Alberta and BC Hit Hardest with Decline of New Motor Vehicles

Despite a slight decline in March, sales of new motor vehicles closed the first quarter of 2008 with their strongest gain since 1998.

According to seasonally adjusted data from the New Motor Vehicle Sales Survey, consumers purchased 148,796 new vehicles in March, down 0.5% from February.

Sales of both passenger cars and trucks declined more slowly in March compared with February. Sales of new trucks (which include minivans, sport-utility vehicles, light and heavy trucks, vans and buses) fell 0.6% while passenger car sales slipped 0.3%.

Looking ahead, preliminary industry data for April suggests that the number of new motor vehicles sold will remain relatively unchanged.

Strongest quarterly growth since 1998

After experiencing a downturn in the second half of 2007, new motor vehicle sales have resumed their upward swing. An exceptionally strong January powered a 9.1% gain in unit sales in the first quarter of 2008 compared with the fourth quarter of 2007. This was the strongest growth rate since the second quarter of 1998. Lower prices, additional rebates and incentives, such as better financing, along with a one percentage point reduction in the Goods and Services Tax, appear to have paid off for new car dealers.

This quarterly increase in units sold was driven almost entirely by strong sales of new passenger cars, which were up 17.8%, the largest increase since 1976. In particular, sales of overseas-built passenger cars have been rising rapidly since November 2007.

Sales up in seven provinces

In March, significant drops in new motor vehicle sales in Quebec and Newfoundland and Labrador more than offset increased sales in most provinces. The significant declines in Newfoundland and Labrador and Quebec did not offset the extraordinary increases registered in January.

British Columbia led the provinces in March with an 8.1% increase in unit sales, the strongest monthly growth rate in the province in over three years.

The exceptionally strong performance of the first quarter of 2008 was concentrated in the Atlantic provinces and Quebec, where passenger cars account for most of the new motor vehicles sold.