Canada Matching U.S. Light-Truck Sales Shift

OTTAWA – Light trucks accounted for 70.9% of Canada’s passenger-vehicle market in 2018, on par with their share in the U.S., and there are no signs of the trend abating, industry officials say. 

In unit terms this amounted to 1.4 million light trucks – SUVs, CUVs, pickups and minivans – sold last year, compared to just 577,000 standard cars, according to new data from Ontario-based DesRosiers Automotive Consultants. 

Indeed, according to Oumar Dicko, chief economist with the Canadian Automobile Dealers Assn., this year’s anticipated drop in overall auto sales of between 3% and 4% is largely because of a 16% year-on-year decline in passenger-car deliveries, he tells Wards. Despite this soft overall market, Dicko predicts Canadian light-truck sales will grow 2% in 2019. 

Dennis DesRosiers, owner of DesRosiers Automotive Consultants, thinks a combination of planned new launches, marketing dollars and the intrinsic desire of Canadian motorists to own a roomier vehicle will sustain light-truck segment growth. 

“Over the next 18 months, 70% of the 65 to 70 new models to be launched in Canada will be light trucks. If you build it, they will come,” he says. 

DesRosiers predicts that in the coming decade, light trucks could command 75% to 80% of the Canadian market before their market share stabilizes and potentially falls back, although not below 65% of the market. Only a “black swan” event, such as doubling of gas prices, is likely to dent the market, he says. 

Dicko thinks the light-truck bull market has been more consumer-driven, with Canadians being particularly keen on light trucks’ all-wheel-drive capabilities, which come into their own in Canada’s often-harsh winters, offering safer driving on snow and ice, and sometimes the ability to drive and park over snow, when passenger cars, especially with 2-wheel drive, cannot cope. 

DesRosiers agrees Canadians favor light trucks for their good handling, storage capacity, safety-enhancing higher sightlines and generous seating. 

Moreover, the fact that their fuel efficiency has been improving will only strengthen the attractiveness of light trucks. In addition, the launch of electric SUVs and pickup trucks in Canada will remove another incentive to buy cars. 

Given these trends, Dicko asks: “The question is, where is the bottom of the market for passenger cars? This shift is mainly driven by consumer preference.” 

The data backs this up. Canadian light-truck sales have been expanding for years, commanding just 31.3% of total sales in 1990, rising to 45.3% in 2000, 54.7% in 2010 and 68.6% in 2017, DesRosiers Automotive Consultants data shows. They have been particularly strong in western provinces such as Alberta and Saskatchewan, where light trucks accounted for 83.5% and 85.4%, respectively, of 2018 sales. 

“A lot of this is because of the type of consumers,” DesRosiers says. In areas with large rural populations, “many had been accustomed to driving pickup trucks…with a lot of outdoor activities.” 

When Toyota led the way in manufacturing car-based from 1998 onwards, Albertans and Saskatchewanians lapped up the new models, attracted by the price, the handling and the fact they offered space, just like their old pickups. 

In the past decade, CUV and truck-based SUV sales have surged in Alberta, for instance – midsize models were 19,846 in 2010 and 27,088 in 2018, while compact utility vehicle sales totaled 29,743 in 2010 and 44,704 in 2018. Pickup sales have remained strong, although increasing at a lower rate: 63,687 in 2010 and 73,273 in 2018. 

There has been a similar pattern in Saskatchewan.  

DesRosiers notes luxury purchases, such as top-of-the-line SUVs and CUVs, were high in British Columbia, a province with pockets of high wealth, especially around the capital Vancouver – they accounted for 4.4% and 5.4% of sales of all vehicles in BC, compared to 0.7% and 1.5% in significantly poorer Newfoundland & Labrador.

Chevrolet Impala 19_1

Might the Canadian government’s carbon-tax policies, which have inflated fuel prices – by C$4.42 ($3.32) per liter in Ontario, for instance – depress sales of larger autos, given their higher fuel consumption? DesRosiers says so far he has seen no evidence of impact on light-truck demand, indicating tougher measures (which are not currently in the offing by Canada’s new minority Liberal government) might be required for that to happen. 

DesRosiers says the image of SUVs and CUVs remains positive among Canadian consumers willing to pay more for these models, encouraging manufacturers to make additional sales efforts – and shift production accordingly. General Motors this year ended production of the Chevy Impala (above, left) and Cadillac XTS sedans at its Oshawa plant near Toronto. 

Fewer car launches mean less choice and less marketing for cars, Dicko says, so the great Canadian shift to light trucks looks likely to roll on. 

“It’s been successful,” DesRosiers says. Manufacturers “will put millions of marketing dollars behind these models and rev up the dealer base and sure as heck, consumers will embrace them.”