February 13, 2008 / 10:51 PM / 10 years ago

Canada auto execs see sales slowing slightly in 08

TORONTO (Reuters) - Automobile sales are set to slow in Canada in 2008, but a strong domestic economy, along with ongoing incentives and recent price reductions should lead to a fairly robust year, according to executives at the Canadian arms of the “Big Three” automakers.

To start off the year, Canadian auto sales recorded their second best January ever, helped by incentives and reduced prices on some models, allowing some tempered optimism in the industry.

“One month does not a year make, but we’re off to a really good start,” Barry Engle, president and chief executive at Ford Canada (F.N), told Reuters at the 2008 Canadian International Autoshow in Toronto on Wednesday.

The economic downturn in the United States, along with a stronger Canadian dollar has started to take its toll in Ontario, Canada’s most populous province and the heart of its manufacturing sector.

The U.S. economy absorbs around 75 percent of Canadian exports, and in response to the slowdown south of the border, the Bank of Canada has lowered its forecast for economic growth in 2008, and Canadian auto makers have lowered their forecasts as well -- but not by much.

“Last year the industry did around 1.69 million (units). We are now forecasting 1.64 million, so we are forecasting a decline of about 50,000 units,” Engle said.

Over at General Motors of Canada (GM.N) , the forecast was similar, with industry sales expected at 1.64 to 1.65 million units, said Vice-President Mark Comeau.

Comeau said he expects to see sales being fueled by lower prices on many vehicles, which came about in response to public pressure as the Canadian dollar muscled its way to parity with the greenback last year. But he warned that prices are not going to fall much further.

“We think the adjustments that needed to be made have been made across the industry, as underscored by our performance here in January, when we came out of the chute with sales up almost 20 percent. And, as I look through the first few days of February, we are following that same pace.”

The sharp rise in January sales allowed Chrysler Canada to record its eighteenth consecutive month of year-over-year sales growth.

Reid Bigland, chief executive at Chrysler Canada, said that while he expects sales to stay healthy, they might not meet 2007’s strong showing.

“We’re optimistic that we’ll keep our success rolling into 2008, but I don’t know if we’ll continue the consecutive streak,” Bigland said.

($1=$1 Canadian)

Editing by Rob Wilson

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