March 1, 2011 / 4:44 PM / 6 years ago

Canada vehicle sales fall, signal fragile recovery

5 Min Read

VANCOUVER (Reuters) - Canadian auto sales fell for the first time in 14 months in February showing the fragility of the sector's recovery as a late-month oil price spike hit truck sales and some Japanese car makers struggled.

After a strong January, vehicle sales fell an unexpected 4.2 percent last month, the first time in 14 months that sales were down, said independent auto analyst Dennis DesRosiers.

"It shows we have a very halting recovery... The continued positive view of where the automotive sector is going may be ill-founded," DesRosiers said.

He cautioned, however, that February is traditionally the worst sales month of the year and that not too much store should be put in one month's figures.

In the United States, auto sales rose more than 20 percent in February, figures showed on Tuesday, exceeding the most bullish forecasts as the lure of discounts from automakers outweighed concerns about higher oil prices. [nN01121963]

Ford Motor Co of Canada Ltd (F.N) once again claimed the top spot in sales after losing it last month to General Motors (GM.N) of Canada, which was pushed to third place in February behind Chrysler.

Ford returned to the No. 1 position despite a 10.3 percent drop in vehicle sales. It said truck sales slid 14.4 percent to 12,378 units, which it blamed on a spike in oil prices toward the end of the month.

"February industry was lower than expected, reflecting higher gas prices and lower consumer confidence," said David Mondragon, Ford Canada's chief executive.

Crude oil prices surged above $100 per barrel in North America last week for the first time since 2008 on concerns about supply disruptions due to unrest in North Africa and the Middle East.

"There will continue to be movement from trucks to cars as gas prices move forward," Mondragon told Reuters.

Ford's car sales rose 7 percent to 3,703 in February.

GM Canada said that overall sales of its core Chevrolet, Buick, GMC and Cadillac brands fell 5.7 percent to 12,285 in February from the same month a year earlier. Truck sales dropped 12.9 percent to 8,214, but cars rose 13.1 percent to 4,071.

"Industry sales were softer in February, but we are well-positioned to achieve our targets for profitable and sustainable growth in 2011," said Marc Comeau, vice-president of sales, service and marketing at GM Canada.

Chrysler Canada, maker of the Dodge Grand Caravan, Ram pickup and Dodge Journey was Canada's No. 2 automaker in February. It bucked the falling trend and posted an 8 percent increase in vehicle sales to 15,238.

The company has "one of Canada's most fuel-efficient lineups, which helped to propel our sales in February," Chrysler Canada CEO Reid Bigland said.

Tough Month for Toyota, Honda

"The big losers were Toyota and Honda. A number of the Japanese players are really struggling," DesRosiers said.

Toyota Canada 7203.T>, which has been trying to win back customers after a string of recalls, reported a 25.3 percent drop in sales in February. It sold 9,480 Toyota, Lexus and Scion cars, trucks and sport utility vehicles.

Honda Canada (7267.T) said combined sales of Honda and Acura vehicles fell 12 percent in February to 7,809 units.

The drop in sales came mainly because Canadians are waiting for the arrival in late April of a new 2012 Honda Civic sedan, Honda Canada Executive Vice-President Jerry Chenkin said.

In sharp contrast, Nissan Canada (7201.T) said it had its best February ever, selling 5,408 units, an increase of 21.6 percent over February 2010. Much of the boost came from strong sales of its Sentra sedan.

Hyundai Canada (005380.KS) said sales rose 2.3 percent to a record high of 8,700 for the month, helped by its fuel-efficient lineup.

"Choosing a Hyundai gives customers a way to respond to the rising cost of fuel and save money at the pump," said Steve Kelleher, CEO of Hyundai Canada.

Reporting by Nicole Mordant; editing by Peter Galloway

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