Automotive News Canada - October 2017 - 26
* OCTOBER 2017
Factors converge to boost lust for luxury
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to open a dealership later this year; sales of
BMW brand vehicles were up only 1.1 per
Ultraluxury brands, such as Rolls-Royce
and Bentley, have posted double-digit
increases this year.
Even supercar maker McLaren - with
an entry-level price just under $200,000 -
is seeing a sales increase. Morris Lubinich,
general manager of McLaren Vancouver,
recently said that Canada is "an important
market" for the
There's a lot
of money at stake:
A large, new
Mercedes dealership can cost up
to $75 million to Jaguar sales are up nearbuild, dependly 80 per cent during the
first nine months of 2017
ing on the size
and cost of land, compared to 2016, largely due to the F-Pace.
Caza, Mercedes' ( P H O T O : J A G U A R )
director of communications in Canada. The new Lexus of
Lakeridge dealership in Ajax, Ont., which
opened in January, is 73,000 square feet (6,700
square metres) of "innovative features that
focus on hospitality, comfort and luxury experience." It helped bump year-to-date Lexus
sales up by 13.5 per cent over last year.
MORE BUYERS, MORE PRODUCT
There's also more selection, with compact
and subcompact utility vehicles leading the
charge. Jaguar has the F-Pace while Land
Rover recently added the Velar, built on the
same platform. Jaguar's sales are up 18 per
cent year to date. It opened a new dealership
in Ajax and plans to open six more by 2020,
for a total of 32 dealerships in Canada.
"The premium brands are pushing downmarket, but they're not cheap, they're just
at a lower price than you used to find," says
Karwel of J.D. Power. "Look at Porsche,
doing very well with the [compact SUV]
Macan product. These are more accessible
markets with a larger pool of buyers."
There's no doubt Porsche is on a roll. This
year, new Porsche stores opened in North
Toronto, Kelowna, B.C., and Rive-Sud, Que.,
while three others expanded, including Pfaff
Porsche in Vaughn, Ont. There's plenty of
incentive for the additional showroom space.
"Depending on the brand, you're typically getting quite a premium, and sometimes
a massive premium, in the luxury segment
that you wouldn't see in the mass-market segment," says DesRosiers. "The exact level, we
don't know, but it can be significant. Chris
Pfaff isn't paying millions for new dealerships because he's not making very much
money selling luxury vehicles."
There's another reason for the popularity of luxury, says Karwel: Leasing is cheaper. In 2016, 24.3 per cent of mainstream vehicles were leased, but more than twice as
many luxury vehicles - 63.5 per cent - were
bought the same way. The increase from the
previous year was less than one per cent for
mainstream, but five per cent for luxury.
Why? The numbers speak for themselves.
The average monthly lease for a mainstream vehicle increased by $14 to $482, but
decreased for a luxury vehicle by $14 to $796.
"This is a long-winded way of saying that
there are deals to be had on the leasing side of
luxury vehicles," says Karwel. "Low interest
rates are helping to foster this."
ROBUST LUXURY MARKET
Most luxury brands have sales increases
through nine months of 2017, with many
posting double-digit percentage increases.
Source: Automotive News Data Center
Gov't policy gap: inspiring EV purchase
public awareness, said Canadian Vehicle
Manufacturers Association President Mark
Automakers say the targets are unrealisNantais, one of the industry representatic, given that EVs accounted for just over
one per cent of Quebec sales last year.
But the central question of how and to
When he launched the review
what degree government should step
last May, federal Transport Minister
in remains divisive.
Marc Garneau said he wasn't lookA mandated sales quota is bound
ing for a sales-mandate recommento get pushback from automakers,
dation, but his department told
who are still trying to get the Quebec
Automotive News Canada that no
decisions have been made.
"There was a lot of opposition to
that," said committee member Al
MOVING TOO SLOWLY?
Cormier of McMaster University's
A sales mandate has supporters
Institute for Transportation and
"Conversation Logistics. "Just because it's manamong EV advocates on the panel
who argue the industry is not mov- went surpris- dated doesn't mean the demand [for
ing fast enough to introduce a wide ingly well."
EVs] is going to be there."
range of ZEVs.
Consumer incentives are not
"The conversation went surprisingly
doing enough to help sales, so other
well, given the disparate points of view or
ways are needed, said committee memdisparate starting points at the table," said
ber Suzanne Goldberg of Simon Fraser
committee member Ian Jack, the Canadian
University's Sustainable Transportation
Automobile Association's managing direcAction Research Team
tor of communications and public affairs,
"We see that as one of the biggest gaps in
after the final session in mid-September.
the policy arena today."
The review is part of Ottawa's PanAccording to participants, senior federal
Canadian Framework to help meet its target officials at the meeting seemed keenly interof reducing greenhouse-gas emissions to 30
ested in Ontario's program, which combines
per cent of 2005 levels by 2030.
buyer incentives with modest voluntary
The committee, about two dozen people
sales targets. Ontario EV sales rose 67 per
from the auto sector, non-government orgacent in 2016, according to figures compiled
nizations, academia and federal and provinby Fleet Carma.
cial representatives, was never intended to
Ottawa might consider Ontario's
deliver a consensus to Ottawa.
approach, which doesn't seem as coercive,
There was still "a fair amount of alignas the basis of a palatable compromise
ment" on useful elements such as raising
instead of mandated sales quotas. - ANC
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New bridges would
triple the lane count
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Bridge replacement would compete with the planned Gordie
Howe International Bridge,
which would connect the U.S.
and Canada by linking two key
highways: Highway 401 and
Interstate 75. Moroun has long
opposed the construction of a
second bridge, but a spokeswoman for Global Affairs
Canada said the country still
plans to move ahead with the
Gordie Howe bridge, which
would be about three kilometres
south of the Ambassador.
"By providing direct connections to Ontario's Highway 401
and Michigan's Interstate 75,
the Gordie Howe International
Bridge will significantly
improve road-based transportation at this major land-border crossing for many key manufacturing sectors, including
the automotive industry, where
just-in-time delivery is
key to economic success," Global Affairs
Natasha Nystrom said in
an email to Automotive
About one-quarter of all trade
between Canada and the
United States funnels through
the Detroit-Windsor border
crossing. ( P H O T O : R E U T E R S )
News Canada, in September.
"Our hope is this really changes the landscape that we've
been dealing with for the past
HOWE BRIDGE DELAYED
Plans for the $4.5-billion
Gordie Howe bridge, to be paid
for entirely with Canadian
funds, have stalled in recent
months, stymied by
delays and politics. The
Authority in August
gave the three consortiums bidding for its
construction an additional six months to subFOUR LANES TO 12
mit their plans, pushing
back construction from
The two new bridges Laura
November until at least
would triple the numMay 2018.
ber of bridge lanes to
The Gordie Howe
12 from four on the
bridge is crucial to
Ontario and Michigan
because it provides another
border crossings, including
crossing that is in public hands,
the tunnel that runs under
said Laura Dawson, director
the Detroit River, account for
of the Canada Institute at the
about one quarter of all trade
Wilson Center in Washington,
between the United States and
D.C. Moroun has fought against
Canada, according to Global
the idea of a second, publicly
Affairs Canada. About 2.6 milowned bridge for years.
lion trucks crossed the border
"Having a right of access in
in 2016, carrying about $100 bilprivate hands tends to be problion in goods.
lematic," Dawson said, saying
There are four border
a publicly owned bridge adds a
crossings between the cities:
layer of predictability for busithe Ambassador Bridge; the
nesses crossing the border.
Detroit-Windsor tunnel, a rail
"The construction of the
tunnel and the Detroit-Windsor
Bridge together with the Gordie
Most of the trade over the
Howe International Bridge projborder is auto-related, whethect will ensure that Canadians
er it's ready-for-sale vehicles or
continue to benefit from the effiparts shipping over the border,
cient movement of people and
according to Kristin Dziczek,
goods at this crossing while prodirector of the Industry,
viding infrastructure improveLabor and Economics Group
ments for the local communiat the Center for Automotive
ty," Transport Minister Marc
Research in Ann Arbor, Mich.
Garneau said in a statement.
"This is one of the biggest
But Colin Robertson, a forbridges in the country, and it's
mer Canadian diplomat and a
mostly auto," she said. "New
bridges would enable that trade fellow at the Canadian Global
Affairs Institute, is skeptical
to continue. It's pretty vital to
that new bridges could spur new
the health of both the Michigan
automotive development. While
and Ontario economies."
new bridges would speed up the
Many hurdles remain before
flow of trade between the two
either bridge becomes a realinations and perhaps make existty. For Moroun and the DIBC,
the Ambassador Bridge replace- ing Canadian and American
manufacturing more palatable,
ment still needs to be approved
lower labour costs in Mexico
by U.S. and Michigan regulaand the southern U.S. would
tors, though it already received
continue to pose a challenge to
conditional approval from the
northern manufacturing, he
U.S. Coast Guard.
"A lot of folks heard Canada
"The products are already
will never give us a permit
there. We're not getting too
to build a new bridge," DIBC
many new automotive plants,"
President Dan Stamper told
he said. "There's no bridge we
Crain's Detroit Business, a sibcan build to Mexico." - ANC
ling publication of Automotive