Automotive News Canada - June 2022 - 14

14
* JUNE 2022
Auto industry expected to
shrug off economic storm
Billions of dollars are
being invested in the
Canadian industry,
providing stability
in the face of instability
By STEVE MERTL
VANCOUVER CORRESPONDENT
ALTHOUGH THE GLOBAL
economy faces years of uncertainty,
Canada's auto industry is positioned
to survive and even flourish, said
the keynote speaker of the
Automotive News Canada
Congress panel titled
" Navigating Economic
Turmoil and Global
Unrest. "
In the May 25 online
presentation, economist
Jeff Rubin outlined forces
that continue to roil a
world emerging from the
COVID-19 pandemic. They
include higher-than-expected
inflation, rising interest
rates, high fuel prices, persistent
supply chain problems
- including a shortage
of microchips essential
to vehicle production
- and geopolitical and
trade realignments triggered
by Russia's invasion
of Ukraine.
Despite this, Rubin said,
growth in manufacturing
to support domestic electric-vehicle
production in
Ontario could lead to a reexpansion
of Canada's middle
class, after decades of
decline as well-paying jobs
moved to low-wage countries.
Supported
by money
from the federal and
Ontario governments,
Stellantis is investing $3.6
billion in its Windsor and
Brampton plants, Ford is
spending $1.8 billion to
retool its Oakville operation,
and GM Canada plans
to prepare its CAMI plant in
Ingersoll to produce electric
delivery vans, Rubin said.
" Today's investment is
tomorrow's production and
jobs.
" We're going to see
high-paying, middle-class
jobs. And what do high-paying,
middle-class households
do? They buy vehicles. "
The
industry should see
a light at the end of the tunnel,
Rubin said, " because
I think what we may see
going forward is that vehicle
sales are more resilient
than many people yet suspect. "
Hyundai EVs] has never been stronger. "
Automakers
must solve global
supply chain problems so they can
increase production to meet demand.
But Romano thinks the problem is
temporary.
" If we look at the current situation,
inventories right now are tight, " he
said. " But at the same time, discounting
is at an all-time low. So, we're
actually getting prices that are fair for
the products that we're making.
" And that's what's causing a lot
of OEMs to invest even more, and I
think that's going to bear fruit down
the road here. "
SESSION 1
MAY 25
Navigating
Economic
Turmoil
and Global
Unrest
Panelists
A sagging stock market
also might be drying up
funds for upstart manufacturers,
Romano said, giving
long-established brands an
edge for now.
" I think it puts the franchise
system, the traditional
OEMs, in a much stronger
position going into what
is a very strong demand
market, " he said.
'WE'LL WEATHER THIS STORM'
But traditional auto
companies can also learn
from new brands on how to
work with customers, such
as through effective online
systems.
Jeff Rubin
Economist,
energy expert,
bestselling author
" And if we do that, if
we continue to improve
our customer service,
we'll weather this storm, "
Romano said.
Current inventories are
at an all-time low industrywide,
he said. But Hyundai
dealers in Canada are getting
solid support from the
automaker, receiving up to
90 per cent of planned allocation.
Don
Romano
CEO, Hyundai
Canada
Still, dealers have less
than a week's supply vehicles.
No longer can customers
expect to drive off
the lot soon after the deal
closes.
" We're used to having
large inventories, big lots
and selling what we have, "
said Romano.
Simon
Deeley
Fixed-asset
income strategist,
RBC Dominion
Securities
Dealers are transitioning
to an order-based
approach more common
in other countries, he said.
The shift has been made in
record time, with dealers
using online tools to stay
in touch with customers
about their orders.
But the threat of recession
still looms, said panelist
Simon Deeley, a
fixed-asset income strategist
at RBC Dominion
Securities. Deeley pinpointed
inflation as a
OPPORTUNITY IN EV ERA
Panelist Don Romano, CEO of
Hyundai Canada, said the auto sector
can do little to influence external factors
such as oil prices, interest rates
and inflation - challenges also faced
in the past. But it can control how it
responds.
One opportunity is the shift to
zero-emission transportation.
" That is, there's a transition taking
place in demand right now from combustion
engines to EVs. [Demand for
principal factor. Central bankers
worldwide are struggling to curb it
through interest-rate increases without
pushing their economies into
recession.
Deeley's team forecasts inflation
dropping slowly toward the Bank of
Canada's target of two per cent in
2023.
" The recession risk really comes if
inflation is stickier than expected, "
he said, adding that persistent inflation
could force the bank to raise
rates more aggressively to meet its
target. - ANC
CANADA CONGRESS
CONVERSATIONS
VIEW THE VIDEOS
THERE'S A LOT TO UNPACK.
The COVID-19 pandemic and Russia's
invasion of Ukraine have created supply
chain crisis after supply chain crisis, and
economic turmoil around the world. And
Canadians are dealing with the
fallout: high prices for fuel and food,
high inflation and rising interest rates.
Still, demand for new vehicles is outstripping
supply because dealers have
few, if any, new vehicles on their lots to
sell. Meanwhile, automakers are committing
billions of dollars to completely pivot
to electric vehicles - nothing short of
a once-in-century shift. Where does the
industry go from here? Automotive News
Canada Congress Conversations takes
on the major issues in a three-part video
series, which inspired the accompanying
news stories.
www.automotivenews.ca (events & awards tab)
1) NAVIGATING ECONOMIC TURMOIL
AND GLOBAL UNREST
2) DIGITAL RETAILING, DATA AND THE
CHANGING CONSUMER BEHAVIOUR
3) THE ACCELERATED EV
REVOLUTION: HOW DOES THE
INDUSTRY PROFITABLY PREPARE
FOR THE EV AGE?
EXCLUSIVE
LEAD
SPONSOR
Dealers immersed in
COVID-19 pushed buying
online to new levels; vehicle
shoppers now expect the
same seamless experience
By DOUG FIRBY
CALGARY CORRESPONDENT
AUTOMOBILE DEALERS NEED TO GET
better at aligning the online and in-person
purchasing experiences
for customers as digital
retailing rapidly gains
traction in Canada, industry
experts said during a
June 1 Automotive News
Canada Congress panel
discussion.
Online purchasing has
reached a " tipping point "
in Canada, putting the
onus on dealers to let go of
traditional models of selling
vehicles, said Chace
Estes, Google Canada's
head of industry and auto.
Car buying has reached
the moment that " the
majority of sales within
the organization is coming
through digital resources, "
said Estes.
Six per cent of
Canadians bought their
vehicles online in the past
12 months, six times the
rate in 2019 before the
COVID-19 pandemic. And
13 per cent of used-car buyers
are doing so online, he
said.
To thrive in the digital
environment, automakers
and dealerships must build
and refine their omnichannel
selling strategy, Estes
said. That will ensure customers
who begin a vehicle
search online have a consistent
experience when
interacting with the dealerships.
Omnichannel
refers to
technology and processes
aimed at providing a seampurchase
process the same way [other] retailers
do, " Estes said.
OMNICHANNEL APPROACH FAVOURED
Andria Zanchin, principal and executive
vice-president of the Zanchin Automotive
Group, was surprised to see how quickly digital
sales have grown during the pandemic.
But she believes omnichannel purchasing will
dominate because " it gives the consumers
the best of both the digital and the comfort of
knowing they can still walk into a dealership
should they need assistance. "
SESSION 2, JUNE 1
Digital Retailing,
Data and the Changing
Consumer Behaviour
Panelists
A culture shift must
occur at the dealership
level, which can be difficult
for long-term staff,
said Zanchin, whose
Toronto-area group has
33 dealerships.
" A lot of them are not
adept at changing. They
are comfortable with the
old ways. "
John Currado
President, taq
Automotive
Intelligence
Chace Estes
Head of Industry
and Auto, Google
Canada
Pierre Boutin, CEO
of Volkswagen Group
Canada, said that
although data and new
technology are " the new
way of doing business, "
automakers and dealers
must also stay focused on
personal customer interaction.
" Maybe
I'm old-fashioned,
but I think it's
really, really important, "
Boutin said. " People want
to be treated with respect,
and the technology is not
going to make it happen
for us. ... The human factor
remains key in this
overall retail experience. "
VALUE IS A VIRTUE
Andria
Zanchin
Principal and
executive
vice-president,
Zanchin
Automotive
Group
less buying experience for consumers whether
they shop online, in-store or both.
Retailers must provide " that frictionless
Pierre Boutin
CEO,
Volkswagen
Group Canada
The interaction comes
down to the perception
of customers that they
are receiving value, said
John Currado, president
of dealer-support company
taq Automotive
Intelligence of Markham,
Ont.
While a few buyers
might buy a vehicle with
no personal contact,
Currado said, " for the vast majority of consumers,
they still want to feel that the value
is being delivered by someone. "
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