Toronto, Ontario–For most, the COVID-19 pandemic has brought on a period of financial uncertainty that puts buying a car far from the top of many Canadian’s to-do lists, however, one economics expert says that the current state of the auto sales industry could be a sign of relief for reluctant buyers.
“[Auto sales] is the first signal of how the economy is doing in any given month,” says Rebekah Young, director of fiscal and provincial economics for Scotiabank Economics’. She claims that factors such as a decline in fleet vehicle sales have given the impression that overall sales are on the downturn, however in fact, government programs are restoring the confidence of Canadian buyers.
In an interview with Automotive News Canada, Young said that while certain economic recovery programs, like CERB, may not provide long-term economic stability, they do provide many Canadian households with the confidence to buy, even in spite of the uncertain times we currently find ourselves in.
“There is a good portion of Canadians who haven’t been affected by the pandemic and, in fact, we are seeing, on aggregate, that the transfers from the government through things like CERB or the child benefit transfers. A variety of these transfers have actually exceeded income losses on aggregate.” says Young. “So there is a portion of Canadian households that are actually financially better off now than they had been prior to the pandemic.”
There is pressure on the federal government by the Canadian Automobile Dealers Association to increase the amount of incentives for people to be able to buy cars during this time, however, Young considers the government’s current action to be “sufficient” and that in fact, Canadians are saving more than ever.
According to a report from Statistics Canada, the savings rate for Canadian households has shot up from three to 28 percent since prior to the pandemic, meaning more people are choosing to hold onto more of their income than before.
Young says “it’s not necessarily a negative or a fear factor, and in fact it could be a positive as Canadians start to unwind those savings or to go out and spend some of this money in their bank account.”
