Automotive News Canada - February 2018 - v2 - 16

16

* FEBRUARY 2018

The Canadian government
is expected to produce a
national strategy to reduce
greenhouse-gas emissions
in 2018. Could this affect
the price of fossil-fuel-power
vehicles, thereby promoting
the sale of more electrified
models?
(PHOTOS: BLOOMBERG, ISTOCK)

IT'S OFFICIAL: 2017 WAS A RECORD-BREAKING
year for Canada's automotive industry, but it's in the
history books now. What can be expected for 2018?
Will Canadians take home more than two million
cars again? Will the business continue to grow?
Well, that depends ...
By MARK RICHARDSON

TORONTO CORRESPONDENT

CANADA'S ECONOMY
"It's going to be tough to
top two million [in 2018]," said
Robert Karwel, senior manager of J.D. Power's Power
Information Network in
Toronto.
"We see the headwinds in
retail coming."
In 2017, the Canadian econ-

omy had low interest rates and
a stable exchange rate with
the U.S. dollar. There were
plenty of cash incentives for
buying a new vehicle, and the
North American Free Trade
Agreement (NAFTA) trudged
on unchanged. Karwel said,
however, that only the most
popular models of vehicles
increased their sales while
most others dropped, especially traditional family sedans.
"It's getting increasing-

ly difficult to sell passenger
cars because of the popularity of light trucks," he said. "In
2017 we had record volume,
but only four out of [every] 10
nameplates increased sales.
That means the other six out
of 10 were a boat anchor on the
industry."
More concerning, however,
is that 84- and 96-month loans
are increasing in popularity.
It usually takes more than five
years for buyers to see positive

equity because of initial taxes
and the fast devaluation of
new vehicles. The average loan
rate is now 117 per cent of the
value of the car. Consequently,
car owners with long-term
loans are less financially capable of trading in their vehicles
for new ones in a three or fouryear timeframe.
In the first nine months of
2017, 26 per cent of all vehicles traded in for new vehicles
had money still owed on them
- negative equity - and the
average amount was $6,000.
In that same period, 54 per
cent of people who financed
their new cars had a loan
term of 84 months or longer; that grew from the first
nine months of 2015 when 50
per cent of loans were for 84
months or longer.
Similarly, while the most
popular length of a car lease
is still 48 months, the fastest
growth in leasing terms is now
for 60 months; consumers are
trying to reduce payments by
spreading them over longer
periods. Karwel is concerned
that buyers are being tempted
into paying for more car than
they can really afford. After
all, the average transaction
price for a new vehicle in 2017
was up seven per cent.
"It's a desire-driven purchase, and the desire will
remain, but we're starting to
push the limits of the financial

instruments that are out there.
"The consumer is getting
stretched a little thinner every
year. As we continue to ingest
record volumes of cars we see
those headwinds on the horizon for the retail market. We
think in 2018 it will pull back
a little. Nothing dramatic,
because the other econo-metric things are pretty stable,
including NAFTA, hopefully."

NAFTA AND THE AMERICANS
The biggest wildcard of
them all, however, is that
nobody can predict what will
happen this year with the
renegotiation of NAFTA.
"We're continuously monitoring the NAFTA position," said Jean-Francois
Champagne, president of
the Automotive Industries
Association of Canada.
"I don't think that the U.S.
government has the political focus and will to execute
on their promise to repeal
NAFTA. There's a lot of work
done by the Canadian government to convey that message at the state and congress level. This is my personal opinion, but we're
going to see negotiations
around NAFTA go all the way
through 2018."
David Adams, however,
is not so sure. The president
of the Global Automakers of
Canada thinks the Mexico

The challenge becomes, what does
Canada do in response [to U.S. actions],
because the Prime Minister was elected
on a platform of doing something
on climate change.
JEAN-FRANCOIS CHAMPAGNE
Automotive Industries
Association of Canada


http://www.quorumdms.com/nada2018

Table of Contents for the Digital Edition of Automotive News Canada - February 2018 - v2

Automotive News Canada - February 2018 - v2 - Intro
Automotive News Canada - February 2018 - v2 - CT1
Automotive News Canada - February 2018 - v2 - CT2
Automotive News Canada - February 2018 - v2 - 1
Automotive News Canada - February 2018 - v2 - 2
Automotive News Canada - February 2018 - v2 - 3
Automotive News Canada - February 2018 - v2 - 4
Automotive News Canada - February 2018 - v2 - 5
Automotive News Canada - February 2018 - v2 - 6
Automotive News Canada - February 2018 - v2 - 7
Automotive News Canada - February 2018 - v2 - 8
Automotive News Canada - February 2018 - v2 - 9
Automotive News Canada - February 2018 - v2 - 10
Automotive News Canada - February 2018 - v2 - 11
Automotive News Canada - February 2018 - v2 - 12
Automotive News Canada - February 2018 - v2 - 13
Automotive News Canada - February 2018 - v2 - 14
Automotive News Canada - February 2018 - v2 - 15
Automotive News Canada - February 2018 - v2 - 16
Automotive News Canada - February 2018 - v2 - 17
Automotive News Canada - February 2018 - v2 - 18
Automotive News Canada - February 2018 - v2 - 19
Automotive News Canada - February 2018 - v2 - 20
Automotive News Canada - February 2018 - v2 - 21
Automotive News Canada - February 2018 - v2 - 22
Automotive News Canada - February 2018 - v2 - 23
Automotive News Canada - February 2018 - v2 - 24
Automotive News Canada - February 2018 - v2 - 25
Automotive News Canada - February 2018 - v2 - 26
Automotive News Canada - February 2018 - v2 - 27
Automotive News Canada - February 2018 - v2 - 28
Automotive News Canada - February 2018 - v2 - 29
Automotive News Canada - February 2018 - v2 - 30
https://www.nxtbook.com/nxtbooks/crain/canada_202402_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202401_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202312_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202311_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202310_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202309_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202308_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202307_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202306_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202305_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202304_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202303_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202302_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202301_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202212_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202211_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202210_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202209_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202208_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202207_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202206_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202205_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202204_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202203_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202202_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202201_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202112_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202111_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202110_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202109_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202108_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202107_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202106_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202105_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202104_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202103_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202102_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202101_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202012_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202011_ifm
https://www.nxtbook.com/nxtbooks/crain/canada_202011_acg
https://www.nxtbook.com/nxtbooks/crain/canada_202011_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202010_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202009_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202008_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202007_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202006_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202005_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202004_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202003_v2
https://www.nxtbook.com/nxtbooks/crain/canada_202001_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201912_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201911_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201910_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201909_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201907_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201906_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201904_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201903_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201902_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201901_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201812_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201811_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201810_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201809_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201808_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201807_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201806_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201805_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201804_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201803_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201802_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201801_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201712_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201710_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201709_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201708_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201707_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201706_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201705_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201704_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201701_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201612_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201611_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201610_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201609_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201608_v2
https://www.nxtbook.com/nxtbooks/crain/canada_201607_v2
https://www.nxtbookmedia.com