Vehicle sales in Canada this year will come very close to topping last year, veteran auto analyst Dennis DesRosiers said Tuesday as he raised his sales forecast.

Automakers will sell 1.645 million cars and light trucks in Canada in 2008, said DesRosiers, president of DesRosiers Automotive Consultants.

That's up from his previous forecast, issued last November, of 1.603 million sales, and is just 8,000 below the 2007 sales figure — the industry's second-best year ever.

That's in sharp contrast to the situation in the U.S., where the auto industry has experienced a sharp downturn in recent months. Standard & Poor's predicted Tuesday that auto sales in the U.S. may fall seven per cent this year to 14.9 million. Sales were 16.1 million in 2007 and 16.5 million in 2006.  

DesRosiers raised his yearly forecast for Canada after sales in January and February came in 20 per cent above last year's levels. Sales in March — after adjusting for this year's early Easter — were up 10 per cent. 

"There are a lot of bright spots and reasons for optimism for light vehicle sales in Canada," DesRosiers said in e-mailed comments.

He cited five reasons for the brighter outlook:

  1. Prices. Statistics Canada says average prices have dropped by five per cent as incentives are extended and sticker prices fall.
  2. The GST drop to five per cent. Unlike incentives and lower sticker prices, DesRosiers said, this reduction is permanent.
  3. The strong loonie. The earlier forecast was based on a 95-cent US dollar. "A dollar closer to par gives the vehicle companies a little more latitude in pricing," DesRosiers said.
  4. The healthier Canadian economy. We're still creating jobs while the Americans are shedding them.
  5. The U.S. downturn. The economic slump south of the border is making popular vehicle models easier for Canadians to get, DesRosiers said.

DesRosiers sees two main risks to his forecast — the U.S. downturn starting to affect Canada more than anticipated, and a "significant" decline in used vehicle prices that would undermine the new car market.