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Entries in Canada (118)

Monday
Apr202015

The Paradox of Older Cars

By now we are all familiar with the mantra that "Cars (vehicles) are better, the quality is up, they last longer, and the population of older cars is increasing."

The other often heard mantra "Cars last longer consequently finance terms can be extended." Which implies that CMS (Citizen Main Street) will keep a car for 5-8 year time frame. The lenght of the finance term.

As we often mention the auto industry runs on a 36 month cycle, always did, and always will.

With record new vehicle sales in Canada for the past few years, you have to wonder where all these old cars are hiding, who is driving them, who is maintaining them.

Yes...all manufacturers have access to immense computing power, and can deal with massive amounts of data. Which permits them to acquire market insight that was not available a few years ago.

In Canada MerBimAu (hate to always bring these guys up) has been doing a phenomenal job in selling more vehicles, adding new models, remarketing, increasing CPO sales. We also know that the bulk of the new vehicles they sell are leased.

Lets break it down...some components...

Lease Term: Ideally 36 months, with the occasional stretch to 39-40 month to better position the return of the vehicle, improve the residual risk factor.

The vehicle returns in 36 months, not 60 or 72 or 84, the magic number is 36. It has a remainder of factory warranty, can be reconditioned at a reasonable cost, can apply an addtitional factory extended warranty to CPO the vehicle.

Remarketing / CPO: The idea is to make money twice with a vehicle, dealers that leased vehicles 2 generations ago knew that when the lease reached its term the vehicle would come back offering an opportunity to lease another vehicle to the lessee, and remarket the lease return.

In many instances the lease return is remarketed as a CPO and the supporting financial instrument is a 36 month finance term with a balloon amount at the end of the term.

The Chain Reaction: In the auto business having a chain reaction, taking trade ins, retailing used vehicles has always been a key to generating additional business, and obvious making more money.

Think about this...where are all these older cars? Are they still with the original owner?

 

 

Friday
Apr102015

Vroom Room

Good Morning,

 

Another Garage
Its Friday, its the Vroom Room, come in make yourself comfortable. We have cappuccino and biscotti, join the conversation, leave a comment.

 

The ongoing Cadillac, and Lincoln conversation...Cadillac has been trying to garner a foothold in the luxury segment for the past decade...think about it, at least 10 years. They are great world class cars, and still in the starting blocks...go figure.

Lincoln...they have the MKC and MKX that are selling reasonably well in Canada, while they seek the true essence of a luxury car.

Imagine for a moment if Cadillac instead of showing the CT6 would have shown the replacement for the SRX.

Several years ago we concluded that utility vehicles are lifestyle vehicles, family kickers, and make a fashion statement, and fall out of fashion. We are of the opinion that folks have a different "luxury" expectation from a utility vehicle, than a car.

More forgiving towards utility luxury shortcomings.

Looking at Canadian Sales for the first quarter, its emerging that "premium economy" is superceding "luxury" for the Germans. We did say that they were engaging in a fine line. You know the saying water flows dowhill.

Looking at the big picture these folks have the top end covered, although selling less, and now are inexorably moving downstream with their product offerings.

A brilliant photo gallery from the Sebring Historic Races.

 

 

Friday
Apr032015

Vroom Room

Good Morning,

 

The Vroom Room in a Garage Complex this morning.

Its Good Friday, its the Vroom Room, come in make yourself comfortable, we have cappuccino this morning, join the conversation, leave a comment.

Not to sound redundant, we have been telling you about the impact of low oil prices and the impact on the Canadian economy for some time now. Take a look at an opinion poll of Canadian executives.

From Ferrari a cool infographic of the Sepang F1 race.

In case you missed 2015 Canada Digital Future, which we believe is a must read, scroll down.

In case you never noticed, please go to our Welcome page to see the various publishing platforms we use for Strada on an ongoing basis. Not to honk our horn, perhaps we are unique in using several formats and platforms to publish our content.

Canadian Sales

Challenging climatic conditions, thousands of vehicles snowed under at Autoport (Halifax), pradigm shift in the oil patch made for an interesting March and 1st quarter.

At first blush its almost like VW with a 2,24 unit increase in March saved the day, since March sales increased by 3,046 units in Canada.

Considering the myriad of challenges it was a great month, and an impressive first quarter.

Cadillac CT6

You surely know that we are Cadillac fans, their latest offerings are world class. The CT6 is surely world class as a car, lets see what it does for the brand, and more important in sales pitted against formidable competitors. What do you think?

Why the garage this morning? from a few years back...the Strada Garage.

Our usual old race cars from the HMSA Spring Club Races 2015...enjoy.

 

 

Wednesday
Apr012015

2015 Canada Digital Future

If you are conducting business in Canada its a must read.

From comScore...

This annual landmark report explores how the prevailing trends in in web usage, multi-platform engagement, online video, and digital advertising are shaping the Canadian marketplace and what these trends mean for the year ahead.

 

 


Monday
Mar162015

March Sales Update

Weekly payment amounts.Its mid month March, lets take a look at the auto sales front.

Since last week most if not all manufacturers are offering one deal or incentive piled up on top of another and it all ends on March 31, 2015. Every incentive promotion has a "marketing name" to heighten the awereness.

The end of the first quarter is only 2 weeks away, needless to mention that everyone is seeking to conquer sales along with everyone else.

Yes...the auto business is hyper competitive.

CMS (Citizen Main Street) is sitting back and watching this advertising frenzy in print, TV, radio, online.

Perhaps...getting confused by all the deals, promotions, incentives. Certainly conclcuding that its a case of dynamic pricing run amock.

Needles to mention that whoever had a strong start to 2015 is in a dramatically better position than the manufacturers seeking to conquer in the last 2 weeks of the month.

Before we forget, many dealers are piled up with new vehicle inventory, while others have vehicles temporarily stalled in snow at Autoport (Halifax).

Some indicators:

  • The "nothing down" deals are getting scarcer.
  • The loan terms are extending at a faster rate than last year.
  • The transaction price is higher than last year.

Although interest rates are marginally lower, the Canadian dollar is dramatically devalued (in the dumpster) compared to last year.

The manufacturers that waited till March to throttle up, are in a less favorable position that the one that did a "hole shot" in January.

Let's see what month end will bring.

 

 

Thursday
Mar052015

February '15 - Canadian Sales

February generated spectacular near record Canadian auto sales...a Wow moment.

Lets take a closer look at the results, and while most folks compare numbers. This morning we are taking a different perspective.

2014

Its was a record year in Canada with 1.85 M vehicles sold a truly remarkable achievement.

2015

The executives at the various manufacturers in the waning months of 2014, looking ahead to 2015 are reflecting on how to improve on a record year. Its an auto business mantra that you always have to achieve higher numbers.

To make it interesting there is increased volatility in the air, with a tinge of uncertainty.

How much more do you improve on 1.85 M? At best probably a few percentage points (< 5%).

The astutes are grasping that mobility at a monthly payment is surpassing ownership.

Financial services (free flowing money) will continue in 2015.

The weak players (manufacturers) will adhere to their tried and true (stale) play book. The stronger players will need to  displace "someone" in one fashion or another to increase sales. Other players have fortresses and moats around their market segment.

Hopefully all manufacturers condensed their voluminous big data to uncover market segments with a strategic advantage.

We could keep on going but you surely grasp that for any manufacturer planning for 2015 offered opportunities and posed challenges.

Strategic Vectors

Strong Start - In the auto business its a given that you start strong, in drag racing its known as a "hole shot" a strong start in January provides an advantage and creates quick momentum. Especially with increased volatility in the Canadian landscape.

Conquer New Customers - If one manufacturer conquers another loses, need we say more.

The Migration to SUV/CUV - Which manufacturer will generate a "utilities" strategy to provide a quick start, and advantage.

February 2 Months Into 2015

Its an understatement to say that the auto business is competitive and unforgiving. If anyone misses a month its a salvageable situation. If anyone misses 2 months especially if they blinked due to a competitor its an arduous challenge and task to overcome a 2 month miss. 

"The climate was just awful in eastern Canada we held back on programs till March, watch us now." Its a good PR line to deflect reality that they are in deep yogurt.

At the end of February sales in Canada are ahead by 3% a stunning achievement especially after a record 2014, and a strong December.

Who Caught Our Attention

MerBimAu - we would have been shocked if Mercedes-Benz, BMW, Audi did not continue increasing their sales.

Toyota - made it clear from the start of 2015 that they are more aggressive.

Korea - these folks have enjoyed their windows of opportunities a few years ago, and are facing unrelenting competition.

Detroit - they are collectively waiting for March to overcome the Alberta effect.

Subaru - the niche is expanding.

Nissan - the Micra effect endures.

Honda - a serious blink after only 2 months.

VW - the momentum continues.

It will be interesting to see how March and the first quarter develops.

 

Friday
Feb272015

Vroom Room

Good Morning!

The last Friday of the month, its the Vroom Room, come in make yourself comfortable, enjoy the cappuccino and biscotti, join the conversation.

Looking back its been a positively frigid month. Although global warming is a reality, February was influenced by an unrelenting cold jet stream all month long. In addition to breaking a myriad of records for COLD. Must be winter...

Good thing gas is less expensive, and perhaps we are old school; with cold overnight and early morning temperatures we believe in warming up any vehicle for a few minutes.

Daytona 500

Did you notice the empty stands?

A typical NASCAR race at Daytona, which culminates in yellows, frustration, and NASCAR that tries to end a race on a green flag. Good thing the teams have appreciable budgets to wreck cars, and endure the litany of yellows, then red if a yellow is not enough.

Its the business of racing, not the sport of racing.

The exercise becomes intellectually insulting...and generates empty stands.

Congratulation to Joey Logano for the win, and being at the right place at the right time.

Canadian Sales

It will be revealing next week to see the February sales numbers for Canada, and the initial impact of the Alberta effect will start making its presence felt. As well as the frigid climatic conditions in eastern Canada.

If you missed our Apple and Cars take a look for our perspective.

Sebring Saga 1965, yes...50 year ago.

 

 

 

Monday
Feb232015

Autonomous Cars and Winter

With all the current talk and opinions from pundits on autonomous cars. 

Ever wonder how these vehicle would behave in winter, or even inclement weather? 

The current driver aids shut down when the climatic conditions are not auspicious or block certain sensors. 

Smart Cruise Controls in a driving rain stop functioning, and will alert the driver. Obvious that snow is even worse. 

We all know, at highway speeds a good amount of snow, slush accumulates on the front (bumper-grille) of any vehicle.

Lane Departure is the same, if the sensors no longer see the lines on the road to verify the location of the vehicle.

Fascinating that in Canada all the conversations of autonomous vehicles overlook the reality that we have snow, slush, feezing rain for several months of the year. The highway (401) that connects the 2 most populous cities (Montreal-Toronto), as well as one of the busiest border crossing further west (Detroit) in winter is always affected by unpredictable conditions. 

Will autonomous systems comprehend climatic and snow/ice/slush conditions better than humans? What do you think?

At some point in time we will have autonomous vehicles in Canada, that will be fully autonomous for 6 months of the year. 

 

 

 

Thursday
Feb192015

Cold and Cars

At times you have an epiphany of sorts...the other day we had one.

If you remember mechanical cars, with carburetors, ignition points to name a few. You surely remember the colder it got, the more challenging it was to start a car (vehicle) in the morning.

With advances in technology, be it fuel injection, improved ignition systems, we have quickly forgotten the challenges of a cold start, and the initial effects of cold on a vehicle.

Some things never change, and when its appreciably cold (minus 25-30 C) for a few days and you pay attention, cold continues to have an impact on a vehicle.

In no particular order:

Aluminum Engine Block: Contracts a bit more than steel, creating more friction on a cold start.

Oils: Even synthetic, still increase in viscosity from a good cold soak, be it motor oil, transmission, power steering.

Plastics: From decades ago, they crack and groan, a good reminder that its cold.

Starting a modern vehicle is much easier, as well as letting it warm up...the engine stays on fast idle for a shorter period of time, and obvious makes a few additional sounds.

Once you start moving its the same decade old experience.

Automatic Transmission: the oil is thicker the transmission shifts are slower.

Brakes: The brake fluid is cold, the brakes take a moment longer to apply, and release.

Power Steering: If its an old school hydraulic power steering, its stiff, its only half power for a while.

Thermostat: Once the thermostat open the engine temperature sinks like a rock.

Sounds: The familiar cold sounds of creaking here, cracking there.

Block Heater: Even with modern cars if temperatures are lower than minus 30 C, a block heater will be useful.

Technology: Interesting that the technology behaves quite well in cold temperatures.

Warm Up: We still believe that wen its minus 25 C its a good idea to warm up a car for a few minutes, to put some initial heat in the engine, and get components turning. What do you think?

We could keep on going...it struck us that when it comes to cold and cars some things simply do not change.

 

 

Monday
Feb162015

Auto Show Media Days

Most folks do not attend the media day/s of auto shows which are held prior to the public opening.

As you can appreciate some auto shows and media days are more prominent than others, although they are all important to provide exposure and visibility for the product.

In case you did not know there are a myriad of agendas being played out by various stakeholders during the media day. There are the prominent figures from the manufacturers, the handlers, the production folks, the show organisers, the main stream media folks, and other media folks. Its a wide spectrum of media that is in attendance.

A ton of actual in person "social" activity going on, at a time of social media here are folks connecting in person, commenting, glad handing, while everyone is busy with their specific agendas.

Its a fascinating experience.

As you can appreciate with the bulk of the auto business being conducted "online" whatever is unveiled at a press day was seen "online" a few days/months prior. Customers do their due diligence online prior to making a purchase decision. You can just imagine the level of online media activity that goes on.

In most instances the unveiling that support the manufacturer specific press conference are an exercise in unveiling "deja vu" from a media perspective. Manufacturers that are keenly aware of customers doing their due diligence prior to visiting a dealer; these same manufacturers remain confused when it comes to media days at auto shows.

Interesting enough the manufacturers that actually sell more iron often do a better job than the manufacturers that are behind the 8 ball...go figure.

Will it change? What do you think? Too many folks are set in their ways, adhering to the same "media" play book.

Should it change? Absolutely...by now the media playbook is tired, the product being unveiled is mostly a case of "deja vu", the comments during the press conferences are manufacturer specific self serving. Every manufacturer tries to convey a message that they "get it" when in most instances they stick to an old tired play book.