Canadian Sales - First Quarter 2013

Our thoughts...

 

Vroom Room

Good Morning!

Its Friday its another Vroom Room, come in make yourself comfortable, enjoy the cappuccino and biscotti, join the conversation.

You know the saying "change is the only constant" we are firm believers in that saying, and in going out and creating your own change. We often read about innovation, the innovative mind set, and so on. Perhaps we forget that we can and should innovate our lives, and disrupt our own level of comfort to reach a different level.

Another aspect is to have the capacities to execute your decisions, when you don't have to, and its disruptive, it generates butterflies....

For the time being suffice it to say that what started out as a thought vector on a beach, is being executed with a few remaining moves...we will keep you posted once the remaining pieces fall in place and how the journey develops.

Yes...spring is in the air, its April, its wet, its unpredictable, and the birds are chirping early in the morning.

You surely noticed that we are discussing components that have grasped our attention, like electric power steering, and paddle shifter, we will continue discussing components that grasp our attention. 

This week we have a Jaguar XF AWD...what a pleasant surprise...its a cool car.

On a different note, we have often said that the leveraged Canadian consumer has been powering the Canadian economy for a few years now. When you read that a Canadian entity that benefits from a leveraged Canadian consumer goes out and encourages putting its Canadians employees out of work, and is encouraged to do so by the Canadian political system. 

Its a Wow moment of how many things can be very wrong with a situation, and who will do some butt kicking. After all the PR is done, its still deserves serious butt kicking (yes we are being very polite).

An interesting analogy: A few weeks ago we had an informative exchange with an individual that was returning home from working the winter in Fort McMurray for the lobster fishing season on his boat. During the same trip we also encountered an individual having an intense experience writing e-mails on his smart device on a plane. Truly fascinating to see the difference in how humans behave.

More old race cars from the Spring Club Races.

Household Numbers

Are we still in a ranty mood? We might as well keep on going, and what do household numbers have to do with the auto business. 

Back in 2008 we mentioned that we were entering a new reality for the auto industry, the auto business, as well as an economic new reality. As usual when a thought is a little too far ahead....yes we all know!

if you are getting the feeling that main stream media is on a mission to pound CMS (Citizen Main Street) to the ground you might be on the correct thought vector.

Our prescient comments from almost 2 years ago on the Canadian Economy and Consumer.

We have constantly repeated that CMS has been powering the Canadian economy, and obvious that at some point CMS was going to run out of credit facilities and/or arrive at a higher understanding than to continue powering the economy. In the meantime (4 years) has anyone else picked up the slack? Has anyone taken on additional risk, compared to CMS? 

Some points:

• Canadian banks through CMS made substatial sums of money available in the Canadian economy.
• CMS rode the wave.
• Canadian companies cashed in on the wave, and are sitting of substantial sums of money.
• What seemed secure a few years ago is no longer as secure.
• As usual the top of the pyramid will fare better than the bottom.

For the auto industry, auto business:

• It will get dramatically more competitive to create customers and sell vehicles.
• Yes...some will be left behind
• CMS will continue to do transactions that fit the monthly budget.

For the economy:

• What has to frustrate many folks, CMS took it upon themselves to power up the Canadian economy at a perilous juncture.
• Its finally sinking in to CMS that his wave has run out.
• Its clear that no one (to avoid risk) is stepping up to replace CMS in the Canadian economy.

Showroom Numbers

We must be in a ranty mood this morning! How come? Simple, in the past few days we have been reading more "you know what" from a variety of pundits with limited knowledge at best (lets leave it at that) about acquiring a vehicle and trading in a vehicle, and other auto business stuff. 

Lets start with a few: 

The Informed Customer: No kidding, from the outset of the internet (almost 20 years ago) anyone with a modicum of intelligence knew that the information residing in the showroom would migrate to the internet. Its old news...very tired old news.

Leads: Buying leads from a 3rd party supplier has existed since the inception of the internet, its not a business model for a dealer, but it fits within a business model to generate incremental sales (sell a vehicle deeply below cost to a profoundly informed consumer, to get your monthly volume bonus from the manufacturer). While increasingly in an age of big data somebody our there has data on someone else.

Social Media: The heyday of social media was 2009, we are in 2013 and everyone employed in a dealership uses a "smart device" to stay abreast of their own social circle. If a dealer presumably does not get it, is not interested in budgeting an amount towards staying in touch with his customers and prospects. Its his decision, will beating him on the head with the "social media hammer" make a difference? 

Showroom Time: A real challenge for dealers, CMS (Citizen Main Street) would like to complete a vehicle transaction in about 15 minutes, would like to complete a business office process in another 15 minutes. Its a genuine hurdle for dealers, its a challenge for the folks working in the showroom. How come no one talks about this moment of truth so much? On delivery CMS needs to grasp and understand the myriad of technology interfaces between himself/herself and the vehicle...for this CMS will allocate 60 minutes. 

Cost Prices: Back in the day (a few generations ago) when a dealer would take out his invoice and tell his friend "How much profit do you want to give me on top of the invoice cost" are gone...long gone. Knowing the cost of any vehicle is an exercise in futility. Knowing the various programs is not much better, dealers get confused on all the programs, and e-mails they get from their manufacturer.

Trade-Ins: Since leasing came to a sudden stop in Canada in 2008/2009 and finance terms are competing with mortgage terms. We all know (or should know) that the lack of equity in trade ins is rampant, that CMS (Citizen Main Street) is informed about costs, knows all the programs, has done due diligence to uncover the value of his trade. The reality in many instance he owes appreciably more than the vehicle is worth. While everyone wants to inform and enpower CMS on what his vehicle is worth. In the meantime CMS is presumably clueless about the deficiency.

Showroom Numbers = Monthly Payment: After all is said and done, and every pundit expressed an opinion. It is the "tradecraft" (is this an new term) of the dealer to craft transactions where the deficiency is rolled over into the vehicle being purchased, and the monthly payment remains constant and within CMS's budget. As we mentioned in Money for the Deal a few months ago.

Profits: Think about this, how can dealers afford palatial imaged premises, deal with a CMS that is informed and has a strong desire to pay below invoice (whatever that is), is selling dramatically more reliable vehicles that require less service, and generate less warranty claims, and still turn a profit? They either get substantial kick backs from manufacturers (what do you think), or their "tradecraft" permits a dealer to uncover additional profits from other sources in the showroom numbers while matching the budget of CMS.

Care to share your thoughts leave a comment.

Canadian Sales 2-13

Are we surprised...not really! With the aggressive advertising activity during CIAS in Toronto it was either a strong month, or everyone was playing catch up. 

Seems they were all trying to catch up!

Not to sound robotic, last year was an exceptionally strong February, and a leap year with an additional day. Similar to January perhaps a little too strong. This year its a strong February, and an impressive first 2 months.

Although it still begs the question: What happened?

The simplest answer is that CSM (Citizen Main Street) is more conservative, and prudent. It should not come as a surprise, and should have been expected.

Think about this for a moment same as last year at the end of February Chrysler is # 1 in Canada. 

MerBimAu's traction control light is flickering...lets see how much traction it gains.

We agree, VW is nibbling away at someone's lunch.

The Koreans hit a bump in the road, but after so many consecutive months of smooth sailing, perhaps it was to be expected.

The Detroit 3 are holding on, gaining traction in a competitive market with the light truck market on a upward trajectory.

The Japanese are surprising by their collective lacklustre performance after 2 months.

One question to reflect: There was an auto show in Montreal in late January, and auto show in Toronto in mid February with millions disbursed by the various manufacturers to have a presence at these show. Sales are down from the previous year for 2 consecutive months?

Lets see what March brings...how it will develop, as well as the various PR/pundit spins that will be disseminated.