According to Desrosiers Automotive Reports, the sales of luxury cars in British Columbia, Canada, have fallen since the second half of 2018.
The report shows the sales of luxury cars in BC like Maseratis fell by 50% in late 2018. According to the data, more than 135 Maseratis were sold last year in the province, compared to its 248 total sales data in 2017.
Meanwhile Mercedes’ car sales last year fell by 10% as the giant automaker only sold around 8,939 cars from the 9,903 cars they sold the year prior.
BMW and Jaguar also suffered a significant blow when it comes to their car sales in B.C. Only Land Rover managed to break the trend as their sales increased up to 10% as they sold around 2,351 units last year.
The firm recorded around 36,617 luxury cars sold around the province last year which mainly comprised of seven expensive luxury vehicles from giant automakers. Of all the luxury vehicles, only the SUV category increased its sales to 4.2% as it sold around 11,466 units.
Effects of Surtax
While the experts already expect some significant fall when it comes to luxury cars sales, they claim it didn’t affect the citizens of B.C’s luxury vehicle purchasing power in general. According to the report, the luxury cars’ total purchasing rate increased by 16.6%. The report shows the province remains a luxury car hotbed of the country.
The researchers also compared the luxury car sales from 2010-2017, and they noticed a staggering increased over the past couple of years. In 2010, only around 12,447 luxury vehicles sold in B.C. However, in 2017, B.C’s luxury car sales increased to an astounding 38,006 units.
Impact on Car Distributors and Sellers
Interestingly, the increase in car sales came in the same year when the BC government raised the sales tax from 10-20% on luxury cars with more than $150,000 of worth.
Aside from that, the surtax also increased to 15% for vehicles amounting between $125,000-$149,999. While some business analysts anticipate the said increase in sales tax would affect the sales of luxury vehicles in B.C, it didn’t seem so according to Blair Qualey.
He says B.C’s luxury car sector continues to thrive. The 2nd-8th avenues on Burrard Street are the only ones affected by the sales tax.
Despite the positive data, Qualey says it may not be the same thing when it comes to car dealers and distributors. According to him, one member of their association said they had to lay off some people, especially in their mechanic and sales department to lower down their cost and cope up with the slight decline in sales.
Statistics in the Other States
According to the Ministry of Finance spokesperson, the government didn’t lay out the PST breakdown on different car categories, so there’s no way of knowing whether the increased tax rates affect the sales rate in BC.
However, the ministry recorded a decline in luxury cars sales not only in B.C but also in other states across the country. In B.C alone, the total sales for new cars plummeted to 5.6% last year. The luxury car sector, on the other hand, recorded a 3.7% decline.
Alberta also suffered a significant decline at 5.6%. The biggest drop in new car sales was recorded in Nova Scotia last year, where the purchasing rate plummeted at 11.2%. All in all, the country recorded an average of 2.6% drop in new car sales.
Manitoba was the only state where the purchasing rate of new cars increased up to 6.9%. Last year, Manitoba sold more than 61,661 new car units. The automotive analysts also noticed it’s the first time Canada experienced a decline in car sales since 2009.