Economy, low rates push Canadian auto sales to record

[mentalfloss]

Terrible, terrible news everyone.

With higher wages, I just don't know how anyone will be able to afford any of these.


Economy, low rates push Canadian auto sales to record

Car buyers stomped on the accelerator pedal in Canada last month, sending sales soaring 11 per cent from May, 2016, levels and shattering the monthly record hit in April, 2016.

Auto makers delivered 216,861 vehicles in May, only the second time ever that sales have topped 200,000 in a single month – last April was the only previous occasion. That put the total for the first five months of this year 5 per cent ahead of the pace in 2016, which was a record year.

“Big wheel keeps on turning,” Bank of Montreal chief economist Douglas Porter said in an e-mail. “The main story is just how consistently strong vehicle sales remain.”


Sales are underpinned by strong growth in employment and population, Mr. Porter said, as well as ultralow borrowing costs that are boosting demand for big-ticket items.

Auto makers themselves have helped jolt demand with six- or seven-year interest-free loans. About 52 per cent of Canadians who took out car loans in April borrowed money for seven years or longer, according to consulting firm J.D. Power and Associates, down slightly from 53 per cent in March.

Several auto makers reported record monthly totals or their highest level of May sales. Only BMW Canada Inc. and Volkswagen Canada Inc. reported sales declines.

The fundamentals in the Canadian market remain strong, said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc.

One factor providing a strong base for sales is replacement demand. Canadians bought a record number of new vehicles between the economic dip after the Sept. 11 attacks in 2001 and the 2008-09 recession and they are just now beginning to come off the road, Mr. DesRosiers noted.

https://www.theglobeandmail.com/rep...-canadian-auto-sales-for-may/article35176212/

 

[Jinentonix]

Terrible, terrible news everyone.

With higher wages, I just don't know how anyone will be able to afford any of these.

Fer sure dude. $15 bucks an hour will definitely get you behind the wheel of a new car. Other than that, what higher wages are you talking about? Wages for the 24-34 age group have declined since 2003 and stagnated for the 34-44 age group over the same period.
Of course it's so inconvenient how you ignore story points. 0% financing for 6-7 years is what's driving the sales. You notice how BMW and Volkswagen sales actually declined? That's because BMW never offers 0% financing and VW rarely offers it. I think I saw VW offer it once for a limited time.
And let's face it, if you're in the market for a car, with the monthly payments that are currently available you can pretty much buy a new car for less per month than a used one. What would you do Flossie, pay $200/mo for a brand new car or $250/mo or more to finance a decent used one?

 

[mentalfloss]

Le gasp!

How businesses can handle the hikes in minimum wage
https://www.theglobeandmail.com/rep...le-the-hikes-in-minimum-wage/article35166792/

 

[tay]

I have a friend who sells real estate and he says the level of debt people are not only getting approved for, but accepting, causes him to shudder.

And he says as soon as they secure the mortgage they go get a loan/ line of credit and buy a $50,000.00 SUV......


The level of debt Canadians carry is the main worry for the head of the Canada Mortgage and Housing Corporation.

In an interview Thursday with Peter Armstrong, host of CBC News Networks' On the Money, CMHC president and CEO Evan Siddall said he worries that debt load means we have "straitjacketed ourselves."

"We have fewer degrees of freedom, because we have more household debt, and that means we are more vulnerable to all sorts of things, whether they're domestic or off-shore, as far as shocks go, and that hurts all of us," Siddall said.

Level of Canadians' indebtedness is chief worry: CMHC head - Business - CBC News

 

[Danbones]

housing crash imminent

"Stay tuned, Home Capital’s crisis may puncture Canada’s housing bubble yet

hose who remember the collapse of the housing bubbles in Britain and the U.S. might want to tune in to the saga of troubled Canadian alternative lender Home Capital Group Inc.

What exactly is Home Capital and why is it so important to the mortgage industry?

Here’s a look at the company, its role in the Canadian mortgage landscape and how the discovery of fraud among its brokers two years ago continues to have ripple effects today. Read on

HCG’s stock price fell nearly 60 per cent last Wednesday, following the launch of an investigation by Canadian regulators into allegations it misled investors, a rush to the exit by depositors and it taking out a $2 billion lifeline at a punitive interest rate. The lender, which competes in the market for less well qualified borrowers, has hired bankers to help it explore its strategic options.

So far, so 2007-2008, but this is Canada, and while there is undeniably a housing bubble, the interesting points won’t be just the extent to which this echoes the last housing bubble and denouement but how it differs.

HCG’s business model has been predicated on raising funds by offering higher rates of interest to savers and then lending it on, again at elevated rates of interest, to the very kind of borrower who struggles to get financing to swing a purchase in Canada’s booming real estate market, where prices in Toronto have surged 33 per cent in the past year.

Some of these loans have been “bundled” mortgages in which a primary loan conforming to safer standards and usually made by a traditional lender is packaged with a second loan at a higher interest rate, allowing borrowers to finance up to 90 per cent of the purchase price."
http://business.financialpost.com/n...ls-crisis-may-puncture-canadas-housing-bubble

 

[petros]

housing crash imminent

Stay tuned, Home Capital’s crisis may puncture Canada’s housing bubble yet

hose who remember the collapse of the housing bubbles in Britain and the U.S. might want to tune in to the saga of troubled Canadian alternative lender Home Capital Group Inc.

What exactly is Home Capital and why is it so important to the mortgage industry?

Here’s a look at the company, its role in the Canadian mortgage landscape and how the discovery of fraud among its brokers two years ago continues to have ripple effects today. Read on

HCG’s stock price fell nearly 60 per cent last Wednesday, following the launch of an investigation by Canadian regulators into allegations it misled investors, a rush to the exit by depositors and it taking out a $2 billion lifeline at a punitive interest rate. The lender, which competes in the market for less well qualified borrowers, has hired bankers to help it explore its strategic options.

So far, so 2007-2008, but this is Canada, and while there is undeniably a housing bubble, the interesting points won’t be just the extent to which this echoes the last housing bubble and denouement but how it differs.

HCG’s business model has been predicated on raising funds by offering higher rates of interest to savers and then lending it on, again at elevated rates of interest, to the very kind of borrower who struggles to get financing to swing a purchase in Canada’s booming real estate market, where prices in Toronto have surged 33 per cent in the past year.

Some of these loans have been “bundled” mortgages in which a primary loan conforming to safer standards and usually made by a traditional lender is packaged with a second loan at a higher interest rate, allowing borrowers to finance up to 90 per cent of the purchase price.
Stay tuned, Home Capital

I hope so.