08:31 AM EST, 11/13/2024 (MT Newswires) -- Scotiabank noted that Canadian auto sales increased 3.5% month-over-month seasonally adjusted to 1.84 million units at a seasonally adjusted annualized rate (SAAR) in October according to Wards Automotive.

This was the biggest monthly increase since July when vehicle sales rebounded from June's recent seasonally adjusted low that was likely negatively distorted by the CDK disruption, said the bank.

While seasonally adjusted vehicle sales slowed over the summer, October's rebound has brought the three-month moving average back up to 1.8 million SAAR units. However, given the volatility of vehicle sales from month to month, growth in the sales rate is likely to remain muted in the near term while Scotiabank keeps an eye out for persistent change in the trend of Canadian vehicle sales.

The Bank of Canada cut the policy rate by 50 basis points in October, lowering the policy rate to 3.75%. The larger-than-usual cut was supported by the continuing decline in annual inflation which eased to 1.6% year-over-year in September, while job growth remains positive but lower than last year, as the unemployment rate held steady at 6.5% in October.

The bank's outlook for Canadian new light vehicle sales is 1.78 million this year and 1.8 million in 2025 as interest rate headwinds ease. However, as Canada enters a period of uncertainty relating to the outlook, Scotiabank will be monitoring the implications for the automotive sector over time.