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Friday
May062016

Fort Mac

At Strada our thoughts and prayers are with all the folks that have been displaced in one fashion or another by the devastating fires that have engulfed Fort McMurray.

We hope that as a Canadian you have by now made a donation to the Red Cross to assist all these folks at a time when they surely need a helping hand from everybody.

Obvious that if you are in other parts of Canada Fort Mac is far removed from the horizon. If you have ever had an opportunity to travel in the northern areas of western Canada, its stunning scenery while reinforcing that Canada is a great country.

If you have travelled in Canada for the past few years, although Fort Mac is far removed, you surely noticed how many folks from across Canada have gone to Fort Mac to work. In its own way its still an economic engine that ensures a livelihood to a bunch of folks across Canada.

If you are in an urban area, you should know that a pick up is the vehicle of choice in northern Canada, its that simple.

Having to leave your home on a moments notice is an excruciating experience, displacing your family especially with small children must be emotionally draining.

Staying in a temporary shelter, not knowing if there is a home to return to, or when you can return, plays out on a wide spectrum of human emotions.

Its moving to see the local folks all pitch in to help each other in any way they can, the rest of us as Canadians also need to pitch in and give these folks a hand.

Simple...its the right thing to do.

 

Thursday
May052016

Whimsical Thoughts

If you are a die hard gear head, and have been one for decades now...yes we are talking about The Colonel. Every now and then there are these "whimsical thoughts" that crop up usually relevant to the occasion or circumstances at hand.

The deal

Here is The Colonel "This is a cool stretch of road"

 

Another deal

 

The Colonel "This is really cool...impressive"

 

Another deal

 

The Colonel "Good thing its only a 4 cylinder under the hood..."

 

You can develop your own whimsical thoughts and conclusions. 

 

Here is an over the top picture for your consideration.

The mythical "shoe box Chevy" with a race 572 (in case you forgot about 720 HP), with a Tremec 6 speed, and 3.73 or 3.23 gears in the back (in this instance 3.23 would work better). Yes...a serious batch of octane in the gas tank.

That shoe box Chevy with the 572 has been around for a long time...

 

 

 

Wednesday
Apr272016

Software Coding Revisited

Reflect on this what do we really know about all the software code in any vehicle?

That you are a consumer, or an ardent gear head what do you really know about the siftware code, and how it manipulates the performance of a vehicle.

A few months ago we speculated that we were in the dark and shared our thoughts in The Computer Code Epiphany.

Reflect on this for a moment, if you now get a manual the size of a phone book of a small town to operate the center screen on the dash. Imagine a manual clarifying the codes and algorithms for the various black boxes in any vehicle.

Lets get it out of the way now, without software we would not see the horsepower we are enjoying, or the safety we take for granted today. There is no way that any mechanical set up would generate the same results.

At the same time there is a classic case of "Big Brother" watching with the various flash memories in a bunch of boxes.

Think of AV's for a moment, who will know what the decision tree is in the software code, it might be safer than the human driving, but will we know?

When you flick from "normal" to "sport" you can immediately sense the engine revving up higher, the transmission hanging on to a gear a little longer. What else is going on? Do you know? If you do let us know.

What needs to happen to trigger the "stability control" on a vehicle? Do you know? From our experience a steady 4 wheel sideways slide will not trigger the stability control, unless you change the steering angle. If you are in a 4 wheel sideways slide and wait for the stability control to engage, you might wait until you get in deep yogurt, unless you alter the steering angle.

By now you know that we rarely mention or talk about fuel economy. Our mantra is simple "You need gas to make horsepower". Irrelevant if what engine is under the hood, you still need gas to make horsepower. Reflect on this for a moment...back in the day with a 4 barrel carburetor the jets on the secondaries were always bigger (flow more gas), and you could also get a "double pumper" literally running on all 4 barrels all the time.

Think of a modern vehicle, you step on the gas, you are sending a signal from one box to another, the air mass sensor concludes how much air is flowing, sending another signal to the injectors to start metering the flow of gas, then another signal goes to the transmission for how long to stay in a gear. Let's not forget the oxygen sensor sending another signal to control emissions. If all the signals are too aggressive the traction control will start to engage. If its an all when drive various signals will alternate torque from the front and rear wheels.

This is constantly going on in nano seconds in any vehicle.

Back in the day if you throttle up a tillte aggressive at a traffic light especially after a light rain there was a good chance that the back end (rear wheel drive) would break lose and the car shift sideways a wee bit (especially with a positraction). You would pedal the car and upshift if you had a clutch pedal and gently throttle up again. Today you feel the back end of the car bog down, the traction light starts flickering in the dash, you still pedal the car to turn off the traction control, and in most instances the car will not upshift, you gently throttle up again.

The software is the primary mover, and we are along for the ride up to a point. Reflect on this for a moment, and connect a few additional dots.

Then connect a few additional dots about a virus, or hacking the software in any vehicle.

 

Thursday
Apr212016

Is The Auto Business Myopic In Canada?

In the early days of the Internet the entire auto industry was myopic towards the Internet, and later towards social media. There are countless cases where the business comes up short.

If you have been around, involved with, or participated in the auto business for a while, you have the luxury of looking back, and looking ahead.

We were doing that the other day, and it hit us that in the 21st century some folks that are truly enlightened, prescient, and always very discreet. While others are myopic, with a glancing pedestrian knowledge, usually if not always making a ton of noise.

Everyone has a better mouse trap than the other guy. Everybody is trying to monetize something or other, or grab some piece of the action.

There is the "guild" for this, the association for that, the convention for something else, the event for another thing...and it goes on. Let's not forget the 20 of this, the 10 best of that, the top 5 of the other thing, and the nominated winner of something else.

Being part of a "guild", while attending these various events of like minded folks is great for networking, disseminating pedestrian knowledge, and inflating egos.

While the really smart "dude" observes from the back of the room acknowledges the myopic behavior, while crafting his strategy.

Agreed...public relations, photo ops, guilds, associations, events, networking, are an intrinsic part of any business, and create the right optics from a social, community perspective. In the auto business the PR budgets are well consumed for a myriad of activities that capture a nano second of attention.

In 2016 if you need to go to an industry event to discover a new product, new software, new concept, bolster your ego...where are you the rest of the time?

There is so much of this low level stuff going on, its has a tendency of sucking in individuals. While propagating "street knowledge" in an auto business environment where you have to be brilliant to make a difference, and stand out.

"Did you really do that (a brilliant move/strategy)?"....reply "Yes"...."How did you do that?"....reply "A bit of this, and that it worked out". Obvious no one will provide a step by step answer....certainly not to a room full of like minded folks (competitors).

Consider this simple graph from JD Power...for March 2016 in Canada.

The myopic / pedestrian comment would be "The spring market is around the corner and you can't sell new vehicles from an empty shelf."

The smart dude in the back of the room, discreetly starts to connect a few dots, seeking an advantage.

If you are an astute observer and conclude that manufacturers have applied the "sledge hammer" approach to move iron, you might be correct.

If you are a dealer and look outside, you visually see the increase in day supply, the increase in longer term loans, the additional challenge to close deals, while intimately feeling the pressure to move iron.

If you are a customer you see serious deals being offered in the immediate horizon.

Do you think that the smart / prescient individual in the back of the room will give you a step by step guide as to what he will do to move iron during the second quarter?

 

Monday
Apr112016

What's Up with Leasing

We always mention that you should be your own editor and edit out stuff that is...lets just say misinformed.

Last week we published our "white paper" Creeping Auto Loans, and mentioned that manufacturers that did not abandon leasing in Canada were in a dramatically better competitive position.

Reading in industry publications various comments and remarks from folks that should know better, you have to wonder if these folks are in the auto business in Canada...lets leave it at that.

Leasing 

A decade ago leasing had  50% penetration in Canada, CMS (Citizen Main Street) was leasing mobility, eschewing ownership. 

CMS was directed by manufacturers from mobility to ownership with increasingly longer finance terms.

While some manufacturers got out of leasing, others kept on leasing. They are in a better position today, aided by strong CPO programs.

What is the deal?

Leasing will not save the day of long loan terms and negative equity in 2016. Thinking otherwise is being naive, and totally detached from the current reality. 

Rolling over negative equity in a lease is perhaps possible, but the monthly payments would skyrocket, at a time when most deals are closed on a similar or lower monthly payment. Reflect on this for a moment.

Which begs the question "Why do industry experts mix long term loans, negative equity, and leasing in the same conversation.

Reality Check 1

Manufacturers that never abandoned leasing can easily function within the 36 month cycle, while attracting and conquering customers that are in a lesser negative equity position to their product. These manufacturers that never abondoned leasing in Canada have also introduced numerous new models in the "Premium Economy" segment.

Suffice it to say that they are eating a few lunches.

Reality Check 2

Manufacturers that abandoned leasing for finance, and are now fully embroiled in longer term finance, and negative equity have no choice but to continue doing the same, rolling over deficiencies, and pulling ahead finance deals. 

There is a choice...perhaps they will introduce a 72+ month lease to roll over deficiencies? Same as stretching the finance terms a few years ago.

Reality Check 3

When manufacturers abandoned leasing in Canada, they opened the door for Canadian financial institutions to become more active in the auto segment. Auto sales have exploded with the increased participation of financial institutions, which also influence the captives in recalibrating the risk of auto loans.

You have to wonder why "industry experts" persist in connecting the wrong dots, or remain oblivious to the emergence of new dots.

In the meantime CMS is enjoying mobility at $500 per month, and will keep on demanding and enjoying mobility. Its similar to a lease...especially when "everyone has skin in the game" pitching in to roll the negative equity risk down the road.


 

Wednesday
Mar232016

Ignorance

Ever wonder how much ignorance floats around on a daily and ongoing basis?

Ever wonder if there is such a thing as an ignorance meter?

In an age where knowledge is literally disseminated for free, ignorance often prevails.

The "autosphere" is rampant with ignorance running wild on numerous occasions.

We could keep on going...and going.

We urge you to reflect on how much ignorance you can spot / detect on a daily basis.

 

Thursday
Mar172016

What's Going On?

Every so often we stop and ask "What's Going On?" this is the ideal time, mid month on the last month of the 1st quarter of 2016.

In no particular oder

Utility Vehicles

It still seems to befuddle a ton of folks, CMS (Citizen Main Street) prefers utility vehicles over sedans. That simple...this migration has been enabled by manufacturers.

4 Cylinder with a Turbo

Its the new 6 cylinder...usually tweaked to provide good low end torque

6 Cylinder with a Turbo

Its the new V8...again tweaked for torque and some top end power. Many manufacturers are putting these V6's in all sorts of models with an appealing word track to entice consumers.

V8

By now its truly a luxury engine, especially one big enough to not require a turbo or a blower. Agreed the Detroit 3 have some interesting offerings when it comes to V8's.

Multispped Automatic Transmissions

Remember the Powerglide? Today we are up to 8 and 9 speed automatics, which makes sense that by going to smaller engines, more gears are useful to "lift the load". Think of this...for decades a 13 speed Fuller Road Ranger was the mainstay of the trucking industry. A 9 speed automatic with a torque converter is similar to a 13 speed in a heavy duty truck.

Loan Terms

Getting longer not a good thing for the auto business. The loan terms are signaling the the business has crossed the shark and truly pushing the envelope.

Pulling Forward

Dealers to be competitive are pulling deals forward which makes sense, when folks are in longer than shorter loan terms. How much forward can you pull...its the question.

Negative Equity

From a consumer perspective they are getting about 50% of what is owed on a vehicle on a trade value. Think about this for a moment.

Mobility

CMS in Canada increasingly wants mobility, not ownership. With profound implications for the auto business. The loan terms are merely a financial instrument to package mobility.

Opinion of Others

Have you noticed all the references to the younger generation relying on the opinion of others, reviews, forums to formulate their decisions especially when it comes to vehicles. When it comes to vehicles is it the the money of others, or your money?

 

 

Thursday
Feb182016

The Price of Everything

A little while ago the Canadian economy was presumably humming along, we presumably had missed the worst of the great recession, while CMS (Citizen Main Street) was increasingly borrowing money from Canadian banks to keep the economy going.

It was all cool...we were on a supposed enviable trajectory. Lets not forget the CDN dollar which was actually worth some money.

Today in many business conversation we hear disruption, innovation, creativity, in addition to the this "space" and that "space".

Suddenly the price of oil is disrupted, billions upon billions are squandered.  If you remember conversations of peak oi, running out of oil, and folks raising the price of oil. Its "deja vu" the other way with now too much oil.

"We have decided to keep on pumping to see where the price of oil will settle down to" Its a business decision and strategy with dramatic impact on Canada.

To make it more interesting China the factory of the world, slows down marginally. It remains a huge machine but it slows down a few points. Suddenly the price of this resource, and that resource plummets to levels not anticipated.

As a preemptive move the Bank of Canada starts chiming in that the Canadian economy is slowing down, the price of oil is in free fall, exports are slowing too. All of this to beat down the value of the CDN dollar on the premise that there is little light at the end of the oil tunnel. Lets see if we can get manufacturing the one that remains in Canada going again.

Have you noticed that Canada prefers to make money the easy way with the least amount of investment or risk. We have oil but no way to turn it into a consumer product.

All the computers, and software that do most of the trades on the financial markets are totally confused as to what the "humans" are actually doing. The various algorithms are detached from the humans, while the humans are being impacted by the algorithms they have created.

Lets take a look at a few prices

Oil/Gas

Cheap, bu not cheap enough, immense savings at the pump for CDN.

Food

What you saved at the pump gets immediately spent to cover the higher orices of food.

Investments

Absolutely not going forward, and will not for the foreseeable future. The algorithms rule.

Real Estate

In certain areas of Canada its through the roof, in others its imploding, and other its steady.

Cars

Prices are steady while rising, incentives are tactical, CMS takes advantage of the entire landscape. Sales are through the roof. The lenght of loan terms is also though the roof.

 

 

Thursday
Jan212016

Evolution of Vehicle Technology

Informative video by JD Power

 

Wednesday
Jan202016

Red Bull F1 on Snow

As you would expect a very cool video from Red Bull...