Are new vehicle sales an early warning sign for aftermarket?

by | Apr 10, 2024 | 0 comments

Canadian new vehicle sales may not have an immediate impact on the aftermarket, but the current divergent market may indicate where Canadians’ heads, and wallets, are at in the current economy.

While overall new light vehicle sales for the first quarter grew by 15.3% among reporting manufacturers, the real story developed beneath, at the segment level, in terms of the split between luxury and mass market:

  • Mass Market +18.7%
  • Luxury -7.3%

Given this extreme divergence in sales patterns, it is unsurprising that two of the three worst performing segments for the quarter were luxury: luxury car, which was down 29.1% and compact luxury car, down 19.7%.

At the other end of the spectrum, subcompact SUVs pulled well ahead of the overall market, thanks to a 58.2% sales increase bolstered by strong volume gains by the Chevy Trax, Nissan Qashqai, and Hyundai Kona, amongst others.

Sports cars similarly saw a 48.3% increase, led by a significant increase for the evergreen VW Golf R.

Overall, light trucks continued to gain ground when compared to passenger cars in the first quarter. Light truck sales reached 348 thousand units in the first quarter, up 16.2%, to reach 86.8% of the market.

Meanwhile, passenger cars saw an increase of 10.0% compared to Q1 2023, up to 53 thousand units sold.

Despite the apparent divergence between mainstream and luxury, DAC is voicing increasing concerns regarding the market as a whole.

As Andrew King, Managing Partner at DAC, commented, “There are a number of warning signs appearing even in the mainstream market – incentives are climbing, sub-vented leasing has reappeared, and consumers are increasingly pushing back against the “trimflation” seen in 2022/23.”

The market as a whole appears unstable and DAC says it will be watching closely in the coming months to see if the market is approaching an inflexion point, in which pent-up demand is overcome by high interest rates, increased vehicle prices, and tepid economic conditions.


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