Heavy discounting can't turn Oct. sales slide

by Canadian Press
posted Nov 3, 2004


By Steve Erwin
TORONTO (CP) — New vehicle sales in Canada slipped in October compared to the same month one year ago, although heavy discounting by the Big Three car manufacturers prevented a steeper decline.


Sales of new cars and trucks reached 119,751 in October, down 1.1 per cent from the 121,094 units sold a year ago, according to figures compiled by DesRosiers Automotive Consultants Inc.


For the first 10 months of this year, the market was down 4.9 per cent, with just over 1.3 million vehicles sold. DesRosiers? forecast calls for 2004 sales to come in somewhere around 1.54 million units, below last year?s 1.593 million.


The October results followed a much more difficult September in Canada that saw new vehicle sales fall eight per cent compared with a year earlier.


"We expected the market this month to be up or down a point or two so this performance is not out of line," said industry analyst Dennis DesRosiers.


"There was very heavy discounting by GM, Ford and (DaimlerChrysler) which we suspected would help maintain sales and we were correct."


GM Canada?s sales were up 8.3 per cent in the month to 33,035 vehicles. It had the top market share in Canada ? 28.4 per cent year to date. That?s up 0.4 percentage points from last year, though GM?s grip on the market has declined over several years, as cars and trucks made by offshore-based automakers gain more favour.


GM has protected itself from further market share erosion this year, however, through its willingness to stay in the incentive game ? such as zero per cent interest financing plans, which are expensive for automakers, DesRosiers said.


The analyst also noted that GM is focusing more this year on taking back market share for entry-level vehicles from mainly Korean-based competitors.


"Over 40 per cent of the Canadian market is entry-level vehicles and GM is importing a number of products in this segment ? Aveo and Optra etc. ? which are gaining some traction and helping them maintain market share," he said.


DaimlerChrysler?s October sales increased 0.3 per cent to 16,734 vehicles. However, sales at Big Three competitor Ford fell four per cent to 15,175.


Import nameplates that tend to shy away from the heavy discounting were down 5.6 per cent on the month, according to preliminary sales results compiled by DesRosiers. Hit especially hard was Honda, where sales plummeted 20.6 per cent during the month to 8,748 vehicles.


Sales at Toyota fell three per cent to 12,917, though sales at its Lexus luxury arm increased 18.9 per cent to 888.


Notable import exceptions were BMW, up 1.3 per cent, Hyundai, which gained 19.6 per cent, and Mazda, rising 14 per cent.


For October, passenger car sales fell 1.3 per cent to 64,393. For the year, sedan sales were off 6.1 per cent.


Sales of light trucks ? a broad category that includes pickups, SUVs and minivans ? fell 0.9 per cent in October to 55,358. For the year, sales in the light truck segment have declined 3.5 per cent.


Major automakers report their October sales results Wednesday for the United States, which follows a strong September in the world?s biggest auto market.


Observers say heavy discounting at the end of September likely boosted October?s U.S. sales for some automakers, while sagging consumer confidence may have hurt business.