Canada July auto sales drop, outlook uncertain

Wed Aug 3, 2011 5:15pm EDT
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By Nicole Mordant

VANCOUVER (Reuters) - Vehicle sales in Canada slid in July after a strong June, leaving the trend for the rest of the year in doubt as the outlook for the economy becomes murkier.

Passenger car and light truck sales fell 4.9 percent to 141,500 units last month, DesRosiers Automotive Consultants said, as Japanese carmakers continued to suffer parts shortages and a tepid Canadian economy and high gas prices stifled truck purchases.

"There are a lot more economic problems and a lot more hesitation in the marketplace than what people want to talk about, especially the politicians," said independent automotive industry consultant Dennis DesRosiers.

"It is a difficult market to call. Because it is so lackadaisical, there is no distinct trend one way or the other," he said.

Sales started the year on a strong footing, raising industry hopes for continued recovery from the 2008-09 global economic crisis that nearly proved fatal for General Motors and Chrysler. But the road became bumpier in the spring with vehicle sales rising 6.6 percent in June after falling 3.8 percent in May.

In July, Ford and General Motors sold fewer of their flagship trucks in Canada as consumers again opted for smaller cars as gas prices stayed high and confidence about the economic outlook wavered.

Ford Canada, the biggest vehicle seller in Canada in July, said its truck sales fell 2.9 percent to 19,182 last month. However, its car sales jumped 9.5 percent to 8,162, helping its combined vehicle sales rise 0.5 percent to 27,344.

"We have been seeing consumers migrate from trucks to cars throughout the year due to several factors including higher fuel prices," Ford Canada Chief Executive David Mondragon said.   Continued...

<p>A new 2011 Chrysler Town &amp; Country minivan is displayed during a celebration ceremony for the production launch of the new 2011 Dodge Grand Caravan and Chrysler Town &amp; Country mnivans at the Windsor Assembly Plant in Windsor, Ontario January 18, 2011. REUTERS/Rebecca Cook</p>