Canadian new vehicle sales picked up, but supply chain hiccups are hitting the market. Statistics Canada (Stat Can) reported 94,624 new vehicles sold in January 2022, up 15.3% from the previous year. The increase is huge, but it’s being compared to the slowest January since 2011. The second slowest was this past one, as the inventory shortage that began in 2020 only eased a little.
Annual new vehicle sales were also released today, showing the first gain in years. There were 1.6 million vehicles sold in 2021, up 0.9% from the year before. It was the first annual growth for new vehicles since 2017, though sales failed to rise above 2019 levels. Part of this is due to supply chain issues, but falling annual growth before 2020 shows there’s a little more to it.
Canadian New Vehicle Sales
The annual volume of new vehicle sales including cars and light trucks.
Source: Statistics Canada; Better Dwelling.
Canadian New Car Sales Made First Increase Since 2014
Canada’s new car sales showed its first increase in over half a decade. Canadians bought 345,400 new cars in 2021, up 6.1% from the previous year. It was the first annual growth seen for new car sales since 2014, though it might not mean all that much here. It’s compared to 2020, which was the slowest year for car sales in Canada since at least the 1970s.
Car sales might low but price growth is ripping higher. The average sale price reached $39,400 in 2021, up 11.3% from the previous year. Inflation is high at 5% and this growth rate is more than double that rate. It’s astronomical.
Canada doesn’t track used car prices, but the US estimates annual growth hit 45% in January. The White House even specified used cars now have a measurable impact on inflation — an issue not seen in the 20 years prior. Seeing the average price of new cars jump only 11.3% almost feels like a deal in contrast.
Canadian New Vehicle Sales
The annual volume of new vehicle sales including cars and light trucks, separated by segment.
Source: Statistics Canada; Better Dwelling.
Truck Sales Made A Small Decline, But Represent Over 76% of New Vehicles
Canada’s light trucks, which include SUVs and crossovers, showed a slight decline in sales. Sales fell to 1.27 million trucks in 2021, down 0.4% from the previous year. The average sale price for this segment was $50,100, up 5.1% over the same period. Including the decline in sales, trucks still represent 76.2% of all vehicle sales in Canada. Canadians really like their trucks.
The global chip shortage continues to slow down the ability to create inventory. Less inventory means fewer sales, which helps to explain low volumes. Car companies are also prioritizing chips for more expensive vehicles, pushing average prices higher. It’s logical, but not the whole explanation in Canada.
Growth had been slowing for new vehicle sales pre-2020, indicating a slowdown. Granted, the slowdown wouldn’t have been nowhere near this abrupt without the chip shortage. That said, vehicles are an asset with a long life cycle and the market has been at record levels before 2020 hit. A little cooling over the recent period was largely expected.
