TD predicts auto sales rebound

Canadian auto sales will rebound by five per cent this year, according to a forecast released Monday by TD Economics.

The bank also predicted U.S. sales which were hit harder than Canadian sales last year will bounce back by 9.5 per cent this year, though remaining well below pre-recession levels.

Despite 2009 being the worst single year on record, a pickup in sales toward the end of the year offers some optimism for 2010, it said.

Last year, new-vehicle sales were down 21 per cent from an already depressed 2008 level. Only 12.5 million light vehicles were sold in Canada, the U.S. and Mexico, a drop of 36 per cent from the peak reached in 2000. Canada's sales fell the least of the three, dropping 11 per cent.

The recession hit some automakersharder than others, the study said. GM and Chrysler lost more that two percentage points of market share in both Canada and the U.S. last year. Korean automakers gained market share. Hyundai and Kia increased sales volumes with Hyundai moving into the number six spot in Canada, ahead of Nissan.

The study noted that manufacturers have been ramping up production after sales in Canada and the U.S. began to rebound at the end of the year.

In Canada, seven of 10 provinces posted gains of 14 per cent in December, with only Alberta, Manitoba and Saskatchewan lagging behind.

As employment rebounds, the study predicted, sales will continue to pick up. It forecasts growth of 4.9 per cent this year and 3.9 per cent in 2011.

The study warned several challenges still face the industry, among them the viability of GM and Chrysler as they progress out of bankruptcy.

"The jury remains out on [their] long-term viability," it said.

Despite a slew of safety recalls by Toyota, it predicted, "once the automaker rights its wrongs, we suspect that the underlying strength of the brand will resurface and the drop-off in demand will prove temporary."