Sport utes and pickups have made up around 70 per cent of total sales in Canada in 2017
Canada has a population of just over 36 million people; by the close of this year, current annual sales of new cars will be about 2 million. Estimates put used car sales at about three million for the same time period.
We buy a lot of cars.
Light trucks, actually. For all the jabber after the last economic crash a decade ago, the one that took the leasing industry with it, we’ve left behind the promise of subcompact vehicles, become bored with sedans and continue to shun the hybrid and electrics that dominate headlines but little else.
“Sixty-eight to sixty-nine per cent of the market this year is light trucks,” says Dennis DesRosiers, of DesRosiers Automotive Consultants. “In fact, for four of the past 12 months, it’s been over 70 per cent, and this will stay positive for another year, at least.” DesRosiers crunches numbers and breaks down stats; he cares little about what ad campaigns and headlines say we should be buying, and instead reports on what we actually are.
“The used car numbers are actually the most revealing,” says DesRosiers. “In 1990, there were 600,000 vehicles on the road that were over ten years old. Today, there are 11 million, and over the next two years that will grow to 12 million.” Used car sales were two million in 1990; over the next couple of years, DesRosiers predicts that will leap to 3.5 million. It’s the fastest growing part of the market, and all for one reason.
“Quality, quality, quality,” he remarks. Even with the resurgence of the leasing game, which reached a high of about 40 per cent of sales before the 2008 meltdown, and now has rebounded back to about 30 per cent, about half of current lessees are choosing to buy out their vehicles at the end of the lease. So why is a group that traditionally leased to make sure they could have a continuing loop of that new car smell now keeping the old one?
“A lot of people lease to lower an initial monthly payment,” says DesRosiers. “At the end of that three- or four-year term, they like their cars, they trust their cars, and the refinance amount is still very manageable.”
When I offer that I think extended term vehicle loans, for seven, eight or even nine years are dangerous, DesRosiers shoots me down. “Consumers were just doing that anyway, when they leased while intending to buy. Keeping their monthly payment where they wanted it, then refinancing down the road. It makes no difference for people keeping their cars,” he argues. It’s true we’re keeping our cars longer, and our cars have longer lives even after we release them into the wild; DesRosiers suggests the life cycle of a new car today is close to thirty years before it will finally leave the road.
John Raymond, a consultant with the Automobile Protection Association (APA) hesitates over that figure. “Twenty years plus with regular maintenance and some level of corrosion treatment. The cost of repair generally drives the scrap-age rate,” he explains.
There is also the lure of a rapidly changing technological landscape that pushes a significant number of buyers to chase after the newest, shiniest thing.
“I call it the new-car erection,” DesRosiers laughs. There will always be a segment of the car buying public who have to have the latest upgrades, much like the phone you’re reading this on, or that is at least not far away. The extended lifespans of today’s cars is also complicated by another factor: fuel economy.
“Vehicles are getting at least 2 per cent more efficient each year; that means today’s model will be 20 or 25 per cent more fuel efficient than the same one from a decade ago,” says DesRosiers. My ten-year-old paid-for car is running like a top, but a new one would provide much greater fuel economy and better environmental factors. Which naturally leads the discussion in an electrifying direction, or doesn’t.
“Electrics are up, but they comprise a blip in the sales numbers. Hybrid sales are down for the fifth year in a row,” he says. “When sales of electrics comprise just 5,000 vehicles out of that two million, the OEMs have a headache.”
He’s right. And that 5,000 was almost entirely triggered by rich rebates in three provinces – Ontario, Quebec and British Columbia – and if those enticements disappeared (as some say they should), even those gains would disappear in a blink. Raymond lists three barriers to electric sales taking off. “The cost of entry, despite heavy subsidization, is still high. Range anxiety is still very relevant, and thirdly, the ability to consistently charge the vehicle remains an obstacle. Not everybody lives in a house,” he says.
So if the statistical reality is that hybrids and electrics are more like the last mosquito in the room at night instead of the elephant, why is that all we hear about? “I blame you guys,” laughs DesRosiers. “The media play it hard and the OEMs are taking a huge risk on technology that, look at the numbers, nobody wants.” Those internal combustion engines are doing more with less, doing it better, and doing it for longer. Electrics seem to be the answer to a question nobody asked, at least in the passenger and light truck vehicle segment.
As another record sales year closes, the industry is happy to shovel SUVs after CUVs after pickups to a public who can’t seem to get enough. I ask DesRosiers if we’re starting to mimic American buyers, with the numbers and the flash. He laughs again.
“Canada is pretty boring,” he says. “We buy the least amount of vehicle we need; Americans buy the most.”
And everybody wonders why Canada loves hatchbacks so much.