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.
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. They ticked up slightly in July, coming in just slightly above $4,000.
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.
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.
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 numbers 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.