The COVID-19 outbreak hit after what we expected to be decent sales in Canada for the first two months of 2020. COVID-19 caused mass shutdowns and shelter-in-place orders and mass job loss across Canada. Obviously all of this economic disruption will impact car sales, and judging by our sales charts, this is certainly the ace.
Add to that the fact that many dealerships aren’t open and can’t be open and have few options to sell cars to people even if they were in the market to buy a new car, and you have a recipe for disaster in terms of car sales.
The Canadian automotive industry took a big hit in Q1 of 2020. Let’s take a closer look at what exactly happened and what we can expect in the future.
How We Report Canada’s Sales Numbers
Many automakers have switched over to quarterly reporting for their sales numbers. This has forced us to switch over our reporting as well. The automakers still reporting sales numbers monthly will be reported as they come in. However, for other automakers, we’ve had to come up with monthly estimates.
COVID-19 makes creating these estimates difficult. The pandemic didn’t really hit Canada until partway into the quarter, so this made it challenging to do an accurate estimate of the monthly sales numbers.
With that said, from what we could see of the automakers who still report monthly, there was a roughly 17 percent decrease from February to March, so that is the percentage drop we used to calculate the monthly numbers. Using that benchmark isn’t absolutely ideal, but it should get us close.
You’ll notice a pretty big drop off in March. That drop is expected to continue into Q2 of 2020, though it’s unclear at this time how many sales that will impact and negatively affect.
Automotive News Canada, places the drop of sales across all automakers to be at 20 percent. That’s a bit higher than the 17 percent drop we used as a benchmark, but that sales data does include some estimations of their own. All told, we feel our sales numbers are a very good representation of what has actually happened since the COVID-19 outbreak hit the Canadian automotive market.
What Did COVID-19 Do to Sales in Canada in Q1 of 2020?
COVID-19 wreaked some serious havoc on the Canadian automotive market. Quarterly sales drops are as high as 69 percent for brands in our sales report. There was only one automaker that managed to see a sales rise in Q1 of 2020 and that was GMC.
The brand had been trending up lately and it looks like that positive momentum was enough to keep it from entering the red in Q1. Unfortunately, that isn’t likely to continue. In the last month of Q1, we estimate a drop in sales for the brand of 37.19 percent. Q2 will likely be sales declines across the board.
At the bottom end of the sales charts in terms of sales decreases was Tesla. The company saw a sales decline of 69.36 percent, though it’s worth noting that Tesla figures are estimates as they don’t actively report their sales numbers. Other companies that were way down included Maserati at a 57.45 percent decrease in sales, Chrysler at a 55.04 percent decrease in sales, Infiniti at a 50.35 percent decrease in sales, and Porsche at 42.07 percent decrease in sales.
Honda, Nissan, Jeep, Acura, Cadillac, Jaguar, and Mini all saw sales declines in the 30 percentages. Every other brand was below that.
When you look at just the month of March, you’ll see that the sales declines were even more pronounced. Most brands saw somewhere between 50 and 80 percent decrease in sales. The numbers for March are more likely what the Q2 sales numbers will look like as the COVID-19 pandemic has caused major disruptions since then and will likely continue to do so in the immediate future.
What Does the Future Look Like?
Unfortunately, Q2 will likely look most like the last month of Q1, possibly worse. It all comes down to timing. In Q1 of 2020, we had about two months of usual automotive sales. Q2 is starting in the middle of a health crisis.
That means sales will slide even further into the red for all automakers. Millions of people are struggling due to the economic impacts of COVID-19, and that will ripple through just about every industry, autos included.
The end of Q1 was the worst in terms of the data that we do have, but the sales drops won’t end there. Q2 will likely see more dramatic drops in the 40 to 60 percent range or more. Automakers are going to struggle.
Lockdowns due to COVID-19 are more stringent than in the U.S. and people in Canada are actually paying attention to them, too. That means fewer folks will be out shopping until COVID-19 is under control. Despite the fact that scientists are working hard on a vaccine, it will take months for it to get to the masses. That means a long time before auto sales turn around.
Hopefully, after Q2 things will start to get a little better. However, it will likely be a year or more before the full effects of COVID-19 are felt, and that’s if the virus doesn’t rear its ugly head in a second wave and if we can get a vaccine created in a timely manner.
Automotive sales in Canada will likely be dramatically lower than last year. Q3 and Q4 will have COVID-19 impact the number of cars sold. This is an issue that isn’t going away in a few months or a quarter. Even if the virus were to miraculously disappear, the economic impact will be felt in the automotive industry for a long time to come.