Treasury
Scotiabank Sees a Gradual Improvement in Canada Auto Sales This Year, 2027 Amid Volatility
Canadian auto sales increased 3% month over month to 1.9 million units at a seasonally adjusted annualized rate (SAAR) in April, based on data from Omdia, Scotiabank noted in an overnight note.Last month's sales rate was the highest seasonally adjusted (SA) month since July 2025, while a 1% upward revision to Q1 sales provided a "stronger hand-off" going into Q2. In non-seasonally adjusted terms as reported by the same source, auto sales were 181,600 in April, down 4.1% year over year but up 7.9% relative to the same month in 2024, the bank also noted.Canadian auto sales have improved in recent months, with the three-month moving average (3mma) rising to 1.86 million SAAR in April, up from 1.76 million (SAAR, 3mma) in January, Scotia said. This rise is primarily supported by higher car sales, which increased 22% month-over-month SA in April amid a surge in demand for small cars, it added.It remains to be seen whether this is a temporary rebound from the softer sales at the end of last year or a more enduring rebound, the bank said. One possible explanation for the rise in car sales is increased demand owing to the recently implemented Electric Vehicle Affordability Program (EVAP), it added.Statistics Canada is expected to publish new vehicle sales by fuel type for March on Thursday, which could show early signs of an uptick in ZEV sales from the EV rebate program, noted Scotiabank.Scotia's outlook for Canadian light vehicle sales is 1.81 million this year. Auto sales remain quite volatile on a monthly basis, smoothing through this volatility, Scotiabank estimates demand to gradually improve throughout this year and next, rising to 1.87 million in 2027, although with larger uncertainty given elevated and volatile oil prices clouding the outlook.
$CXY