In a tale of two starkly different auto markets, vehicle sales jumped 5 per cent in Canada last month and plunged in the United States to levels not seen since the recession of the early 1990s.
Canadian sales, which rose to 149,515 in July from 142,448 a year earlier, are defying gravity, said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont.
Canadians shrugged off bad economic news such as the weakening energy sector, an increase in unemployment numbers and a recessionary quarter in Ontario, Mr. DesRosiers said.
"I suspect at the root of this performance is the simple word called 'price,' " he said.
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Vehicle prices have fallen between 3 per cent and 5 per cent so far this year, he added.
The Canadian numbers were helped by a record month for Subaru Canada Inc., and record July performances by Honda Canada Inc., Mercedes-Benz Canada Inc. and Toyota Canada Inc.
General Motors of Canada Ltd. matched the market with a 5 per cent gain, while sales dropped for Chrysler Canada Inc. and Ford Motor Co. of Canada Ltd. The Detroit Three's share of the Canadian market fell to a record monthly low of 46 per cent.
July was a disaster in the much larger U.S. market, whose health is vital to Canada because it's the destination for about 80 per cent of the vehicles made here.
Sales fell for almost every auto maker - even Honda Motor Co. Ltd., which had bucked the plunging trend of the past few months.
The seasonally adjusted annual sales rate in the United States fell to an estimated 12.6 million, down more than one million units from an already dismal rate in June and considerably below the 2007 performance of 16.1 million.
Double-digit declines were the order of the day for Chrysler LLC, Ford Motor Co., General Motors Corp., Toyota Motor Corp. and others amid plunging sales of pickup trucks and traditional sport utility vehicles, because of high gas prices and the U.S. housing industry collapse.
Mark LaNeve, GM's vice-president, pointed to sales of mid-sized Chevrolet TrailBlazer and GMC Envoy SUVs falling 75 per cent.
"That number kind of blows you away," Mr. LaNeve said on a conference call.
Ford officials said the U.S. credit crisis is spilling over to vehicle sales as financial institutions tighten lending in order to shore up their balance sheets.
One of the results of that, said Jim Farley, Ford's marketing group vice-president of marketing and communications, is that "the industry is confronting sales levels we haven't seen in a couple of decades."
Chrysler, which is believed throughout the industry to be the auto maker closest to a liquidity crunch, posted a 29-per-cent decline in the U.S. market, the largest drop among the major players.
The privately held company took the unusual step of issuing a statement saying that despite the downturn, it outperformed its financial plan for the first half of the year.
Cash and marketable securities stood at $11.7-billion (U.S.) on June 30 and earnings before interest, taxes, depreciation and amortization were $1.1-billion for the six months ended June 30, Chrysler said.
"The company remains ahead of its financial plan due primarily to Chrysler's fast response to the deteriorating market conditions and its cost reduction initiatives launched in 2007," chief financial officer Ron Kolka said in the statement.
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