Slow growth better than no growth

Michael Hatch, CADA

By Michael Hatch,
Special to Wheelstalk.com -

It’s natural at this time of year to look back on how that past 12 months have played out and to wonder what a new year will bring. For the auto industry in particular and the economy in general, 2012 has been characterized by growth through fits and starts. There’s a feeling out there that we’ve had a good year, but that it could have been so much better. But set against what’s going on in much of the rest of the world, even halting growth is better than most alternatives.

First, the good news: we’re on pace to come very close to a new record for new vehicle sales in Canada this year. If the month of December produces particularly strong results – not out of the realm of the possible – then we could surpass the all-time sales mark set a decade ago. Considering what’s gone over the past four years, this is remarkable.

The economy at large is performing as well as can be hoped in the context of what often seems like total chaos in the rest of the world. We have our challenges in Canada but a bankrupt (Greek) or gridlocked (American) government are not among them. In our much-hyped economic outperformance of most of the world we’ve been as lucky as we’ve been good.

But the flip side of this for our own industry is not as encouraging. Another way of saying 2012 will be the best sales year since 2002 is that new vehicle demand has been flat over the last decade. Not many industries would pound their chests trumpeting such a record. But in the dual contexts of the recession of 2009 and what continues to take place beyond our borders, at the very least a sigh of relief is in order.

And as for next year, the fundamentals are solid. The same factors that drove people into dealership showrooms in near-record numbers this year will continue to exert pressure on them in 2013: record affordability; world-beating product choice; pent-up demand from the past several lean years; shortened spreads between prices for used and new vehicles; a myriad of financing options; an economy that’s growing slowly, but still growing.

All these factors and others should bring us another year of solid growth in 2013. If we don’t quite break the sales record in 2012, we wont need much of a push to do it next year. All things considered, this is great news.

Michael Hatch is the Chief Economist with the Canadian Automobile Dealers Association: www.cada.ca

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