March 25, 2002

Rebates and incentives boost Canadian car sales

Stronger than expected first-quarter sales, coupled with continuing aggressive incentives by automakers, are prompting J.D. Power-LMC Automotive Services to boost its Canadian new light-vehicle sales forecast from 1.48 million units to 1.56 million units in 2002, just shy of 2001’s record performance.

“The economy is showing signs of picking up, and automakers keep extending the use of rebates and incentives, which we believe will result in a healthier-than-anticipated automotive market,” said Dr. Robert Schnorbus, chief economist at J.D. Power and Associates. “We expected first-quarter sales to be the lowest of the year, but we have been pleasantly surprised by the numbers.”

The Canadian automotive market has been on an upward trend since mid-1996 and reached a new record of 1.57 million units in 2001.

“As long as automakers are committed to incentivizing sales and the economy is in a position to cooperate, we see sales following a higher sales pattern than expected at the beginning of the year,” Schnorbus said.

New light-vehicle sales in January reached levels in excess of a 1.7 million seasonally adjusted annualized rate (SAAR), and February’s selling rate was 1.69 million units. J.D. Power-LMC, while anticipating some moderation, still expects robust sales in March.

“There is continued confidence among Canadian consumers, coupled with great quality products that really meet consumer needs,” said Richard Cooper, executive director of Canadian operations for J.D. Power and Associates. “It’s not surprising that sales continue to be strong.”

SUVs continue to gain market share in Canada, increasing from 13 percent of the market in 2001 to 17 percent by year’s end. Much of the SUV segment’s gain is at the expense of mini-vans and midsize cars, both of which are expected to drop a percentage point of market share in 2002 to 15 percent and 18 percent, respectively.

The luxury vehicle segment is also showing some moderate improvement in market share, increasing from 3.9 percent in 2001 to 4.2 percent by the end of the year.

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