New vehicle sales

New car sales typically grow and contract along with the economy. Vehicles are durable goods, meaning consumers generally only purchase new vehicles when they feel secure with their financial condition. As the labor market has improved and consumer confidence has increased over the past five years, new vehicle sales have also returned to growth.

At the same time, vehicle sales have contracted slightly in recent years as both the Canadian auto market and the broader Canadian economy have adjusted to a new average level of oil prices and rising interest rates in the United States. Additionally, the durable nature of cars means that consumers who purchase a car may not buy another one for several years. The spike in cars purchased during the beginning half of the period limits potential growth in subsequent years. Additionally, in 2020, as the pandemic impacted the broader economy and deterred consumers from making large purchases while lockdowns limited the need to upgrade cars for commuting and travel, sales declined 19.6% in 2020 alone. Driven by pent-up demand and a recovering Canadian economy, vehicle sales increased 6.3% in 2021. However, growth was tempered by supply chain disruptions, semiconductor shortages and limited car production, driving up car prices, resulting in car sales declining 7.0% in 2022.

In 2023, car sales are set to rise again despite the Bank of Canada's increasing interest rates, which drive up the cost of financing new cars. However, as supply chain issues begin to be resolved with oil prices in Canada declining in 2023 per IBISWorld estimates, car sales are set to grow in the year. But, volatility in the hiking of US interest rates (which has historically influenced how much the Bank of Canada raises their interest rates) is set to keep these rates pressured in the year to keep prices of products in Canada elevated in the year. However, expanding use of electric vehicles has helped elevate car sales in the period with special tax credits and the appealing use of these vehicles because of their robust sustainability has concurrently made these cars more popular in the period. As both consumer spending and labour market levels have concurrently remained robust in the period, higher prices are not set to scare off consumers with automobiles remaining essential for consumers to travel across the region of Canada in large part in part because of its enlarged landscapes and plentiful rural areas despite of concurrent efforts to boost public transit lines within the same period. Recession fears in 2024 are set to influence car sales in the period, leading to a more tempered incline of sales in the year as more consumers begin scaling back their spending while previous purchases of products like cars in the year before will concurrently discourage purchases of more cars within the year.