Surge in new vehicle and parts orders leads overall boost in Canadian retail sales

Surge in new vehicle and parts orders leads overall boost in Canadian retail sales

by Sue Jones
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Motor vehicle and parts dealerships led a retail sales increase in October, with the new car dealership industry in recovery after a debilitating global microchip shortage

Car Auto Dealership Ottawa

A new vehicle for sale is seen at an auto mall in Ottawa April 26, 2021. The new car dealership industry is in recovery, with sales ticking upward in October after two consecutive months of decline. (Justin Tang/The Canadian Press)

The sale of motor vehicles and their parts led a boost in Canadian retail numbers in October, as the new car dealership industry continued its recovery from an inventory crisis.

While overall retail sales jumped 1.6 per cent in October, to a total of $57.6 billion, core retail sales — which exclude gas station sales and automobiles, because they are seen as volatile sectors — were up 1.5 per cent. Dealerships that sell new cars had a sales increase of 2.8 per cent, according to Statistics Canada.

The numbers show that Canadian retailers did better in October than was initially expected, said CIBC senior economist Andrew Grantham. But he cautioned that the economy may take a turn for the worse, given that provinces are tightening restrictions across the country to limit the spread of the Omicron variant of COVID-19.

“Even though these restrictions have focused more on bars, restaurants, gyms and other such services, rather than retailers at this stage, public concern regarding the recent outbreak is still likely to be disrupting footfall and driving more shopping activity online again,” Grantham said.

WATCH | Economist explains how the microchip shortage affects car manufacturing:

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The microchip crisis explained

Economist Rebekah Young with Scotiabank explains how the global shortage of microchips has led to major delays in the supply chain for the car industry 0:57

The automaking industry was hit hard when a global microchip shortage made it difficult to manufacture new cars. That’s why new car dealerships saw a decline in sales in August and September — but sales ticked upward in October, signalling a reprieve.

Early and unofficial numbers indicate there was another 1.2 per cent increase in retail sales in November, according to Statistics Canada, which said that estimate would be revised.

Gas sales down

While the increase was noted in seven of 11 retail subsectors, motor vehicle and parts dealers’ sales increased by 2.2 per cent, with new car dealer sales leading the way with the 2.8 per cent increase. Both automotive manufacturing and wholesale trade enjoyed higher sales.

Gas stations were down 0.1 per cent in receipts during October and sales were down 3.2 per cent in volume terms. Gas prices increased by five per cent in October, according to the Consumer Price Index.

Propelled by higher sales at motor vehicle and parts dealers, Ontario and Alberta had two of the highest retail boosts in October, with the former enjoying a 1.9 per cent sales increase. Alberta took in its largest retail sales increase — 3.8 per cent — since January 2021. Overall, nine provinces had a retail boost in October.

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