New Car Sales: April’s showers could mean Fall flowers

April’s Canadian new car sales numbers came in this week. And as is the continuing trend, new car customers are dividing up the automakers into roughly three groups: the Haves, the Have-nots and those Treading Water.

While the market was up by only 4.0 per cent compared to April 2009—a number that some industry analysts thinks should have been better—automakers like Government Motors and Toyota were down substantially, while Ford, Chrysler, and Volkswagen saw gains of 25 per cent or greater. Add in the likes of Mazda, Nissan and Honda with numbers at or about the industry average, and you can see how the market in April was broken into three, distinct groups.

Of course, unless you’re a stockholder in one of these automakers (as any Ontario taxpayer is in GM or Fiat-run Chrysler) or own a dealership, most consumers couldn’t care less about monthly sales figures and trends. But Canadian auto industry analyst Dennis DesRosiers sees future deals potentially coming to Canadian new car buyers who can wait until the Fall.

In an electronic newsletter, DesRosiers thinks, given the improving economy and heavy incentives in the market (see Toyota), April’s performance by Canadian automakers was “abysmal.” But he also predicts April’s weak numbers may result in even further price drops later this year:

“The problem is that most [automakers] have planning volumes for a market between 1.5 and 1.6 million units. This means that any individual company is going to have to take market share from others as a way to move their inventory since the size of the pie will not grow fast enough to absorb the product they have on dealer lots (Hyundai and Kia for instance). But if this happens it also means that the others are going to be left with a huge inventory build through the rest of the year.”

Basically, DesRosiers is saying that if sales don’t take off later this year (i.e. more than the 4.0 per cent gain in April), there are going to be too many new cars on dealers lots, with ensuing deals to move them.

So, if you’re in the market for a new car, can you wait until this Fall for potentially even deeper discounts?

Or are the incentives out there right just too good to ignore?

[Source: DesRosiers Automotive Consultants]

 

Comments

[Randy]

It's easy to ignore incentives when you can't afford a new car right now ;)

If I did need a new car, I'd probably wait until fall since the automakers and dealers will be anxious to move old model year inventory to make space for the new 2011 models. Even more so if sales are mediocre.

The competition in the Auto industry is as fierce as its ever been I think.