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The Current State of the Canadian Auto Industry – May 2009

The State of the Auto Industry- and What's Around the Corner

Although Canada is not exactly feeling the economic strain like other countries are, we are still wary of buying what we simply do not need. Because of this, the state of the auto industry will change in the coming year. Economical and environmental factors will transform the state of the auto industry into a cleaner, fuel efficient tomorrow.

What to Expect- Environmental Factors

Toyota, GM and Ford will all be joining the eco-revolution with their hybrid models. Some of these include the Toyota Prius (third generation), the Honda Insight, the Ford Fusion and the hybrid General Motors pickup trucks.
As the baby boomers downgrade to smaller cars, Generation X have gone green opting for more environmentally friendly cars for their families. They can still tote their kids to and from school and to the beach on the weekends without worrying about the harmful damages to the environment.

What to Expect- Economic Factors

What will happen with Chrysler as it proceeds through bankruptcy remains to be seen. There is possibility that with some inventory backlog coupled with low demand may lead to lower prices in the near term.

Generally speaking, small cars will still rule the Canadian market because of fuel efficiency and price continuing to be of prime concern. Although the price of fuel has seen a few lows, it will almost certainly continue to increase which is why more and more people are opting for the smaller coupes and sedans to drive through the road of life.

As mentioned above, Canada is one of the only countries which is still ahead of the global collapse and this includes our auto industry. Although people are watching what they spend, they are still spending their hard earned money on cars. They are simply being smarter about it. Perhaps America's dire situation has made Canadians warier to borrow what they can not pay back. Whatever the case, more and more Canadians are re-evaluating their lending options before spending the money. While the state of the auto industry in the US and in Europe continues to decline, the Canadian auto industry market remains above water.

There is an interesting anomaly here though. Sales of luxury cars, like BMW, Mercedes and Audi have reported increased sales through the first quarter of 2009. There may be several explanations for this. First, people value quality, and they will pay for it. The reputation problems affecting GM and Chrysler have not been a problem for most foreign manufacturers. Second, the people who are in a position to buy a car over $ 50,000 have not been affected by the recession.

What to Expect- the Big Names in Automobiles

The News constantly regales us with stories about plants closing down in the United States. But what about Canada? Have the Canadian auto industry manufacturers been able to dodge the economic bullet?

Chrysler and General Motors have indicated that they will have to undergo some serious restructuring. GM has decided to stop selling Saab, Saturn and Hummer and Pontiac models. GM's rival, the Ford Company is also feeling the heat with Volvo for sale and Mazda reduced in investment. With recent failed transactions with stockholders a GM bankruptcy seems inevitable. That does not mean GM would stop selling cars, just that it would be restructured.

For the Consumers

So what does all of his mean for the consumers? There is a good chance that the cost of cars will decline by around 10% on 2009. This is nowhere near as dramatic as in the United States but is still great for those who can afford a new car and have the credit or equity to pay for it. With this kind of uncertainty, it may be best to hold off on new vehicles for the moment. But with interest rates at unbelievably low levels, you should get your next car soon if you can afford it. This is a buyers market, and it will not be seen again for some time.

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