Few Canadians plan to postpone new-vehicle purchases, study finds
A new survey is offering a glimmer of hope that Canadian car sales will stage a rebound, at least later this year.
While most Canadian car shoppers expect to purchase a vehicle later than they originally planned this year, very few have indefinitely postponed their purchase, a recent survey found.
A survey of 500 Canadian shoppers conducted in April by the vehicle-shopping site CarGurus found that 87 per cent of respondents said they planned to purchase a vehicle later than they had originally hoped due to the COVID-19 pandemic. But just six per cent said they pushed off those plans indefinitely, while 68 per cent of those who have delayed buying a car said they were still “actively researching” for a purchase.
“Auto sales are delayed, but most are not lost,” the CarGurus report reads. “Many shoppers are simply waiting for normal economic activity to return, and are actively shopping online in the meantime.”
The COVID-19 pandemic and the economic shutdowns that ensued led to a sharp decline in Canadian new-vehicle sales during April, plunging about 74 per cent from a year earlier, according to an estimate by DesRosiers Automotive Consultants. Dealers and automakers hope pent-up demand will help the auto market rebound in the second half of the year if the coronavirus is kept under control and stay-at-home restrictions are lifted, though analysts warned that annual sales could be down as much as 40 per cent from 2019.
A majority of respondents indicated they anticipated purchasing a vehicle four months or longer from now. According to the survey, 13 per cent planned to buy their next vehicle more than a year from now, with 28 per cent saying it would be within 7-12 months and 21 per cent indicating they would within 4-6 months. Sixteen per cent said they would purchase a vehicle “shortly after restrictions lift,” with another four per cent saying they would within a month and 12 per cent saying a purchase would come within three months.
The responses come as Canadian consumer confidence shows signs of improving.
The Bloomberg Nanos Canadian Confidence Index, a composite gauge based on weekly telephone and online polling, ticked up slightly to 38.73 in its second-straight gain after more than two months in free fall. While the index remains near its worst-ever reading, the slight rise in confidence suggests that negative sentiment may be plateauing amid talk of reopening the economy.
While economic uncertainty could keep some buyers out of the market for a vehicle for months or perhaps indefinitely, automakers and dealers could see new buyers who rely on public transportation enter the market. According to the survey, 51 per cent of respondents who said they use taxis or ride-sharing services such as Uber expect to use those services less or not at all when economic activity restarts. Among those who use public transit, that figure stands at 54 per cent.
The survey found that 65 per cent of those who said they would decrease usage of ride-hailing services, taxis or public transportation expected to use their personal vehicles more, while 42 per cent anticipated buying a vehicle.
“We’ve seen in some parts of the world there’s a new type of customer who comes to market, someone who would normally be satisfied with public transit may now have a need for private transportation,” Nissan Canada CEO Steve Milette said in a recent interview with Automotive News Canada. “The primary reason is that driving can reduce the chance of infection” when compared to riding in a bus or train with other people, Milette said.
The CarGurus study found that 16 per cent of respondents who said they were expecting to buy a vehicle in 2020 did not plan on doing so before the COVID-19 pandemic.
“There’s a percentage of the population that will now be new to the market,” Milette said.
In China, public transit usage appears to be down significantly in many markets where lockdowns have eased. In Beijing, Shanghai and Guangzhou, morning traffic is now higher than 2019 averages while subway use is well below normal, according to data compiled by BloombergNEF. Volume on Beijing’s metro system is 53 per cent below pre-virus levels. Subway usage in Shanghai and Guangzhou is down 29 per cent and 39 per cent, respectively.
It’s too soon to say whether this change is permanent. In some parts of Asia that reopened earlier than the rest of the world, people are venturing back onto trains, according to Bloomberg.
With files from Bloomberg.