Automotive News Canada - August 2021 - 19

* AUGUST 2021
19
Sluggish July sales? Toyota never got that memo
A record month
shows the
automaker's
effectiveness at
managing the
microchip crisis
By GREG LAYSON
DIGITAL AND MOBILE EDITOR
A RETURN TO NORMAL
sales remained elusive in July,
but not for every brand.
Industry numbers for the
month fell 5.7 per cent - to
155,657 vehicles - compared
with the same month a year
ago, according to estimates
by DesRosiers Automotive
Consultants.
In July 2020, demand was
increasing as pandemic lockdowns
eased, which suggests
inventory shortages are at least
partially to blame for the July
2021 dip. Also, sales were off
nearly 10 per cent from 2019.
But there were bright spots.
" Beneath the somewhat
tepid top-line number, it was
not all doom and gloom, with
some manufacturers increasing
sales from 2020, " said Andrew
King, DesRosiers' managing
partner. " These disparities in
performance are the real story
for the month and will likely
persist for the remainder of the
year as the impact of the semiconductor
shortages continue
to vary greatly by model and by
manufacturer. "
Toyota appears to
have weathered the
storm better than any
other automaker. The company
sold 23,845 new vehicles, a
July record and up 19.4 per cent
over the same month a year
ago. Sales were also up 10 per
cent over July 2019, well before
COVID-19.
The Canadian-made RAV4
crossover generated record
July sales of 6,702, making
it the bestselling vehicle
in Toyota's lineup. The
Highlander crossover's 2,070
sales were also a record.
Electrified vehicles accounted
for 28 per cent of Toyota
Canada's overall sales.
LOWEST-EVER INCENTIVES
With tight inventory levels,
the average incentive per vehicle
fell below $4,000 in both May
and June, said Robert Karwel,
senior manager of the automotive
practice at J.D. Power
Canada. July numbers were
not available as of press time.
Incentives are at the lowest
point since J.D. Power began
tracking them in Canada in
2012. As a result, Karwel said,
electric vehicles are more
attractive because they qualify
for thousands of dollars in government
rebates.
SALES ANALYSIS
Prince Edward
Island, for example,
offers a $5,000 incentive
that can be coupled
with the federal rebate of
up to $5,000. Quebec consumers
can qualify for up to $12,000 in
EV rebates when they combine
the provincial and federal programs.
" While
manufacturers have
backed off incentives, the governments
have not, " Karwel
said.
Meanwhile, Toyota's Lexus
luxury division reported its
fifth consecutive month of
record sales: 2,608 vehicles. The
Lexus UX, NX and RX crossovers
all set July records.
'SUPPLY-DEMAND MISMATCHES'
Still, DesRosiers said in a
statement that " some dealer
lots resembled barren wastelands,
and the industry continued
to battle its supply-demand
mismatches. "
Scotiabank Economics
said demand for new vehicles
remains high, but the inventory
isn't there.
" Demand-side factors continue
to strengthen, " the financial
institution said. Some of
those factors are job growth,
increased household savings,
strong consumer confidence
and accelerated vaccination
rates.
Citing the Conference Board
of Canada, Scotiabank said people
believe now is a good time
to make a major purchase,
" which bodes well for vehicle
purchases. "
" These demand drivers will
likely only fuel future sales
activity as supply shortages
persist through the summer at
least. "
But it also warned that
" replenishing inventory on the
back of strong demand ... will
take time despite further forecasted
improvements in production. "
Scotiabank
forecasts " dampened
auto sales activity over
the summer and into the fall,
with pent-up demand progressively
unwinding as new supply
hits the market. "
That means it will be well
into 2022 before more balanced
market conditions return,
Rebekah Young, Scotiabank
Economics' director of fiscal
and provincial economics, said
in her monthly report.
NO CHANGE IN FORECASTS
" We maintain our sales forecast
at 1.75 million units for
2021 and have penciled in 1.95
million units for 2022, " Young
said, " with both subject to
considerable
uncertainties
both on supply
and demand
factors. "
Both numYoung:
Don't
expect
supplydemand
balance
until
2022.
FILE PHOTO
bers have
remained
unchanged
throughout
the first seven
months of 2021.
Meanwhile,
DesRosiers
said the seasonally
adjusted
annual sales rate (SAAR) for
July was 1.71 million vehicles,
building on improvement seen
in June, when the number was
1.65 million. However, July's
SAAR remained well below
March's 1.92 million.
Subaru was another automaker
that set a July record,
with sales totaling 6,039.
The company said it was the
third-highest number of vehicles
it has sold in any month
ever.
The Crosstrek, Subaru's
compact crossover, had another
record month with 2,839
units sold, an increase of 94.6
per cent over July 2020. - ANC
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Automotive News Canada - August 2021

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