Canadian Vehicle Sales (March 2020)

Vehicle sales tumble in March as COVID-19 measures roll out  

• Canadian vehicle sales fell precipitously in March, dropping by a staggering 48% month-on-month (m/m) to just above 1.0 million units (at a seasonally adjusted annualized rate).
• The drop in March erased all gains in the previous two months of the year, with sales down 20% in Q1 relative to the same time last year. Passenger vehicles sales fell by 35.3%, while light trucks, which account for nearly 80% of the market, fared slightly better falling by 14.7%.  
• No brand came out unscathed, with all recording double digit declines relative to the year-prior, and luxury brands hit hardest. 

Key Implications

• March's decline in vehicle sales is eye-popping, providing an early reading on the impact that physical distancing measures, economic uncertainly and store closures are having on consumer demand. While we won't see March retail sales numbers for some time to come, they will likely show an equally dramatic decline, with only grocery stores and pharmacy sales likely to come out unscathed. 
• March's numbers were ugly, but physical distancing measures and store closures didn't fully kick in until about mid-month. So brace yourselves because these numbers will likely get even worse. 
• There's no doubt that the economic toll on households and businesses from the COVID-19 pandemic is going to be significant. Federal programs aimed to help households and businesses impacted by the COVID-19 pandemic will help limit the financial blow, and we expect that that consumer spending will start to gradually normalize in Q3 as stores re-open and financial aid begins to flow. Until we reach that point however, expect more of these kinds of jaw-dropping numbers.

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