The onset of winter brings with it a natural tendency to reflect on the year that has been and anticipate to the one before us. This time, that habit is stronger than normal, both because this New Year also brings with it a new decade and because the past twelve months have been particularly taxing on the business front.

And so we launch the ‘twenty-tens’ in much the same way we closed out the last decade: clinging to a cautious optimism that the worst is behind us and to a stubborn conviction that, no matter how tough it’s been selling cars (or anything else) in Canada lately, we can count our lucky stars we’re on the northern side of the border.

My prediction - - made with all the confidence of an astrologer

In that spirit, I’d like to offer up a prediction, qualified heavily enough to give me the wiggle room I’ll need shall it not come to pass and remembering all the while a famous quote that, “the only function of economic forecasting is to give astrologers a good name. So here it is: The year before us will be better than the one we’ve just endured. Not unlike your daily horoscope, the general nature of the statement should provide me with adequate hindsight cover should I need it in a few months.

Taking the “automotive year” as the 14-month period beginning in November 2008, the month in which sales lost the momentum that carried dealers through much of that year, there is room for some optimism. Compared with the same month a year previous, sales were off by more than 25 percent across the board when the crisis hit in this country at the end of 2008.

More recently, November 2009 posted sales that were less than 3 percent off last year’s results in the same month. However, this is compared to a very poor sales month of November 2008, and so must be analyzed in that context. Go back a couple of months, and September’s sales were off by some 7.5 percent as compared to the same month in 2008, when sales were still riding high. While still a significant hit to take, losing 7.5 points is much better than losing 25. In short, ever since dealers’ numbers tanked late last year, every month, things have been getting a little less bad.

We have every expectation that this trend will continue in 2010, with unemployment hopefully peaking and growth, albeit sluggishly, returning. We will not reach the heady sales of the boom years earlier this decade any time soon but it is not unreasonable to predict that 2009 marked the trough of the cycle for the economy in general and car sales in particular. These two indicators, after all, generally travel largely the same path.

Our situation could be much worse

While our numbers are severe and painful, we must keep perspective: the American market went from more than 17 million new car sales as recently as four years ago to barely more than 10 million in 2009. That market also faces a tougher struggle back than ours does, given their very high and persistent unemployment rate and the hangover throbbing from the still-unresolved sub-prime mortgage meltdown.

While Canada’s situation is better, it is said that when America sneezes, we catch a cold. The degree to which our economies are linked means that we cannot fully recover until the United States gets back on its feet.

That said, though the two countries are inextricably linked, key differences put us, and particularly our dealer network, on much sounder footing than our southern neighbours. America’s car ownership rate is 101 percent for driving-age adults, versus 75 percent in this country. Their unemployment rate has surged past 10 percent, while ours has started to climb down after touching 8.6 percent. These factors help explain why the U.S. market has lost almost 50 percent of its demand in the past four years, while ours has lost only about 15 percent.

So, my cautious optimism for 2010 is as optimistic as it is cautious. Our economy, and with it our ability to sell the vehicles that drive it, will grow modestly in the year we’ve just begun. Along with that prediction, I offer the earnest hope that my words do not serve further to enhance the reputation of your newspaper’s horoscope writer.

< Prev		Next >