Pricing incentives give a boost to Canadian vehicles sales

August was a hot month for Canadian vehicles sales, with several major automakers reporting year-over-year increases as incentives helped draw customers into showrooms.

August was a hot month for Canadian vehicles sales, with several major automakers reporting year-over-year increases as incentives helped draw customers into showrooms.

Ford, Honda, General Motors, Chrysler and Hyundai all reported an improvement in sales last month. Although numbers a year ago were still depressed amid economic uncertainty and major restructurings at GM and Chrysler, the improvement indicates a spate of incentives are having their intended effect.

Canadian sales gains stood in stark contrast with those in the U.S., where GM, Ford and Toyota all saw sales slip. Smaller automakers like Subaru suffered too, as did companies that appeal to the budget minded, such as Kia and Hyundai.

Ford Canada (NYSE:F) said Wednesday it sold 24,034 units in August, up just over eight per cent compared with the same month a year ago and the company’s best performance for the month in 20 years.

Ford said the total number of cars sold for the month rose 18.9 per cent to 5,858, while the number of trucks sold rose five per cent to 18,176. As of August, Ford sales for the year to date were up 17 per cent.

“Consumers are beginning to recognize Ford, not only as a great truck company but as a great car company too,” stated David Mondragon, president and CEO of Ford Canada.

Ford said it will extend its employee pricing incentives until the end of the month.

Meanwhile, GM Canada said its overall sales were up two per cent to 23,542, while sales of the four core brands it didn’t eliminate during its restructuring — Chevrolet, Buick, GMC and Cadillac — were up 18 per cent. Year to date, sales of GM core brands are up 34 per cent compared to a dismal 2009, when the company was forced to file for bankruptcy protection in the U.S. and accept billions of dollars in aid from the American, Canadian and Ontario governments.

“Our continued momentum demonstrates our four-brand strategy is squarely hitting the mark with customers,” stated Marc Comeau, GM Canada’s vice-president of sales, service and marketing.

GM has been offering employee pricing to draw customers into its dealerships, and said it will use other incentives through September to continue to boost sales.

Chrysler, which also restructured under bankruptcy protection with the help of billions of dollars in government aid last year, said its August sales were up 12 per cent compared to a year ago to 16,144. This is four per cent higher than the pre-downturn levels of August 2008.

Retail sales, excluding sales to fleets like car rental agencies and taxi services, were up 20 per cent. The North American automakers have been criticized in the past for relying too heavily on fleet sales to bolster their sales numbers.

“We are extremely pleased with our progress so far this year,” stated Reid Bigland, president and CEO of Chrysler Canada. “Most of our 16 all-new or significantly refreshed vehicles are just starting to launch, and we are moving into this product onslaught with nine consecutive months of growth momentum behind us.”

Chrysler is also using incentives to draw customers into its stores, including a new low-interest financing program that allows buyers to return a vehicle at the end of a predetermined time period, which can be in as little as three years.

Earlier this week, a report by Scotiabank found that higher incentives from most automakers have reduced new vehicle prices by more than five per cent since February.

The Canadian vehicle market has been very competitive as Ford and General Motors vie for the top sales spot. So far this year, Ford has been outselling GM, claiming more than 17 per cent of the Canadian market while GM has captured almost 16 per cent. To compete, GM has launched employee pricing and other incentives.

Generally, when one automaker introduces incentives, others are forced to follow suit to stay competitive.

In other Canadian vehicle sales, Honda said combined sales of its Honda and luxury Acura divisions totalled 12,914 in August, a six per cent increase over August 2009.

Honda-brand vehicles saw August sales of 11,463 units, up eight per cent from last year, led by record sales of the Honda CR-V and an increase in Honda truck sales of 37 per cent.

The Acura Division, however, reported August sales of 1,451 units, a 12 per cent decline compared with last year.

Hyundai said it sold 11,403 vehicles in August, up 9.5 per cent over last year and the company’s 19th consecutive month of sales gains. Year-to-date, the South Korean automaker’s sales are up 16 per cent.

Nissan Canada said it sold 6,102 vehicles in the month, down 13.7 per cent compared to a year ago, while its luxury Infiniti division sold 780 units, up 30 per cent to its best August sales ever.

Other automakers are also expected to report their sales for the month later in the day.

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