If you are of a certain age you surely remember when getting on a plane to fly "somewhere" was an elegant undertaking. Perhaps you even remember the "insurance kiosks" offering varied insurance plans in case a plane crashed.
At some point the elegance was totally suppressed from flying.
Lets take a look at this...
A few decades ago flying to various places in Canada was still elegant, tame, relaxed compared to today. Especially if your station in life and the company permitted you to fly executive or first class. While most companies had a designated travel agent to provide the tickets.
You could fly across Canada in executive or first class, arrive refreshed and ready to work. Yes...the over head bins were relatively empty.
There was a sense of civility on the planes, while being served reasonable food, drinks, libations.
If it sounds like ancient history it surely is...
At some point our own The Colonel concluded that dealing with airports, and flying was becoming increasingly inconvenient...the time saved is certainly what still motivates folks to fly...as well as the ability to cross wide stretches of water.
Since time is a most precious commodity...flying endures to impose on the folks that fly.
Have you noticed that buying a ticket is similar to a lottery, a guessing game, take a look and see what comes out sort of thing. Airlines have "dynamic pricing" down to an hourly science...never mind day, or month. Obvious that buying way ahead of when you will actually fly is the mantra.
What does it have to do with cars? Not much...but imagine for a moment if vehicles were sold in the same fashion as plane tickets. The service provided by dealers would be the same as airlines.
What do you think?
"The Automotive Industries Association of Canada (AIA) recently commissioned DesRosiers Automotive Consultants to undertake the first detailed analysis of the number of service bays in Canada. This groundbreaking study used a variety of proprietary surveys and methodologies to explore the number of commercial bays handling light vehicle repair and maintenance, excluding tire, glass and collision focused shops. The analysis indicates that the total bay count in Canada in 2014 was 106,913 bays spread across 16,683 locations. Independent service outlets had the largest location count (11,904) and accounted for approximately fifty percent of the overall number of bays. At a national level, the DAC analysis indicated there were 221 light vehicles on the road in Canada for each service bay with provincial variations being notable as always.Overall, the service bay sector is operating close to capacity handling in excess of 64 million service visits annually."
Lets look at these findings from a service productivity perspective.
- Lets be optimistic and agree that the average RO (repair order) is 2.5 hours.
- There are 8 working hours per day for each service bay.
- Each service bay can accomodate at least 3 vehicles per day (8 divided by 2.5 = 3.2)
- At 106,913 times 3 = 320,739 vehicles can be serviced in 1 day across Canada
- 106,913 times 7.5 hours (we agreed on 3 vehicles) = 801,847 hours at $ 100/hour = $80 M of service labor sales per day - we are not counting parts.
- At 20 working days / month 320,739 x 20 = 6.4 M vehicles per month = 76 M vehicles per year
- If from above 64 M visits = 1 vehicle per visit
- The service bays can handle 76 M vehicles, 64 M is 84% of the capacity in number of vehicles and hours.
- A service bay that runs at 84% capacity is not productive, and does not make good money.
- From the above the vehicle population in Canada is 23.6 M lets say 24 million and there are enough service bays to service 6.4 M vehicles per month in a 4 month time frame every vehicle in Canada can be serviced.
A service bay in an 8 hour day should generate a 20% premium in productivity, in 8 hours 9.6 hours are sold at 2.5 hours per RO (again being very optimistic at 2.5) that is 4 vehicles per bay per day.
Some folks are not making the money they should or could with their service bays.
The price of oil goes in the dumpster for every reason on the planet. In the meantime gas is $1.10 a liter in the GTA, and in case you have not noticed premium has crept up to an additional 22 cents per liter. Lets just say that somebody is making some money retailing oil converted to gasoline at $1.10 a liter.
In Canada we are a nation of borrowers that are headed for a "wall" at some point. We are a consumer economy enabled by a myriad of forces to remain a consumer economy. Its the Canadian consumer that keeps Canada rolling along. Yes...CMS (Citizen Main Street) as we call him.
Auto sales are through the roof, enabled by the same forces upholding the consumer economy...we call it free flowing money. Other folks are always trying to find new meaning in reading the tea leaves.
On a different note
Perhaps you remember the old saying "Sticking your foot in your mouth"...in an age of social media, everybody is on 24/7. This past week we had a politician, and a soccer fan stick both feet and then some in their mouths. The politician went on damage control, and the soccer fan paid the price.
One more thing
The Canadian infatuation with real estate that keeps a ton of businesses going in one fashion or another, in addition to keeping a myriad of pundits going all day long.
From a car business perspective the old saying "What is a car worth?" the answer "The price that the individual who bought it paid for it."
Are we in a new Canadian reality with a bunch of folks attempting to grasp the future through the rear view mirror?
What do you think?
You know that we love horsepower...
In case you missed it live, last Saturday's Kentucky Derby, the 3 leading horses were trading sweat up to the finish line.
This past week end the "Royal Vic" in Montreal closed permanently. The passing of a long established hospital, replaced by a new facility The Glen.
Why are we talking about the Royal Vic this morning?
A few decades ago, 2 members of the Strada Crew were born at the Royal Vic.
The Colonel had a hand and a shoulder fixed at the Royal Vic. The hand was an unfortunate accident, and the shoulder the result of a hockey game.
For generations the hospital was the go to medical facility in Montreal, on the slope of the mountain with iconic architecture. The result of folks residing in the "Golden Mile" wanting their own hospital close the the university back in the days when Montreal was literally the epicenter of Canada.
Although no longer an operating hospital, the various buildings remain a compelling Montreal landmark.
Lets not forget the Mc Gill University student dormitories a little farther up the hill.