By Dennis DesRosiers
Light truck sales remain strong despite high gasoline prices thanks to provincial sales in Northern Ontario, British Columbia and especially the three Prairie provinces.
National sales of light trucks are up 4.6 per cent year to date while passenger car sales are down by 2 per cent. The 2008 financial crisis hurt fleet sales (down by 23.2 per cent) more than retail sales (down 8.6 per cent).
Fleets tend to favour light trucks over passenger cars. Fleets and commercial fleets (versus daily rental) still use their vehicles even though they may not be replacing them, creating demand for commercial use light vehicles in 2010 as businesses come rushing back to the market and renewed the vehicles in their fleet.
Fleet sales are no longer available monthly. However, fleet sales in 2010 were up by 37.4 per cent while retail sales were up by only 2.2 per cent. Dealers say fleet sales are strong again this year and when fleets are in the market they are predominately buying light trucks.
Detroit’s best vehicles are on the light truck side of the equation and the return of GM and Chrysler from bankruptcy in the US and the resurgence of Ford plays to their light trucks more than their passenger cars.
There are a lot more light trucks, defined as pick-up trucks, sports utility vehicles and small vans, being introduced versus passenger cars and the market responds very positively to new vehicle introductions.
Japanese brands are having a difficult year with sales down this year. The supply issue related to the Tsunami is the core problem but worsened by the terrible market in Quebec. Japanese original equipment manufacturers’ strongest market is in Quebec with close to half of the Quebec market buying Japanese and another 20 per cent buying Korean and European vehicles. With the market in Quebec soft, Japanese brands suffer more than the other original equipment manufacturers.
Market tend to be more powerful than any policy maker, so the average fuel efficiency in the market is actually getting worse and not better despite dozens of fuel misers available for sale and all vehicles becoming more fuel efficient. Even the least fuel efficient light trucks are more fuel efficient these days. But when the market embraces light trucks, fuel efficiency suffers since the average fuel efficiency of a light truck in Canada is 11.1 litres per 100 kilometres while it is 7.9 Litres per 100 Kilometres for passenger cars.
If Canada adopts the Obama fuel efficiency standards the average light vehicle will have to meet a 6.62 Litres per 100 Kilometres standard by 2016 which is impossible if Canadians continue to embrace light trucks. The unfortunate solution is that many light trucks may not be made available come 2016.
Dennis DesRosiers is president of the DesRosiers Automotive Consultants Inc.