The Canadian Automobile

In a CADA Newsline article, the association’s Industry Relations Manager Bonnie Wasser said the summit will include networking opportunities and various sessions, including one that will address the current state of the transition to zero-emission vehicles (ZEVs).

The session will include participation from the Canadian Vehicle Manufacturers’ Association, the Global Automakers of Canada, the Automotive Parts Manufacturers Association, and Unifor.

Another speaker, Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors, will outline the current mergers and acquisitions climate for Canadian dealers.

James Voortman, CEO of the Australian Automotive Dealer Association, and Bernard Lycke, Director General of CECRA—the European Council for Motor Trades and Repairs, “will discuss changing OEM structures and strategies in Australia and Europe, and the lessons they may
hold for OEM-dealer relations in Canada,” according to CADA.

Wasser also confirmed that Jason Stein of Cars & Culture will be doing a live recording at the 2022 CADA Summit, which will be broadcast on the SiriusXM network.

Stein is a journalist, publishing executive, and podcaster who interviews guests to help tell the story of the automobile through “the voices of those who create them as well as those who lust for them.” Some of his guests have included comedy legend Jay Leno, Stellantis Chief Design Officer Ralph Gilles, NASCAR Legend Jeff Gordon, and businessman and auto industry entrepreneur Roger Penske.

The summit will include networking opportunities and various sessions.

“The event promises to be both exciting and intriguing for attendees, while also on-point with current and upcoming challenges for dealers in a rapidly shifting environment,” said CADA.

TD Auto Finance is the exclusive sponsor of the CADA Summit.

The post CADA Summit plans physical event for 2022, online option appeared first on Canadian Auto Dealer.

The 2022 Montreal International Auto Show (MIAS)—the largest auto show in Quebec—was cancelled. The event was scheduled to take place from January 21-30, 2022 at the Montreal Convention Centre (Palais des congrès de Montréal), but was cancelled due to the increasing spread of the COVID-19 Omicron variant.

As we were going to press, the Canadian International Auto Show (CIAS) issued a news release also cancelling their 2022 event.

In a December 16 news release, the MIAS announced the cancellation and indicated the decision follows an analysis made on the recent effects regarding the rise of the Omicron variant, along with the uncertainties regarding the sanitary measures around the organization of indoor events for the next few weeks.

This is the second consecutive year the event was cancelled due to the pandemic, which annually kicks off the Canadian auto show calendar. It is the second biggest one in Canada; the Canadian International Auto Show (CIAS) follows the MIAS a month later in Toronto, Ont. and is the biggest one.

“We were so close, we saw the light at the end of the tunnel, but COVID is hitting us again,” said MIAS Executive Director Luis Pereira in an interview with Canadian auto dealer. “Everybody is disappointed here.”

He said the decision to cancel the show had been discussed for weeks. According to the organization’s website, the event was founded in 1914 by the Montreal Automobile Dealers Association.

“With the increasing cases getting out of proportion here in Quebec, we really sat down and said, ‘this is not looking good.’ They are announcing the apocalypse in January with varying cases after the holidays,” said Pereira.

“We had our best intention to put on the show. We were so close, less than a month away, but we had a corporate responsibility,” he adds. “We had to really look at this and say it would be completely irresponsible to put on the show at this point, not knowing what the outcome will be in the next couple of weeks. It just made no sense, and I think the best decision was to cancel the show at this time.”

Pereira said he started relaying the cancellation update the evening of December 15 to the OEMs that committed to the show. The MIAS lost almost 10 automakers that had already bowed out for various reasons, but he said those that committed to participating were keen.

“They completely understand it was the best thing that could be done at this moment,” said Pereira, adding that he received commitments from electric vehicle manufacturers Imperium Motor Company and VinFast to be part of the show for the first time.

“The Montreal show was the first, I think, of all the Canadian shows going back to 2005 that had a zone dedicated to EVs,” said Pereira. “It was a theme to our show, which was gaining in popularity over the last two or three years, and with the inclusion of VinFast and Imperium into our show, it shows how important the Quebec market is for the electric mobility industry.”

He said they were disappointed, as they were also looking forward to having VinFast and Imperium making their Canadian debut. He firmly believes the MIAS is relevant in the landscape of the automotive industry, and the event industry in Quebec.

In the Greater Montreal area, Pereira said more than 13,000 people work directly in the automotive field. And with the energy transition and the changes towards electric powered mobility, the event would have offered “a unique showcase and allowed visitors to compare options and have their questions answered.”

“Thousands of people from the automotive industry flock to the city and into the Montreal hotels and downtown restaurants, not to mention the thousands of visitors,” said Pereira.

Hyundai Canada President Don Romano said the MIAS is a key event for the OEM because of its commitment to EVs.

“Montreal is important because of electrification. That’s the biggest EV market in Canada,” he said. “We’re introducing the IONIQ 5 right now. So for us the timing for Montreal was perfect to get exposure for it. Unfortunately we aren’t able to do that. Fortunately, we just did a press event in San Diego with quite a few (journalists) from Montreal.”

“As a company we’re trying to take the lead on electrification and promote electric vehicles, and auto shows are just fantastic for that because a lot of people don’t understand electric vehicles,” said Romano. “They are not comfortable yet, and auto shows are a place to get comfortable.

As for the fundraising activities planned for the Charity Preview Evening of the show, which are meant to support six hospital foundations, MIAS Executive Vice-President Denis Dessureault said they will be maintained and that details will be communicated in the coming weeks. The six foundations normally benefit from the funds raised during the evening event that launches the MIAS activities.

The CIAS also cancelled its event for 2022. Canadian auto dealer will have more later today on this breaking story. Visit our website for more updates.

The post Omicron spread forces cancellation of auto shows appeared first on Canadian Auto Dealer.

Canada threatened to impose new tariffs on the United States if the Biden administration’s Build Back Better provision regarding an electric vehicle tax credit plan passes, according to Global News. The news outlet said the plan threatens “to severely impact Canada’s automotive sector, valued at tens of billions of dollars in exports alone to the U.S.” The threat to impose tariffs was sent in a letter to several members of the U.S. Senate leadership. (Source: Global News) Read the original story…

The post Canada threatens to impose tariffs on U.S. over EV tax credit appeared first on Canadian Auto Dealer.

A financial expert takes a look at dealership financial statements and offers insights into what dealers might be missing.

My profession is an interesting one.

It’s often misunderstood and commonly discounted in the automotive industry. In a world of exotic cars and cutting-edge technology, most people choose not to focus on their financial health. But it’s important. Extremely important!

And in the long run, it will separate the dealers that lead the pack from those that will fade away into the sunset.

Although I’m a professional accountant by trade, I spend little time thinking about debits and credits. Instead, I focus on business strategy and growth, albeit from a different perspective. I spend time understanding the business in front of me, analyzing entrepreneurial opportunities and recommending big picture alternatives. That’s it, that’s my job.

To perform my duties, I require one simple and comprehensive document: your financial statement. As a senior financial executive, and faculty member at Georgian College’s Automotive Business School of Canada, I often get asked: “What is the most important number on my financial statement? What should I be looking at? What ratios are important?” I will summarize my top three:

Contracts in Transit

To me, this is the most important number on the financial statement. The speed in which you convert contracts into cash is the key success factor for any dealership.

Let’s call this “level one” importance. Then, your ability to use this cash to grow your business is “level two.” Good companies can perform “level one,” but only the great ones have mastered “level two.” (This is my adaptation of Jim Collins’ theory from his book Good to Great.)

Metrics like “lease penetration” were born here and continue to be a key performance indicator for most organizations. Even more important than generating contracts is collecting them.

By definition, a contract in transit represents the amount owed to the dealership for finance contracts on vehicles sold. I think it’s much more than that. It’s really a measure of operational efficiency. As this number grows, it tells the story of a healthy variable operation—one that delivers units at a consistent pace and, more importantly, one that has structured the “right” type of deal.

As we know, variable operations hit their “sweet spot” when they convert customers into three-to-five year leases or financing arrangements. This provides dealers with reserve income, opportunities to repurchase used vehicles, service work, customer retention, and more.

Metrics like “lease penetration” were born here and continue to be a key performance indicator for most organizations. Even more important than generating contracts is collecting them. And here lies the secret weapon of most dealerships: an efficient business office.

This “ebb and flow” that recurs month after month summarizes a dealership’s primary revenue steam, leading dealers do this well—really well. Proper analysis of your contacts in transit will identify weakness in deal structure, volumes, deal flow, and funding delays.

The story of a healthy variable operation is told in this one simple account. Are you paying enough attention to it? Are you good? Or are you great?

Fixed absorption

Industry experts love this metric. Truthfully, so do I. It just makes sense. If a dealership can cover its expenses through fixed operations, then vehicle sales will generate pure profits. It’s a perfect system. And when achieved, it will always lead to a financially healthy business. It’s perfect arbitrage!

While the goal is 100 per cent absorption, industry averages range from 60 per cent to 65 per cent. Think about it, as OEMs require newer, bigger, and more state-of-the-art buildings, a dealer’s ability to cover these carrying costs becomes more impossible to achieve. Therein lies the paradox of the retail automotive ecosystem. So how can dealers survive in today’s environment? It’s the same question I ask myself every day.

Independently, the absorption rate is a beautiful KPI. It measures the efficiency and effectiveness of a dealership’s fixed operations and summarizes its ability to manage expenses all in one metric. It’s a great way to identify a successful company. The challenge today is improving it.

In today’s environment, reducing costs is the only real way to improve your absorption rate. To make a big impact, you must cut big…really big. Let’s be honest, that’s no fun. No one likes reducing headcount, cutting technology, or slashing building maintenance—but there is no other way.

And that’s especially true during COVID. A dealer’s ability to increase fixed operations profit is limited, so they are forced to do the thing they hate most: reduce and restructure.

This financial measure has held the test of time, and it should. At its core, it is a financial analytic that summarizes a dealership’s ability to survive in difficult times. Dealers with a healthy bottom line also have a solid fixed absorption rate—these metrics are dependent. There’s no way around it.

Frozen capital

No one likes wasting resources. For business owners, it’s the equivalent of appendicitis. If left untreated, it will cause your demise. But if attended to quickly, you can live a long and healthy life.

By definition, frozen capital arises when money is tied up in non-income producing assets. In the dealership world, we typically see this in aged inventory and receivables. Both are equally problematic. The good news is, with better management, you can fix it.

Having the “right” amount of inventory is important to your financial success. Too much, and you’ll have resources sitting idle. Too little, and you’ll miss selling opportunities. Gone are the days of buying inventory based on “gut feel.” There is a better way. Use inventory turns and industry benchmarks to calculate optimal levels.

Your dealership representative is tasked to work with you on ordering inventory, both mix and quantity, and can help you offload units that aren’t moving. The key is to do something about it—it’s far too easy to do nothing, and waiting hurts. Frozen resources cost the dealership money. A lot of money. Do something about it!

You should take a similar focus on collecting aged receivables. It’s not the accounting department’s job to collect them—it’s everyone’s job. Parts managers can make phone calls too. Service managers can help with warranty receivables. This is a collective effort. The more you focus on releasing frozen resources, the better your financial health. It’s that simple.

To summarize, successful dealers leverage their financial knowledge and use their financial statements to understand the story behind their operations. It’s not complicated. It’s your competitive advantage. And when done correctly, it’s a tremendously efficient way to manage your business.

At the end of the day, you are running a multi-million dollar and often multi-geographical business, and you must make a profit to survive. Use the tools around you, think outside the box, and do it right. Read and understand the story being told on your financial statements.

The post What your financial statement is telling you appeared first on Canadian Auto Dealer.

One of the more interesting comments stemming from Trader’s annual Carology online event, which took place April 20, was that Canadian household savings have gone through the roof during the pandemic, but are estimated to return to pre-COVID levels by the end of 2021.

That is according to Baris Akyurek, Director of Marketing Intelligence at Trader, who pulled the information from RBC Economics, Navigating 2021: 21 Charts for the Year Ahead (published December 2020).

What is interesting about the finding is that the household savings rate of disposable income, which is estimated to have reached 28% in the midst of the crisis in 2020 from 3% pre-COVID, could be used to purchase vehicles, both new and used — and to an extent consumers have been buying cars. But right now household savings sit at 12.7% as of January 2021, and should decline to approximately 4% by year’s end.

“Now I have to be honest, when I saw this I thought it was too aggressive. Like, there’s a hundred billion dollars in the economy and it’s expected to be spent in the next few quarters? I questioned this,” said Akyurek. “So what we did was we looked at its previous financial downturns and considered what happened to the savings rate in the previous downturns.”

With the exception of the last 2008-2009 (financial) recession, Akyurek said other crisis events dating back to 1981 indicated that the savings rate returned to its previous levels within a year. This includes the energy crisis stemming from the Iranian revolution, the Gulf War in the 1990s, the dot-com bubble, and September 9/11 in 2000.

“The more interesting finding here is that 64% of these consumers who saved money said that they’re planning to use the extra savings to purchase a vehicle.”

— Baris Akyurek, Director of Marketing Intelligence at Trader

But what about the financial crisis? Akyurek said the difference has to do with the nature of that downturn; it has nothing to do with what we are going through right now — the COVID-19 restrictions, lockdowns, and health concerns. Going back to the RBC forecast and looking at previous downturns, Akyurek said they believe that consumers are going to keep spending the money that they have in their savings account.

He said the company worked with a third party research company to understand how this additional money is going to impact the automotive retail sector.

“We asked Canadians who are planning to buy a vehicle in the next six months — we asked them whether they have saved any money during the pandemic, and almost half of these people (45%) said that they did,” said Akyurek. “But the more interesting finding here is that 64% of these consumers who saved money said that they’re planning to use the extra savings to purchase a vehicle.”

What is more interesting is that 29%, almost one-third of consumers, said they were not planning to buy a vehicle before COVID, but are not considering doing so since they have the savings available in their account, according to Akyurek.

“We believe this additional money in Canadians’ accounts have created this quote-unquote new demand that’s going to be coming to our sector,” said Akyurek, adding that almost a quarter of the consumers that said they would purchase a vehicle within the next six months by using the additional money in their savings account would purchase a more expensive vehicle.

If the research proves accurate, dealerships should enjoy a boost in sales from that new demand.

The post Canadian household savings: where is that disposable income going, and is it going down? appeared first on Canadian Auto Dealer.

For dealers that want to keep tabs on how their competitors in the aftermarket are faring during the pandemic, the latest figures from DesRosiers Automotive Consultants (DAC) reveals a surprising increase in retail sales from automotive parts, accessories, and tire stores.

The impact of the pandemic was evident in certain areas of the automotive industry in 2020: new light vehicle sales experienced record-setting declines — finishing the year with a decrease in sales of 19.7%. And production from the assembly sector dropped sharply as well — by 26.9% for the year, thanks to the supply chain shutting down. But DAC says the picture for the automotive aftermarket in Canada “was nowhere near as dire.”

“Many assumptions made by generalist consulting companies and economists with limited understanding of the aftermarket proved to be overly negative,” said Andrew King, Managing Partner of DAC. “The aftermarket has long been the backbone of the Canadian auto industry and continued to hold strong throughout the pandemic, at least compared to other industry sub-sectors.”

Retail sales from automotive parts, accessories, and tire stores rose 2.7% in 2020 compared to 2019, while other categories such as Canadian gasoline consumption, core aftermarket employment, and AARO/DAC installer sales analysis were all down.

“While sales at these outlets did indeed fall in the spring during the first wave of the pandemic, the drop in March, April, and May was relatively subdued and retail sales figures bounced back quickly,” said DAC. “The fall was particularly strong, leading to overall retail sales at automotive parts, accessories, and tire stores to increase to $10.62 billion in 2020.”

For Canadian gasoline consumption, which declined 14.3% in 2020 compared to 2019, DAC said gasoline consumption dropped 43.1% for the month of April at the height of the first wave of the pandemic, when Canadians were not using their vehicles as much and kilometres driven had been significantly reduced.

Core aftermarket employment, which includes motor vehicle parts and accessories wholesale, automotive parts and accessories stores, and automotive repair and maintenance, was down an average 10.4% in 2020 compared to the previous year. But the sharp decline in the spring helped boost that number to a decline of only 7% from 2019, as of December 2020.

And as for aftermarket installers, DAC said it conducted a survey in late January with its colleagues at the Automotive Aftermarket Retailers of Ontario (AARO) to better understand the impact of the crisis on independent installers. Performance in 2020 was mixed, with the largest group of respondents (28.8%) indicating sales increases of 0-10%, and the second largest group (26.3%) indicating small decreases of less than 10%.

“In summary, the picture that emerges of the aftermarket in 2020 is mixed but shows real strength relative to the rest of the automotive sector,” said DAC. “The automotive aftermarket was not affected as deeply as the new vehicle market or the manufacturing side of the industry.”

DAC said the mixed performance and relatively strong retail sales figures points to “a measure of deep-rooted stability” in 2020.

The post Retail sales from aftermarket auto parts category up 2.7% in 2020 appeared first on Canadian Auto Dealer.

Quebec’s Groupe Park Avenue has tapped Serge Vallières as its new director of communications for marketing and partnerships. He will report directly to the company’s Vice-President and Chief Operating Officer, Norman John Hébert.

“He is a natural choice due to his understanding of our industry and our corporate culture, as well as his solid experience and skills in communications and public relations,” said Hébert in a news release. “It will help us grow our brand and our leadership position in a changing automotive world, in which we have been evolving for more than 60 years.”

Vallières has nearly 15 years of experience in the communications industry in both agency and corporate settings. In his new role, he will be tasked with increasing the group’s outreach for the brand and its 21 dealerships, with employees, customers, partners, and external audiences.

“The automotive sector is going through several transformations, notably the rise of electric vehicles and the rapid evolution of the sales experience, and as a leader in Quebec, Groupe Park Avenue wishes to participate in this shift by exploring and establishing new business partnerships and by communicating more proactively,” said Vallières.

Vallières is a graduate of the University of Montreal in communication science, and of McGill University in public relations management. He is also involved in the community, and has served as a member of the INS Québec Committee of Ambassadors for nearly two years within the Institut National du Sport du Québec.

The post Groupe Park Avenue names new director of communications appeared first on Canadian Auto Dealer.

Electric vehicle maker Fisker is calling on the United States government to implement a new program it proposed called “75 And More for 55 And Less,” to help encourage the adoption of clean energy mobility powered by American-developed technology for use around the world.

In a nutshell, the program would provide a rebate of $7,500, plus $10.00 per mile of certified driving range for Battery Electric Vehicles (BEVs) priced at $55,000 and less. The rebates would be applied at the time of sale.

“We are at an inflection point in our transition to low-carbon mobility,” said Fisker Chairman and CEO, Henrik Fisker. “Just as the federal highways program in the 1940s and 1950s enabled a new era for the private car, we now have the opportunity, between the government and business, to accelerate adoption of electric vehicles and ensure the United States is at the forefront of this global shift.”

An EV priced at $45,000 and powered by a certified 300-mile range battery would receive a point-of-sale rebate of $7,500 — and an additional $3,000 for the battery range — for a total of $10,500. The transaction price would then be lowered to $34,500.

In an article posted on LinkedIn, Fisker said that, with annual fuel savings of about $1,000 for a BEV, the gap between the savings from the program and the average price of a gas-powered vehicle in the U.S. can be closed within approximately four years of BEV ownership.

“Many states and municipalities offer additional incentives, plus free or lower toll rates, free parking, and incentives for home chargers, further improving the payback period,” said Fisker. “The (federal) plan to invest $100 billion in full battery electric vehicle subsidies must encourage adoption of vehicles without gas or petrol engines.”

He said if rebates average $10,000, the federal $100 billion investment would support the purchase of 10 million clean energy BEVs, “more than ten times the amount sold in the last ten years.”

In Canada, the federal government already offers incentives for electric vehicles, in addition to what is offered at the provincial level.

The post Fisker calls on U.S. to implement program to boost EV adoption appeared first on Canadian Auto Dealer.

Volvo Car Canada is teaming up with Bullfrog Power to provide the OEM’s Canadian corporate office with 100 per cent green electricity.

Bullfrog Power will use its generators to put clean, pollution-free electricity onto the grid to match the amount of conventional power that the OEM is using at its head office. This includes using a blend of wind and low-impact hydro power that the company said is sourced from “new Canadian renewable energy facilities.”

“We are excited to welcome Volvo Car Canada to the bullfrog-powered community,” said Sean Drygas, Spark Power Vice President, Sales, Marketing, Strategy & Sustainability. “By drawing on green electricity, Volvo is helping to reduce our dependence on polluting forms of energy and transition Canada to renewable energy sources.”

The agreement is meant to reinforce Volvo Cars’ climate-neutrality objectives. Matt Girgis, Managing Director of Volvo Car Canada, said sustainability is just as important as safety for Volvo.

“Choosing to support our head office with 100 per cent renewable energy is a simple and effective way for us to demonstrate our commitment to a clean energy future,” said Girgis.

The OEM wants to become a climate-neutral company by 2040.

The post Volvo Cars Canada goes green on electricity at head office appeared first on Canadian Auto Dealer.

As of Earth Day (April 22), peer-to-peer car-sharing marketplace Turo plans to become the first such marketplace to offset 100 per cent of its estimated global carbon emissions.

Its commitment means two things: that it will offset emissions based on the total number of miles driven on Turo trips, and all emissions from its global office footprint. And that doing so may garner the interest of consumers for who the environment (and climate change) is an important factor when it comes to selecting a form or brand of transportation.

“Building on the organic growth of electric vehicles shared on Turo and our core mission of putting the world’s existing resources to better use, making the Turo marketplace carbon neutral is an important step towards making travel more sustainable, especially as the world emerges from the pandemic and car travel is widely considered the safest form of travel,” said Andre Haddad, CEO of Turo.

Haddad said they were proud to “double down” on their commitment to promote a greener future, and to continue championing EV and hybrid adoption.

Turo is unlikely to be the only peer-to-peer car-sharing marketplace to take this approach, and automotive retailers may have their work cut-out for them as car-sharing companies find ways to regain customers they may have lost due to the pandemic and fear of contacting the COVID-19 virus. A number of EVs have also been added to Turo’s platform via its hosts.

Turo will work to reach its carbon-neutral goal through an investment in emission reduction projects — including a transportation efficiency project, and two sustainable forestry projects (one in British Columbia, and another in Alaska). The company said it selected high-quality, third-party-verified projects through its partner, Bluesource, which is a carbon offset developer.

“Bluesource is very excited to partner with the Turo team as they continue their industry-leading climate commitments and embark on this offsetting program,” said Bluesource Vice President, Ben Massie.

The post Turo to offset 100% of global carbon emissions on Earth Day appeared first on Canadian Auto Dealer.

In honour of Earth Day, Electrify Canada will not charge electric vehicle drivers for charging sessions at its ultra-fast charging stations, starting at 12:00 a.m. EDT April 22 on through to 3:00 a.m. EDT April 23.

In a news release, the company said drivers of EVs can locate a charging station by visiting the Electrify Canada website, which reveals 22 charging stations in the provinces of Quebec, Ontario, British Columbia and Alberta. Each one is equipped with four chargers capable of speeds of up to 150kW and 350kW.

“Driving electric is an impactful action consumers can take to help reduce their carbon footprint and Electrify Canada is excited to celebrate this by offering free charging sessions on Earth Day,” said Giovanni Palazzo, President of Electrify Canada. “We are proud to help lead an electric vehicle revolution by enabling electric transportation for Canadians, on Earth Day and every day.”

The company also created the hashtag #ChargeOnEarth to help foster grassroots support for Earth Day, and is encouraging EV drivers to take advantage of the free charging sessions and share their commitment to the EV lifestyle through their social platforms.

Electrify Canada expects to have 32 charging stations (from the current 22), with a total of 128 individual fast chargers by the end of 2021.

The post Electrify Canada offers free charging sessions on Earth Day appeared first on Canadian Auto Dealer.

CarGurus’ Madison Gross talks about key findings and takeaways from the company’s COVID-19 Consumer Sentiment Study, and what those findings imply for dealers.

The post Video interview: CarGurus’ Madison Gross explores key takeaways from COVID-19 consumer study appeared first on Canadian Auto Dealer.