Automotive News Canada - September 2016 - V2 - 12


12

* SEPTEMBER 2016

Truck growth is expected
while oil prices remain low
Canadians have a clear
preference in vehicle
type when fuel cost is
less of a consideration

"It's almost the reverse of
what you saw 10 to 15 years ago,
when trucks were 30 per cent [of
the market] and cars were 70 per
cent," he says.

MEETING PRACTICAL NEEDS

BY JIL MCINTOSH
TORONTO CORRESPONDENT

CANADIANS WANT TO DRIVE
SUVs and trucks rather than
cars, a trend, manufacturers say,
that's driven primarily by low/
stable fuel prices, low interest
rates and buyer preference.
Overall, compact sport utilities lead Canadian sales, with
270,149 units sold - about a
quarter of all sales to date this
year - through July, according to data provider DesRosiers
Automotive Consultants in
Toronto. But large pickups sold
207,519 units, just 2,479 behind
compact cars and well ahead of
all other SUVs.
"Consumers have a set
transportation budget of purchase and cost of ownership,"
says Mark Nantais, president of the Canadian Vehicle
Manufacturers' Association.
"If the cost of gas goes down,
and it's been down for some
time, it generally frees up more
money and consumers shift
to a larger vehicle. And longterm financing brings down the
monthly payments, making them
more affordable."
The definition of truck
includes crossovers/tall wagons and car-based sport-utilities, according to David
Adams, President of the Global
Automakers of Canada.

Canadian buyers tend to be
practical, Adams says, and a
vehicle must meet the majority
of their needs.
"If you look at the success of
a number of companies that had
traditionally been strictly passenger cars, once they entered
the crossover and SUV market
it significantly boosted their
overall sales," Adams says. "It's
about broadening the lineup and
making it more responsive to
consumer demands.
"It's hard to pin it down to
one thing, but I don't think you
would see the same growth in
trucks if fuel prices were where

It's hard to pin it down to
one thing, but I don't think
you would see the same
growth in trucks if fuel
prices were where they were
two or three years ago.
DAVID ADAMS

President, Global Automakers
of Canada

they were two or three years
ago."
Trucks and SUVs are outpacing passenger cars, "but they're
not stealing sales," says Mike
Sinuita, product marketing
manager for Ford trucks. "The
growth is all on the SUV side,
and cars in general are taking
a bit of a hit, but the industry's
doing well and people are buying
more vehicles overall.

LEASING IS A FACTOR
"There are a few things driving this, including the popularity in leasing. When recession
struck in 2008 and 2009, leasing
died off, but it is gradually coming back and that has made some
of these bigger vehicles more
accessible to people."
Donnelly Baxter, assistant
brand manager for Chevrolet
trucks, said most full-size truck
buyers are coming from other
full-size vehicles, and then from
midsize and compact SUVs.
"Interest rates are at an all-time
low, so people can afford to step
into something that might have
been beyond them [before].
"People also like sitting high,
the functionality, and fewer
restrictions of what you can do
[with a truck]."
All say the trend isn't likely
to change anytime soon. "A lot
of research goes into the marketplace and a lot of forecasting
into the energy pricing market,"
Nantais says.
"And the percentage of older
vehicles on the road is high.
There's still untapped potential
in new-vehicle sales." - ANC

Bank Act review and recall law
CADA president's top priorities
Both outcomes will
significantly impact
Canadian dealers
By MICHAEL GOETZ
TORONTO CORRESPONDENT

MAKING SURE THE
dealer's voice is heard in
Ottawa is one of the main
mandates of the Canadian
Automobile Dealers
Association (CADA).
So John White's first year
as CADA president will be a
meaty one as two major pieces of automotive related legislation are set to be hammered
home soon, both of which
will significantly impact the
Canadian dealer body.
Currently before the Senate
is a bill that proposes to give
power to the Ministry of
Transportation to make automakers recall vehicles that
have safety defects, just as the
Secretary of Transportation
can order recalls to take place
in the United States.
"We want to ensure that if
recall legislation is rolled out
in Canada, that there are various protections for our dealers," says White.
He adds that the association is looking for similar protections to those in the U.S.
legislation, namely some compensation that recognizes the
burden dealers face when they
can't sell inventory with outstanding recalls, and the disruption and displacement that
can happen in service business when dealers are asked to
make service bays and techs
available for large-volume
recalls.

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The other big legislative
piece coming is the Bank Act
Review for March 2019. The
year-and-a-half consultation
process by the Ministry of
Finance gets under way in less
than a month.
Banks will once again ask
to be allowed to enter the vehicle leasing business, which is
something they are prohibited
from doing now by the current
Bank Act.
"Our position is still the
same as it was under the last
review. We want to ensure that
from the dealer's perspective,
that the status quo is maintained," says White.
Although not a legislative
piece, the other government
file CADA is keeping a close
eye on is a pending Canada
Revenue Agency (CRA) ruling
about the money that dealers
receive from insurance companies when dealers facilitate the
sale of insurance products in
the business office. Currently
insurance is viewed as a financial service and therefore is
tax exempt; the revenue generated by dealerships in this
transaction has not been taxable. But the CRA is taking
another look at the transaction.
Two years ago CADA
received a "favourable" ruling on the revenues generated
from arranging finance contracts; they remained tax-exempt. CADA is looking for

New CADA President John
White says that he is someone who likes to seek out
ideas and input.
more of the same with the
pending ruling on insurance
products.
"We want to make sure the
tax treatments there are consistent," notes White.

WORKING WITH STAKEHOLDERS
Meetings are a workday
staple for someone in the top
staff position in an association that represents provincial
and regional associations who
in turn combine to represent
the owners and managers of
Canada's 3,200-plus new-vehicle dealership points.
That's a fair number of
stakeholders who need to be
heard from and consulted with.
No surprise then either, to hear
White characterize his management style as collaborative.
"I'm somebody who likes to
seek out ideas and input."
But a long and successful
career on the other side of the
dealer/OEM fence, most significantly with stints at the
helm of Volkswagen Canada
and Volkswagen Australia, are
proof that he knows a thing or
two about all aspects of leadership. "Yes, CADA has lots of
stakeholders but sometimes
you will need to make a decision and hold firm."
He characterizes the overall
tone of current dealer-factory
relations as good, though with
some qualifiers.
"What's helping factory relations is that there has
never been a better time to buy
a car.
"Are there files we're working on? Yes. Will I tell you
about those? No. But for the
most part, relations are quite
positive."

TRAINING OPTIONS
Another main CADA mandate is to provide training and
other member services, and one
of White's priorities this year is
to have all manufacturers recognize a new pilot program at the
Automotive Business School of
Canada at Georgian College in
Barrie, Ont.
The ABSC program is
designed for working professionals to upgrade their skills
so they can reach higher levels
of dealer management.
For dealerships with manufacturers who don't recognize
the program, it means attending a similar program with the
National Automobile Dealers
Association (NADA) in the
United States. - ANC


http://www.canadianblackbook.com/syndication http://www.canadianblackbook.com

Table of Contents for the Digital Edition of Automotive News Canada - September 2016 - V2

Automotive News Canada - September 2016 - V2 - Intro
Automotive News Canada - September 2016 - V2 - 1
Automotive News Canada - September 2016 - V2 - 2
Automotive News Canada - September 2016 - V2 - 3
Automotive News Canada - September 2016 - V2 - 4
Automotive News Canada - September 2016 - V2 - 5
Automotive News Canada - September 2016 - V2 - 6
Automotive News Canada - September 2016 - V2 - 7
Automotive News Canada - September 2016 - V2 - 8
Automotive News Canada - September 2016 - V2 - 9
Automotive News Canada - September 2016 - V2 - 10
Automotive News Canada - September 2016 - V2 - 11
Automotive News Canada - September 2016 - V2 - 12
Automotive News Canada - September 2016 - V2 - 13
Automotive News Canada - September 2016 - V2 - 14
Automotive News Canada - September 2016 - V2 - 15
Automotive News Canada - September 2016 - V2 - 16
Automotive News Canada - September 2016 - V2 - 17
Automotive News Canada - September 2016 - V2 - 18
Automotive News Canada - September 2016 - V2 - 19
Automotive News Canada - September 2016 - V2 - 20
Automotive News Canada - September 2016 - V2 - 21
Automotive News Canada - September 2016 - V2 - 22
Automotive News Canada - September 2016 - V2 - 23
Automotive News Canada - September 2016 - V2 - 24
Automotive News Canada - September 2016 - V2 - 25
Automotive News Canada - September 2016 - V2 - 26
Automotive News Canada - September 2016 - V2 - 27
Automotive News Canada - September 2016 - V2 - 28
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