Toronto, Ontario – With many Canadian companies getting ready to release their third-quarter financial numbers, an industry expert from J.D. Power reminds consumers that while overall sales figures are positive, we are only in the second-quarter as far as the pandemic is concerned.
In an interview with Automotive News Canada, senior manager of J.D. Power’s power and information network Robert Karwel shed some light on the current state of the auto retail sector heading into the final quarter of the calendar year.
“Sales were pretty good. We’re getting closer to recovering those lost volumes from the height of the pandemic,” said Karwel.
Recent trends appear to be indicating a significant transition from passenger cars to light trucks, according to Karwel.
“The proportion of people that are still switching out of passenger cars into light trucks is a phenomenon that is not slowing or stopping. We were looking at an 80:20 ratio of vehicles being retailed to Canadian consumers, 80 percent being light truck in the last quarter.”
What is specifically charging this push toward trucks over passenger sedans is unclear at this time, however, Karwel sees this as being a fundamental shift in Canadian auto consumer habits.
“It goes to show how much passenger cars have fallen out of style with Canadian consumers when it comes to making a retail purchase decision,” said Karwel.
He goes on, “It’s all a consumer-driven choice. No one is forcing this to happen. It’s consumers making it happen.”
One potential cause for the 80:20 ratio to skew toward trucks could be due to the fact that, despite the pandemic, the purchasing ability of those in the market for trucks was possibly less affected than those more inclined towards a passenger sedan, according to Karwel.
“Vehicle pricing is trending up. We’ve seen it trend up throughout the pandemic and the reasons for it continuing to go up are various. For example, during the height of the pandemic in the spring, we saw vehicle pricing going up but we think that had a lot to do with who was already shopping for a car. Canadian consumers that were in the market for a full-size crew-cab pickup truck, for example; they’re probably a little bit older, a little bit more secure in their jobs or they’re more secure in their future prospects for employment. They didn’t really put off that purchase. But people on the other side of the spectrum — maybe a seasonally employed, younger person with cloudier prospects for staying employed, not really knowing how the pandemic was gonna affect them or their careers. A lot of those customers would probably be buying C-segment cars, like a Honda Civic for example. They dropped out. They stopped buying cars. So we actually saw the average transaction price of vehicles rise.”
Rising vehicle prices are likely a result of certain expenses and drawbacks caused by the pandemic as well as lost sales and Karwel says he doesn’t see the average price levelling back out until early next year.
“Right now in Canada, we’re sitting at about $37,000 average customer-facing transaction price. To put that in perspective, that’s up around 6 percent or $2,000 from this time last year when it was just over $35,000. So it’s a substantial increase.”
