the biggest sector declines.
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