Canadian auto sales fell -1.2% m/m (sa) in April, to a pace of 1.6 mn units on a seasonally adjusted annualized rate according to Wards Automotive. Year-to-date sales in 2023 are up 3.8% compared to the same period last year but are -16.3% relative to the number of sales in the first four months of 2019. Nevertheless, April was a weak month for Canadian auto sales, as non-seasonally adjusted sales were -1.1% below sales in April 2022, and -23.2% below sales in April 2019. Canada’s tight labour market added another 41.4 k (sa) jobs in April, with the unemployment rate unchanged at 5.0% (sa) for the fifth consecutive month. While headline inflation has come down to 4.3% y/y (nsa) in March from the peak of 8.1% in June 2022, measures of core inflation annualized remains sticky above the BoC’s headline target of 2%, showing households continue to face cost pressures. North American light vehicle production slowed down to 15.4 mn (saar) units in March, rounding out Q1 with an average production rate of 15.2 mn (saar) units. The 11.9% q/q pick-up in auto production over Q4 2022 is helping alleviate some pressures from the supply side but is still below the 16.2 mn units produced in 2019. Our Canadian auto sales outlook remains unchanged for now, forecasting 1.7 mn sales in 2023, before increasing to 1.83 mn in 2024 as inflation and rates pressures ease.


US auto sales reached 15.9 mn (saar) units in April, an increase of 7.2% (sa) relative to March sales numbers and a reversal from the two consecutive monthly seasonally adjusted declines. This brings the average seasonally adjusted annual sales rate up to 15.4 mn in 2023, a continued improvement from the 13.8 mn annual light vehicles sales in 2022, but still -9% below the nearly 17 mn units sold in 2019. April’s sales numbers were 1.5% above April 2019 levels, marking the first time since April 2021 that non-seasonally adjusted sales in a given month were greater than the respective reference period in 2019. While GDP growth slowed to 1.1% q/q (saar) in 2023 Q1, consumer spending remains surprisingly resilient, growing 3.7% q/q (saar), with goods consumption contributing 1.5 percentage points to the headline GDP growth figure. The unemployment rate ticked down to 3.4% (sa) in April, the sixth consecutive month bouncing around 3.5% in a range of +/-0.1, and added another 253 k jobs. The 48-month new car loans rate increased for the fifteenth consecutive month to 6.94% in April, up nearly 3.5 ppts relative to January 2022. US light vehicle inventories increased 5.4% (sa) to 1.73 mn (sa) in April, growing in 13 of the past 14 months on a seasonally adjusted basis. Rising inventories continue to alleviate supply constraints but remain well below the 3.35 mn (sa) levels of February 2020. Our forecast for annual US auto sales remains unchanged at 15.7 mn in 2023 against signs of improving vehicle availability but continues to face uncertainty owing to tightened financial conditions following developments in the banking sector. US auto sales are expected to pick up to 16.9 mn in 2024 as inflation and rates pressures ease.


Global auto sales fell 6.2% (sa) in March, averaging 71.5 mn (saar) units in Q1 of 2023, an increase of 6.6% from the average sales level in Q4 2022. In non-seasonally adjusted terms, year-to-date global auto sales are 9.5% below sales levels of the first three months in 2019. The auto sector continues to experience an uneven recovery at the regional level (chart 1). Auto sales in Western Europe were up 5.9% m/m (sa) in March, increasing on a seasonally adjusted basis in 14 of the 15 countries covered. Gains in France (8.5% m/m, sa), Germany (5.1%), Italy (12.8%), and Spain (13.7%) were partially offset by UK (-13.5%). This rounded off Q1 with an average of 11.4 mn (saar) units sold in Western Europe, up 6.7% relative to Q4 of 2022, but Q1 2023 non-seasonally adjusted sales remain -23.6% below levels of Q1 2019. Asia Pacific auto sales fell -14% m/m (sa) in March, largely weighed down by a -18.2% (sa) decline in China which was distorted by the strong sales growth in February owing to the volatile re-opening effects. Auto sales also fell in Australia (-2.4% m/m, sa), Indonesia (-8.0%), Japan (-4.4%), and South Korea (-15.8%), but were up marginally in India (1.4%). Asia Pacific averaged 36.8 mn (saar) auto sales in Q1, a 6.1% increase from Q4 2022, and at the regional level have nearly recovered to pre-pandemic levels, sitting -0.7% below non-seasonally adjust sales in Q1 2019. Latam auto sales increased 16.4% m/m (sa) in March, bringing the average sales rate to 4.4 mn (saar) in Q1 2023, up 7.4% from Q4 2022, but remains -14.4% below Q1 2019 sales in non-seasonally adjusted terms. Auto sales were up across the region, with strong monthly increases in Brazil (32.8% m/m, sa), Chile (12.6%), and Peru (9.8%), followed by more modest gains in Argentina (4.4%), Colombia (3.1%), and Mexico (1.9%). Our global outlook remains unchanged and forecasts auto sales increasing 5.6% in 2023 and 5.2% in 2024, led by North America and Europe, but is subject to uncertainty as financial conditions remain tight with elevated rates in 2023 (chart 2). 

Chart 1: Global Vehicle Sales by Region; Chart 2: Regional Contributions to Growth in Global Auto Sales


Canadians’ shift towards purchasing electric vehicles continued to gain steam in 2022. EVs accounted for nearly one in ten (9.6%) of new motor vehicle registrations in the fourth quarter and 8.2% of all vehicles purchased in Canada last year. The market still has a long way to go in meeting the Federal interim sales target of ZEVs accounting for at least 20% of new light-duty vehicle sales by 2026 and 100% by 2035, particularly in some regions. In Ontario, the largest province by vehicle sales, EVs made up 8.1% of Q4 sales and 6.5% in 2022, up from only 3.1% in 2021. In Quebec, the province with the largest rebates for eligible EV purchases, 13.9% and 12.3% of new vehicle registrations were EVs for Q4 and annual 2022 respectively, up from 8.9% in 2021. Meanwhile, the province recently announced intentions to accelerate ZEV sales mandates. BC continues to be the leader of the transition where EV sales made up 18.6% of sales in Q4 and 16.2% in 2022 (chart 3). As Canadians deal with high interest rates and still high inflation at the margins, the decision to purchase an EV over the alternative of buying a gas car which are cheaper on average or put off the purchase altogether may pose headwinds to EV sales in the near term. In addition, limited inventory and long wait times are likely also putting off some potential purchases.

Chart 3: New ZEV Registrations in Canada
Table 1—Global Auto Sales Outlook (mns units); Table 2—Provincial Auto Sales Outlook (thousands of units ann.); Table 3—North American Annual Production Outlook
Quarterly Outlook for North American Auto Sector Chart 1: Canadian Light Vehicle Sales, Chart 2: US Light Vehicle Sales, Chart 3: Wards North American Auto Production Outlook; Table 3—North American Annual Production Outlook