An financial slowdown is a digital certainty this yr, but it surely received’t dampen demand for brand spanking new autos, says Eric Lascelles, chief economist for RBC World Asset Administration Inc.

“We’re predicting a slower economic system,” Lascelles mentioned throughout the Automotive Information Canada Congress Feb. 16 in Toronto. “It feels to me like there ought to be quite a lot of pent-up demand, and [inventory shortages] take years to resolve. However my assumption is that we may see a fairly first rate soar in gross sales, which could be very uncharacteristic in a attainable recession yr.”

Lascelles predicted a five-to-six-per-cent improve in new-vehicle gross sales this yr. In 2022, gross sales totaled 1.5 million down from 1.66 million within the earlier yr.

Regardless of greater rates of interest, “the economic system remains to be fairly darn sizzling,” he mentioned, citing Statistics Canada figures displaying the addition of 153,000 jobs in January.

The Financial institution of Canada’s “in a single day fee could be achieved at 4.5 per cent, mentioned Lascelles, who additionally predicted that inflation may fall to 3 per cent by the top of the yr. Canada’s inflation fee stood at 5.9 per cent final month, in accordance with StatsCan.

Provide chain shortages, which helped gasoline inflation, are easing, he added.

“Provide chains are loads higher,” he mentioned. “They’re not fairly regular, however the period of huge disruptions and cease and begin and people types of issues appear to be largely handed. I do know not each laptop chip is available, however laptop chips have gotten way more accessible.

Certainly, the “acute concern proper now’s a glut of chips over the following few years.”

The pandemic-induced provide constraints padded trade income, he famous. “This was the largest mismatch between auto provide and demand we have ever seen,” he mentioned. “There have been fewer automobiles offered, however boy, it looks like it was awfully worthwhile to take action.”

A light financial downturn is probably going in retailer for Canada, mentioned Lascelles.

“It could be exceedingly uncommon to keep away from a recession” after the current spate of fee hikes.