Automotive News Canada - March 2020 - v2 - 22

22

* MARCH 2020

Quebec dealers make tracks to racing
A provincial passion
is also a natural
way to connect
with customers
By STEPHANIE WALLCRAFT
TORONTO CORRESPONDENT

AS THE HOME OF
the Formula One
Canadian Grand
Prix along with
numerous regionHOW THEY
al events, Quebec
DO IT
offers dealerships
an opportunity to
QUEBEC
reach a select group
of customers and be part of the
vibrant motorsports culture.
"I believe, from my experience, that there's more of
a following toward the racing culture in Quebec," said
Renny Bettan, manager of used
vehicles at Porsche Prestige
in Montreal, who oversees
the dealership's racing pro-

gram in the Porsche GT3
Cup Challenge Canada by
Yokohama.
"The clientele that are into
racing, everybody has their
own cliques where they hang
out with one group or another group," Bettan said. "It definitely gives a bonus to the
brand, and it gives a bonus to
the garage."
Dealers' involvement often goes
beyond backing a
rolling billboard.
Some own and
enter their own
cars, while others form full race
teams to completely immerse themselves in the
competition.
"We do support a lot of racing enthusiasts and provide
trackside support for our customers" who participate in
regional races themselves,
Bettan said.

'PART OF OUR DNA'

Motorsports creates connections with performance-driving enthusiasts in ways that
can't be bought, say dealers,
who declined to share the
cost of participating in such
events. They add that the
credibility it earns
them with that community can make

the difference in customers
choosing their dealerships
over others.
"Racing is part of our

CONTINUED ON NEXT PAGE

Nissan began the Micra
Cup in 2015 to support
the Canadian launch of
the Micra, which has since
been discontinued. Nissan's
contract with the series
promoter expires after
the 2020 season.
PHOTO: NISSAN

COVID-19: Backup plans, alternate routes and delays
CONTINUED FROM PA GE 1

Few Canadian companies import
auto parts directly from China and
most are electronics, or small pieces such as fasteners, bolts and seals,
said Flavio Volpe, president of the
Automotive Parts Manufacturers'
Association.
"Right now, the industry is working around the issue in China. It's
incurring costs having to source stuff
in other places and increasing risks
because they're going through contingent inventories without an end in
sight," Volpe told Automotive News
Canada. "None of this is good news for
anybody.
"Some of my members have suggested where we'll see the real issue is a few
months out. The dearth of some components today might show up in a few
more months," Volpe said.
To get around the disruptions in
China, some automotive suppliers have
been paying at least 10 per cent more
to ship parts out of China by alternate routes, or up to 50 per cent more
to source those parts closer to home,
Volpe said.
"We are talking about parts that represent less than one per cent of overall
cost but whose absence could trigger a
halt in major module production that
would be a serious issue in just-in-time
production."
Mike Bilton, chair of the Canadian
Association of Mold Makers, estimated five to 15 per cent of parts normally
shipped from China to Canada to Tier 1
suppliers have been held up by factory
shutdowns in China.
Bilton said some automakers were
already asking what his backup plan
was for alternative sources of parts.
"That means I have to spend time
and money looking for new suppliers.
I have to vet them. Suppliers say they
can make that component, but it may
be a knockoff that doesn't meet the technical specs."
Depending on where the automaker
is located, suppliers might be mandat-

Flavio Volpe:
"None of this
is good news
for anybody."
FILE PHOTO

Mike Bilton:
Spending time
and money
looking for new
suppliers.
PHOTO VIA
M I K E B I LT O N

ed to source components from certain
regions, Bilton said. For the Detroit
Three, that means looking to North
America, but for Japan-based carmakers, it could mean other suppliers in
Asia.
"We just don't know where those
suppliers are yet."

OUTPUT GOES ON
Major parts companies in Canada
were downplaying the impact of the
decision by Chinese authorities to
close factories in the city of Wuhan in
February in a bid to limit the spread of
COVID-19.
Most automakers typically hold 30 to
60 days' worth of inventory and many
had stockpiled additional product just
before the weeklong Lunar New Year
holiday in China in late January.
Magna International, the world's
third largest auto parts maker, said in
late February production at most of its
54 plants in China had resumed, though
not at full capacity.
China accounts for just five per cent
of its US $40 billion in global sales,
the company noted. Production outside China had not been affected, the
Aurora, Ont.-based company added. It
has since banned employee travel to
Japan, South Korea, Iran and northern
Italy.
"We haven't quantified what the

Kristin Dziczek:
Doesn't expect
full-scale factory
shutdowns in
North America.
FILE PHOTO

Michael
Dunne: Most
China-based
supplier sources
are not in the
Wuhan area.
FILE PHOTO

This will be a bigger concern
if this thing drags on for
a while. When does it start
impacting customers and
therefore impacting us?
FRED DI TOSTO
CFO, Martinrea

impact will be financially because we
don't know yet," CEO Don Walker
said Feb. 28 after an investor day in
Toronto.
Guelph, Ont.-based Linamar Corp.,
which was set to report its fourth quarter results March 11, did not respond to
a request for comment.
Martinrea said the impact of the
virus has been largely contained to its
plants in China, which account for just
2.0 to 2.5 per cent of its global sales.
Some of those plants also supply
parts to its operations outside China,
the Vaughan, Ont.-based company said.
"At some point we'll be constrained
there," said CEO Pat D'Eramo.
"This will be a bigger concern if this

thing drags on for a while. When does
it start impacting customers and therefore impacting us?" said Martinrea
CFO Fred Di Tosto.
Mark Nantais, president of the
Canadian Vehicle Manufacturers
Association, said there has been little
impact on assembly plants in Canada.
"At this point we do not see any significant supply-chain issues in Canada
and would likely be minimal in any
case. In response to potential disruption events, business continuation
plans are or would be introduced, and
all companies have them."

IMPACT IS INEVITABLE
China is so deeply embedded in the
global automotive supply chain that it's
only a matter of time before the impact
is felt in North America, said Kristin
Dziczek, vice-president research at the
Center for Automotive Research in
Ann Arbor, Mich.
"It could cripple certain [vehicle]
models or certain trim lines. I don't
think it's going to lead to full-scale factory shutdowns in North America.
"With [the virus] now spreading into South Korea and Europe, it's
going to affect us. We're not going to be
immune," Dziczek said.
But just how and where the shortages might pop up remains to be seen as
the automakers play their cards close
to their vest, she said.
Michael Dunne, chief executive officer of investment advisory firm ZoZo
Go Inc., said every automaker is vulnerable to supply-chain disruptions.
The Jeep Wrangler, made in Toledo,
Ohio, relies on steering gears made at a
plant in Wuhan, he said.
"The good news for North
American suppliers is most of their
suppliers' sources are in Shanghai and
Guangdong, and those are in relatively good shape compared to Wuhan.
They're going to recover more
quickly." - ANC
- Toronto Bureau Reporter John Irwin
contributed to this story.



Automotive News Canada - March 2020 - v2

Table of Contents for the Digital Edition of Automotive News Canada - March 2020 - v2

Automotive News Canada - March 2020 - v2 - Intro
Automotive News Canada - March 2020 - v2 - 1
Automotive News Canada - March 2020 - v2 - 2
Automotive News Canada - March 2020 - v2 - 3
Automotive News Canada - March 2020 - v2 - 4
Automotive News Canada - March 2020 - v2 - 5
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Automotive News Canada - March 2020 - v2 - 11
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Automotive News Canada - March 2020 - v2 - 27
Automotive News Canada - March 2020 - v2 - 28
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