(Top left) CADA President and CEO Tim Reuss, (top middle) Charles Saillant of Groupe Saillant; (top right) Kim Day of Steele Auto Group, (bottom left) Susan Gubasta of Mississauga Toyota, and (bottom right) Steve Chipman of Birchwood Automotive Group.
The Canadian Automobile Dealers Association (CADA) made their first foray into the world of online events with this year’s annual CADA Summit, which took place on Feb. 3, 2021 from 1:00 p.m. until 5:30 p.m.
It was a jam-packed agenda that featured a mix of pre-recorded presentations, videos, some live sessions, and live questions and answers with some of the presenters.
According to CADA, the online event had close to triple the number of the always sold-out physical event, and more than half this year’s attendees were from outside Ontario.
The event kicked off live with opening remarks from Michael McGhee, Senior Vice-President and Head of TD Auto Finance Canada — the event’s exclusive sponsor.
“It’s my great pleasure to welcome you all to the online CADA Summit 2021,” said McGhee, who said he never would have believed a year ago, when he delivered remarks at the 2020 event, that he would be now doing it virtually. “What a difference a year makes. The pandemic has turned our world upside down.”
McGhee said the bank was proud to remain the exclusive sponsor of the event, and gave a brief talk about its efforts to stay connected to dealers during the pandemic. “We have experienced the highest of the highs and lowest of the lows,” he said.
CADA Chairman Trevor Boquist offered some remarks and introduced a provincial roll call featuring video greetings from provincial dealer association leaders from coast-to-coast. This added some levity and a sense of community at a time most attendees were likely watching from their homes, or from businesses operating amid a lockdown.
Tim Reuss, CADA President and CEO, thanked TD Auto Finance for its sponsorship, and kicked off the day’s events by giving a preview of the lineup.
Jeremy Gutsche
Chaos is more predictable than we think
First up was Jeremy Gutsche, the CEO of Trend Hunter and New York Times bestselling author; he spent two decades studying chaos and another doing consulting work helping brands, billionaires and CEOs accelerate innovation and adapt to change.
His presentation kicked off the day with a high-octane exploration of how the pandemic has accelerated change globally, and how this is shaking up entire industries — including the automotive industry in Canada. The main concept brought forth was that chaos is more predictable than we think.
“It’s slightly different from a crisis, because chaos is what happens once we emerge,” said Gutsche during the CADA Summit. “And once you start to see all the new business models (and) all those empty retail storefronts, the failed businesses get refilled — and what fills them? Well, the types of businesses that were already starting to trend well, the trends continue.”
In the case of the COVID-19 pandemic, some of those trends would be digital and e-commerce. Gutsche said the existing trends begin to speed up for businesses already riding them forward.
His work at Trend Hunter involves studying trends, and the company uses a data-driven approach that has allowed them to study 500,000 ideas over the last 15 years and three and a half billion consumer choices. All of this has paved the way for the company to become “a bit more studious” about what the patterns of opportunity are, and then use the data to study each of the different core mega trends impacting consumers — which ones are accelerating during a period like now, amid the pandemic, and which ones are not.
Gutsche said the takeaways allow them to understand how you can use mega trends to put a label on what is being observed, “but you can also use them in the other direction to start to predict what’s going to happen in the year and roadmap.”
He said that when a business breaks through a period like the pandemic, there is a heightened desire to do all things experiential. “It causes supercharged tourism. It causes my desire to have that big road trip. The desire for adventure, everything ramps up because you have a year of being pent up that you need to make up for.”
But increasingly, there is also a shift to a more peer-to-peer world, in this case where retail has known for a long time that there was a need to shift to a more advanced (or more modern) e-commerce setup. Now that the pandemic has forced that shift, retail businesses already taking steps in this direction have leapfrogged ahead.
“What’s the most valuable company in Canada now? Shopify, because it’s enabling retailers to get online more quickly,” said Gutsche. “We already knew the trend was happening, but now everything’s accelerated.”
He also talked about hybridization, which Gutsche described as the concept that the lines that separate different industries become blurred and suddenly companies step into completely different (and unexpected) markets. One example of this is retail giant Amazon, which purchased Whole Foods Market, a supermarket company. Other businesses are also looking into which markets they can cross over to, or what opportunities lie ahead for them.
In a year of hybridization during COVID, Gutsche said there will be a lot of big companies with a lot of capital that have already started to think more deeply about which markets they can get into.
“So the takeaway from part of this is (that) chaos is actually predictable, and by understanding that the new changes will still be driven by the mega trends that were (already) happening,” said Gutsche. “We start to think more deeply about what happens in the year ahead.”
It’s the same type of psychology that helped paved the way for the founding of a number of iconic brands in the world during periods of turmoil and change — and that includes the story of Ferruccio Lamborghini, founder of the Italian OEM brand Lamborghini; he originally started his business building tractors from reconfigured surplus military machines after World War II.
“The moral of the story is that an opportunity starts off subtle and awkward,” said Gutsche. “And if you want to try and think about all the ideas in the world that were missed, all the examples, that consistent thing you’ll note is that people overestimate their level of control, particularly when they’re successful, because everyone wants innovation to happen. But most people don’t break from the path.”
As dealers think about their experience amid the pandemic and how to accelerate change, Gutsche said the great ideas that dealers come up with are likely closer within their grasp than they think. They just need to take action.
Economic update
(Left) Oumar Dicko, Chief Economist at CADA and (right) Thomas Feltmate, Senior Economist at TD Bank Group”
Gutsche’s presentation was followed by an economic update from Thomas Feltmate, Senior Economist at TD Bank Group, who offered an outlook on how to navigate uncertainty amid the pandemic.
Feltmate started with a macro overview of the Canadian economy that showed an unexpected dip in the early part of 2021, due mostly to the resurgence of the virus and lockdowns across Canada.
The good news is that the bank sees a sharper recovery starting in the second quarter of 2021, as the vaccines get distributed and administered across Canada. The labour market is recovering but “scarring is also evident,” said Feltmate.
One interesting twist is that household incomes have risen during the pandemic, despite job losses. Federal government programs like CERB more than offset the lost revenue from these jobs, which had a net benefit. Canadians also amassed $200 billion in savings, as they were unable to spend money on tourism, travel, and other activities like dining out. Economists are now trying to predict how consumer spending will evolve over the next two years.
Feltmate said new vehicle sales for 2020 were about 1.6 million units, or about 20 per cent off 2019 numbers. For 2021, he said first quarter sales were sluggish but he expected they would pick up in the second quarter, and could even reach up to the 1.9 million-level for the year.
Did the pandemic trigger a temporary blip or permanent flip?
Feltmate’s presentation was followed by a panel of four dealers that tackled the issue of whether or not the pandemic triggered a temporary blip or a permanent flip within their industry.
Susan Gubasta, President and CEO of Mississauga Toyota in Ontario, described the dealership’s earlier entrance into the online sphere, pre-COVID, and found that customers are more open to doing a portion of the car-buying process online now amid the pandemic than they were before. She said they found it to be different, but liked the seamless experience.
“I look at the buyers and I think, it’s nice that we are able to give them the options,” said Gubasta, adding that she does not think in-person customer care will go away — especially as there has been more traffic coming in during the week as opposed to the weekend.
She said the dealership’s core changes since COVID are solidifying, processes are in place, and they are set up for success, but that “there isn’t one hard and fast way of doing things.”
Gubasta also brought up the concept that many dealers have since embraced: do more with less. It’s one that Steve Chipman, President and CEO of Birchwood Automotive Group in Manitoba also locked on to.
“We are really trying hard, moving forward, to do more with less,” said Chipman, adding that, when they initially let some of their employees go, they wondered why they needed people in administrative roles.
“We had a process problem, and we solved it with a people bandage,” said Chipman.
The dealership is making some changes to ensure employees can have a dual-function, so the business can do more with less staff. However, Chipman also emphasized the importance of finding ways to reward and appreciate team members.
As for Charles Saillant, Vice President of Groupe Saillant in Quebec, his focus during the discussion was about developing a process to manage both online and in-person sales, with an emphasis on the latter.
Speaking amid another lockdown in the province, which once again had dealerships close their in-person sales departments, Saillant said creating a flawless process is more like baking a cake; each ingredient is really important.
And if you neglect one of them, “you will probably find out that your cake will not rise to your expectations,” he said.
The four ingredients are as follows:
- the ability to have a person (and not a machine) answer any consumer requests 24/7;
- to avoid written responses whenever possible, and focus more on using the phone or texting, and then emails;
- to customize as much as possible so that the customer feels like they are being treated as a unique case (avoid pre-packaging templates, as customers feel the “artificial” flavours; and
- to build a team solely devoted to handling those customer requests — by phone and internet.
Saillant said a small segment of people want to do the whole car-buying process online. Even if that segment is small compared to the in-person process, dealers need to be flexible and that segment needs to be addressed.
“You have to learn and play by the rules as they come to you,” said Saillant.
Kim Day, President and COO of Steele Auto Group in Atlantic Canada, discussed the remote work situation and how their customer care centre still has employees working from home.
She said they have been leveraging service videos, including live videos of some repairs, which helps ensure there is little to no human interaction in their processes. This allows customers to understand the repairs and why new repairs may have been recommended. The video also integrates with the DMS, making the process easier for dealership staff.
“The video process will continue, that will simply evolve,” said Day, adding that other processes like maintaining the health and safety of employees and customers with plexiglass and PPE (Personal Protective Equipment) will likely remain for some time.
The dealership group is also exploring alternative ways to get people around so they do not have to rely entirely on their shuttle services and yet still provide good customer experience alternatives.
“It goes back to being able to pivot and change quickly,” said Day. “It’s all about being flexible, and that extends to our customers as well.”
Managing fraud, privacy risks around fully digital finance
Another panel on digital finance tackled the idea of how the automotive industry plans to manage fraud and privacy risks with fully digital finance.
With the pandemic acting as a catalyst for dealerships to move to digital financing, dealerships and financial institutions will need to figure out their next steps; for dealerships, the question is: how will they move to digital finance options while also protecting their business and customers?
John Carmichael, CEO and Registrar, Ontario Motor Vehicle Industry Council (OMVIC), said they wanted digital transactions to occur but first had to find a resolution between the finance and auto retail industry. Things like electronic signatures, and vehicle deliveries impacted their ability to move faster on this file.
“When you look at Ontario legislation, there are three levels alone,” said Carmichael. “In terms of connecting dots, we have to find our way through all these regulations.”
He said OMVIC has been hearing from colleagues across the country that the situation is similar. “We certainly don’t have a perfect solution yet, but we have moved the needle fairly significantly in the last year,” said Carmichael.
Howard Thompson, VP of Sales and Distribution at TD Auto Finance, said the company has been involved with OEMs over the years regarding the digital onboarding of customers.
He also said that there are numerous disclosure requirements at the point of sale, and that regulations are so convoluted that, although the bank may be exempt from some of the rules, the contract must still be negotiated in a way that is compliant so it does not become void.
Thompson said they recognize that if dealers want to stay ahead of the curve, they need to invest in things like remote/at-home car-buying.
“We finance nationally, but are beholden to provincial regulations,” said Thompson,” adding that whether the bank is required to follow specific regulations or not, they also rely on the dealer.
Andrew Ojamae, President and CEO of the Auto IQ Dealership Network, said all the details are not smoothly stitched together yet, but dealers are progressing on things such as e-contracting with digital customers.
He also brought up the concept of large, expensive dealership facilities and their purpose moving forward; as retailers grapple with the OEM investment demand of physical facilities and invest in technology and training development for virtual facilities, do they really need the same expensive building?
“I do think that there’s some discussions we have with that because we, as retailers, are making investment decisions whose amortization periods are much longer than the certainty of their use,” said Ojamae. “So that’s what I think is an important part as far as the transaction itself.”
Ojamae also noted other issues to consider, such as the establishment of return-exchange privileges and extended test drives on pre-owned vehicles. Facilitating those on new vehicles would be helpful too, in helping dealers move forward.
“I think we need to get active and be collaborative as an industry,” said Ojamae, adding that the panel was a good start to a conversation to drive change.
A third panel about the reset of the Canadian automotive industry included Dennis DesRosiers, President, DesRosiers Automotive Consultants (DAC), Jerry Dias, National President, Unifor, and Flavio Volpe, President, Auto Parts Manufacturers Association (APMA).
That discussion explored the idea that there is opportunity in Canada’s automotive industry, in new agreements to manufacture vehicles in the country and also in technology and electric vehicles — although questions remain around mass consumer adoption.
(Top left) President of Universus Niel Hiscox, (top right) John Carmichael of OMVIC, (bottom left) Andrew Ojamae of the Auto IQ Dealership Network, and (bottom right) Howard Thompson of TD Auto Finance.
The mood around Canada-U.S. relations
Political and social commentator David Frum was among the last speakers of the day, delivering a presentation meant to help dealers understand the mood in Washington and how the continued political divide in the U.S. will impact Canada-U.S. relations on everything from trade to climate change.
He discussed the mood across the border, where Joe Biden has now been named the 46th President of the United States after the now infamous Capitol riots, and the Democrats now control both the House and the Senate, making the situation for Canada somewhat better than it was with former U.S. President Donald Trump.
With respect to some good news, he said the global pace of vaccine distribution is going to make a big difference in getting life back to normal post-pandemic. “Humanity is winning this race,” said Frum. “Canada has been a little laggard. Everyone has been riding a wobbly bicycle.”
He believes we will see remarkable things from the U.S., and that there is some good news for Canada as well. But when it comes to trade, there may be some concerns. Biden’s approach to trade is less belligerent than with Trump, but he expects that America’s turning away from global trade will continue under Biden.
Until 2004, he said Biden voted in favour of every trade deal that came before the Senate. After 2005, he voted against every single one of them. “Biden was never a particularly trade-focused Senator,” said Frum, adding that he shifted to the centre of his party.
Biden’s “Buy America” could also become a larger issue. “This is a big concern for Canadians,” said Frum.
However, Canada generally receives exemptions from these measures and Frum expects the country to dodge some provisions.
CADA’s Huw Williams, and Stephen Poloz
Canadian, U.S., and global monetary policy
The last speaker of the day was Stephen Poloz, former Governor of the Bank of Canada, who offered his insights and analysis on the Canadian, U.S. and global monetary policy — current and post pandemic.
He explored the idea that COVID is more of a natural disaster, and that the second wave of the pandemic could be similar to the first wave but with some differences. Household savings, for one, have increased significantly since the first wave — although spending has as well, while auto retail sales have picked up.
Poloz is also expecting the vaccine rollout to improve the overall situation, and said the economy could normalize much sooner than anticipated.
Other additions to the event include a video tribute for Gino Cozza, who was previously the VP of Sales and Distribution for TD Auto Finance and spent decades in auto finance and working with dealers and other members of the industry. He retired in January 2021. And a video honouring the 2020 CADA Laureates (Amin Tejani, Art Angielski, and Brian Garland) was also included as part of the CADA Summit.
The award-winners of the Dealer Satisfaction Index Survey (DSI) were also officially announced. For brands with 100 or fewer dealers, awards were presented to Subaru for the Highest Overall Satisfaction and Most Effective Dealer Communications (8th consecutive year for both), and COVID-19 Pandemic Response Excellence. BMW received an award for Most Improved Overall Satisfaction.
For brands with 101 or more dealers, awards were presented to Mazda for Highest Overall Satisfaction and Most Effective Dealer Communications (both for the 2nd consecutive year), to Cadillac for Most Improved Overall Satisfaction, and to Kia for the COVID-19 Pandemic Response Excellence.
TD Auto Finance is the CADA Summit’s Exclusive Sponsor.
