August 3, 2011 / 4:53 PM / 6 years ago

Canada July auto sales drop, outlook uncertain

<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>

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.

GM of Canada said combined car and truck sales fell a bigger-than-expected 15 percent to 20,345 in July after the unit of General Motors Co sold out of some of its best-selling brands in June, and did not have enough stock.

GM’s car sales slumped 24 percent to 6,472 and trucks fell 10 percent to 13,873.

Chrysler Canada was once again a bright spot. It said its total vehicle sales increased 4.8 percent to 23,385 in July on the back of a 32.7 percent jump in car sales to 3,771 and a 0.7 percent rise in truck sales to 19,614.

It was the Detroit automaker’s best July sales month on record and raised its share of the market to 15.2 percent, just behind GM’s 15.3 percent market share.

Japanese carmakers continued to struggle with sales in July due to a shortage of car parts from Japan in the wake of supply disruptions caused by the massive earthquake and tsunami in March. But both Toyota and Honda said the worst was over.

“With the return to 100 percent production for most North American-built vehicles, Toyota’s sales momentum has been increasing for the past two months,” said Tony Wearing, managing director for Toyota Canada Inc.

Year-on-year, however, Toyota’s car, truck and sports utility vehicle sales were down 17.9 percent at 11,231.

Honda’s sales dropped 25 percent to 7,654 in July while sales at its upper-market Acura division fell 19 percent to 1,164.

“Our July sales results reflect the full impact of the disaster that struck Japan in March, but now that the worst is behind us, we fully expect that the situation will improve significantly over the coming months,” said Jerry Chenkin, executive vice-president of Honda Canada Inc.

In the United States, auto sales ticked higher in July, but automakers cautioned the prospects for the second half remained clouded with consumers hurting in a weak economy.

($1=$0.96 Canadian)

Editing by Rob Wilson and Peter Galloway

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