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Auto sales climb 0.6% for first rise in 17 months

Screen Shot 2019-09-10 at 11.52.04 AMDesRosiers Automotive Consultants Inc. says Canadian auto sales rose 0.6% in August for the first year-over-year climb in 17 months.

The automotive consultant says light vehicle sales totalled 182,040 in August, up from 180,942 a year earlier.

An 8.4% rise in light truck sales was enough to offset the 18.3% decline in passenger car sales for the month.

DesRosiers says that while the August sales were positive, the overall market is still down 4.1% so far this year and Canada could well see a second year of declines in new vehicle sales.

Fiat Chrysler Automobiles saw the biggest jump in August with an estimated 27.5% sales increase compared to August 2018, putting it in third place in sales for the month.

Ford Motor Co., which had an 8.8% drop in sales from last year, kept its first place, while General Motors was second in sales after an estimated 3.4% sales decline from last year.


June retail sales flat as Raptors effect offsets auto and gas slump: StatCan

Canadian retail sales edged expectations in June with merchandise and sporting goods sales climbing as the Toronto Raptors made their NBA championship winning run, according to the latest numbers from Statistics Canada.

Clothing and clothing accessories stores saw a 4.2% uptick in sales, while sporting goods, hobby, book and music stores recorded a 3.7% increase, the federal agency said.

“These gains also followed inclement weather in May and coincided with the Toronto Raptors playing in and winning the NBA championship in June,” Statistics Canada said in a release last week.

Most of the other subsectors saw stronger sales, but these were offset by lower sales at motor vehicle and parts dealers and gasoline stations.

Overall, sales in the retail trade sector were essentially unchanged in June from May at $51.3 billion, the agency said.

Economists on average had expected a decline of 0.1%, according to the financial markets data firm Refinitiv.

“A flat Canadian retail sales reading isn’t usually anything to cheer about. But when it comes against consensus expectations for a decline, not to mention alongside a solid gain in volumes, we’ll certainly take it,” CIBC economist Royce Mendes said in a note to clients.

Sales were down in four of 11 subsectors tracked by Statistics Canada.

Motor vehicle and parts dealers fell 2.5% in June as sales at new car dealers were down 3.2%. Gasoline station sales fell 3.4% as the price of gasoline moved lower.

Excluding sales in these two subsectors, monthly retail sales gained 1.7%. Retail sales in volume terms increased 0.4%.

Sales at building material and garden equipment and supplies dealers rose by six%, while general merchandise stores’ sales rose by three% in June.

Cannabis stores also saw a 6.2% jump in sales in June, on a low base to $91 million unadjusted.

The uptick in sales in clothing and sporting goods during the month were likely fuelled by the Toronto Raptors’ historic win, economists said.

It was the first NBA championship in the Toronto franchise’s history and marked the first for a Canadian team in one of the big four North American professional sports since the Toronto Blue Jays won the 1993 World Series.

After the win in mid-June, fans lined up outside stores to buy special edition NBA championship merchandise and millions filled the streets in downtown Toronto for a parade to celebrate the team.

“The good gains in clothing and sporting goods might be partially driven by the Raptors effect, as their championship run was in high gear in the month,” said BMO Capital Markets’ Canadian rates and macro strategist Benjamin Reitzes in a note to clients.

In addition to the Raptors-fuelled sales bump in clothing and sporting goods, the monthly survey of food services and drinking places showed a one% increase in June.

“Canadian restaurants and bars were big winners during the NBA playoffs,” CIBC’s Mendes said.

 


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Electric car sales climb in wake of new $5,000 federal rebate program

EV Charging Sign_Sm_071219Canada’s new rebate program to help make electric cars cheaper appears to be showing early signs of stimulating sales but mostly in the two provinces that require a minimum number of electric car sales.

On May 1, Ottawa began offering rebates of up to $5,000 on the purchase of some electric vehicles in a bid to bring the cost of lower-end models closer to that of their gas-powered cousins.

Announced in the March budget, the incentives are part of Ottawa’s goal to increase sales of electric cars to 10% of all vehicles sold by 2025, 30% by 2030 and 100% by 2040.

Last year, electric and plug-in hybrids accounted for about 2% of total vehicle sales.

Matthew Klippenstein, an engineer who began tracking electric vehicle sales a few years ago on his website Canada EV Sales, said they accounted for 4% of all vehicle sales in May and June.

It’s still a tiny share _ the Ford F-series pickup trucks alone accounted for 7% of all vehicle sales _ but it is rising. And Klippenstein said the federal rebate “has definitely increased sales in the past couple of months.”

Transport Canada reports that more than 14,000 electric cars and minivans were bought nationwide using the rebate since May 1. The department, which is overseeing the rebate program, also said overall electric vehicle sales were up 30% between January and June, compared to the year before.

But Klippenstein said there is one caveat to the data. More than eight in 10 of the electric vehicles sold in May and June, were sold in British Columbia and Quebec. Those are the only two provinces that have a provincial rebate – Ontario did until last year when Premier Doug Ford cancelled it after being elected – and both allow their rebate to be combined with the federal one for even greater savings.

Even more important to the sales distribution is that both B.C. and Quebec require dealerships to sell a certain percentage of electric cars, Klippenstein said. If they don’t meet the quotas they have to either pay a fine or buy credits from competitors who exceeded their quotas.

Klippenstein said there is still a limited supply of electric cars and those the automakers are sending to Canada are going to B.C. and Quebec first to make sure dealerships hit their quotas.

Dan Woynillowicz, policy director at Clean Energy Canada, said there is still work to do to install public charging stations in the provinces that have never had a rebate. The lack of that infrastructure is contributing to lower sales there.

Transport Canada hasn’t yet been able to provide further details about what kinds of cars were the most popular purchases or sales numbers by province.

The federal rebates are available for fully electric vehicles whose lowest-end model retails for less than $45,000, or $55,000 for vehicles that have seven or more seats like minivans. Up to $5,000 is available, with fully electric vehicles bought outright or leased for at least four years eligible for the maximum. Shorter-range plug-in hybrids or fully electric cars leased for shorter times are eligible for rebates between $625 and $3,750 depending on the length of the lease and the type of vehicle.


Statistics Canada reports retail sales fell 0.1% in May to $51.5B

Canadian retail sales fell for the first time in four months as shoppers spent less at grocery and liquor stores in May.

Statistics Canada said retail sales fell 0.1% in May to $51.5 billion.

Economists had expected an increase of 0.3%, according to Thomson Reuters Eikon.

CIBC senior economist Royce Mendes said the weakness was relatively narrowly based, with only four of 11 sectors lower on the month.

“Food and beverage stores curiously represented the largest decline, odd for a series that should usually be quite consistent,” Mendes wrote in a report.

“As a result, some of that softness could turn out to be transitory, but from a longer-term perspective, real sales have still shown little growth since the start of 2017.”

Sales at food and beverage stores decreased 2.0% in May after increasing for three consecutive months as sales at supermarkets and other grocery stores fell 2.0% and sales at beer, wine and liquor stores dropped 2.7%.

Clothing and clothing accessories stores saw sales fall 2.7%, while general merchandise stores dropped 1.1%.

Meanwhile, sales at motor vehicle and parts dealers edged up 0.5% and sales at cannabis stores rose 14.8%.

Excluding sales at motor vehicle and parts dealers and gasoline stations, retail sales fell 1.0%.

In volume terms, retail sales fell 0.5% for the month.

Benjamin Reitzes, Canadian rates and macro strategist at BMO Capital Markets, said there were a couple of factors that likely weighed on the retail sales.

“First, gasoline prices were up sharply in the month, pushing gas station sales up 3.5%. That spending tends to get diverted from other sectors,” he said.

“And, the weather in May was simply awful, generally a negative for retail activity. The sectors hit hardest, clothing, sporting goods, alcohol, general merchandisers are consistent with bad weather.”

However, Reitzes noted that Canadians remain heavily indebted and that will likely restrain spending growth for years to come.

The weaker-than-expected retail sales report came as the Canadian economy has been showing signs of strength as it has bounced back from a weak end to 2018 and start to 2019.

The Bank of Canada kept its key interest rate on hold last week when it also released its updated monetary policy report.

In its forecast, the central bank raised outlook for second-quarter growth to an annual pace of 2.3% compared with its April projection of 1.3%. It predicted growth an annual pace of 1.5% for the third quarter.

The Bank of Canada stands in contrast to the U.S. Federal Reserve, which is expected to cut its key interest rate later this summer.


3 tips for protecting your tobacco sales

CigsAs the convenience channel moves away from its traditional cokes-and-smokes reputation and toward fresh and healthier offerings, it is easy to overlook the cigarettes category — with its diminishing volumes and tight margins. But, that would be a mistake, according to the experts.

As 7-Eleven Inc.’s Alan Beach stressed during the NACS State of the Industry Summit last year: “You can’t ignore this. We need to protect this; it is what got us here,”

He’s right. While cigarette sales are declining, they are still a hot in-store purchase that attracts customers and keeps them coming back for more. That alone should make c-store operators sit up and pay attention.

“Tobacco continues to be really important, particularly to the convenience retailer, by far,” says Don Burke, senior vice president of Management Science Associates Inc. “We are seeing a little bit greater decline; however…. Tobacco continues to be a very important category, and we project that it will be for many more years.”

Therein lies the reality that convenience store operators need to protect their tobacco category, and the strategy to do that is twofold: assortment and other tobacco products (OTPs).

“In a study we did in the past several years, we found that about 30% of convenience stores are able to increase their tobacco category sales each year,” says Burke.

Here’s how:

  1. “Make sure you are carrying the right number of SKUs, the right number of products and the right amount of selection. When consumers shop convenience, they are looking for selection,” says Burke.
  2. C-stores need to embrace the large cigar segment, which has one of the greatest growth rates of all the tobacco segments. “One of things we found recently is that pre-priced items, which most convenience stores don’t like, have helped this category considerably,” he noted. If a retailer does not want pre-priced items, then it needs to offer a range of price points within the large cigar segment to meet consumer demand.
  3. Take advantage of consumer interest in the vapor category, particularly in the vaporizers that typically retail for $20-plus, Burke explained. “That’s a high cash-register ring for the tobacco category and contributes considerably to revenue growth in convenience.”

A version of this article was originally published by Convenience Store News.