Automotive News Canada - August 2023 - 6

6
* AUGUST 2023
TRENDING
STORIES
automotivenews.ca
ONGOING WEB COVERAGE
ContrUAW TALKS
Service contracts get an
overhaul for the EV era
New and revised
packages lift the cloud
of uncertainty hanging
over off-warranty EV
repairs and provide a
new revenue stream
By KELLY TAYLOR
WINNIPEG CORRESPONDENT
ELECTRIC VEHICLES ARE
rewriting how automakers build
cars and how dealers service
them, but the shift will also impact
finance and insurance
products,
even for internal-combustion
(ICE)
vehicles.
Jeff Schulz,
executive
Schulz: The
reduced
maintenance
needs of
EVs don't
mean regular
checkups
aren't
required.
SUPPLIED
PHOTO
vice-president
of marketing at
LGM Financial
Services, expects
that the higher
cost of EVs, combined
with the
difficulty finding
new vehicles generally,
will mean
longer ownership.
That, he said,
has contributed
to the rise of
new extended-service-contract
and
prepaid-maintenance packages that
cover batteries and the charging
systems that most EV buyers
install.
LGM Financial underwrites
extended-service contracts and
pre-paid maintenance plans for
BMW and BMW Motorrad, Mini,
Kia, Jaguar Land Rover, Mazda,
Mitsubishi, Volvo and Polestar and
has more than 1,200 dealer partners
in Canada.
As well, Schulz said, the public
should be reminded that the
reduced maintenance needs of EVs
don't mean regular checkups aren't
required.
" People say they don't need an
oil change, and they have an app
that tells them their vehicle is
fine, " he said. " But that app doesn't
cover everything, and the reality is
there are some physical things that
need to be looked at. "
Brakes in EVs don't get as much
use because regenerative braking
- for which the electric motor/
generator slows the vehicle to a
complete stop in most situations -
means Schulz rarely touches the
brake pedal of his 2023 Hyundai
F&I
SPOTLIGHT
Ioniq 5, he said. In addition, the
robust torque of EVs puts more
strain on suspension and drivetrain
components such as U-joints
and CV joints.
LGM said retail prices for
extended service begin at about
$3,500, and terms can run for up to
10 years or 200,000 kilometres.
EV-ONLY PROTECTION
Brent Walker, managing partner
of Marlborough Ford in
Calgary, said that for his EV customers,
he relies on the Ford
Maintenance Protection Plan and
Ford PremiumCare EV.
The protection plan covers
scheduled maintenance such as
tire rotation, wiper blades, washer
fluid, cabin air filter, brake-fluid
change every 36 months, brake
pads and linings, and a regular
inspection of
key components.
PremiumCare can
be purchased for
up to eight years
and 200,000 kilometres
and covers
more than
1,000 components,
including battery
chargers and battery
control modules.
Ford's standard
warranty
covers the battery
for eight years or
160,000 kilometres.
Walker:
No
matter how
long an EV
will last,
" people
still want
something
new or
different
every three to
four years. "
FILE PHOTO
As an example
of EV part costs,
in its brochure on
the PremiumCare
EV plan, Ford
estimates that a
new battery control module runs
nearly $3,000.
Walker isn't convinced that EVs
will impact how long customers
own their vehicles, however.
" In my opinion, it won't change
from ICE vehicles, " he wrote in an
email to Automotive News Canada.
" People still want something new
or different every three to four
years. "
Walker said the profit margin
of the service packages is a great
opportunity for dealers. The retail
price of the PremiumCare EV plan
is $2,499 (five years or 100,000 kilometres),
while the dealership cost
is $795. The Ford Maintenance
Protection Plan retails for $2,299
(five years or 100,000 kilometres)
with a dealer cost of $965.
MAKING UP LOST REVENUE
At Denny Dealer Services in
Nova Scotia, which also underwrites
extended service contracts
and maintenance packages for
dealers, President Denise Garagan
said the maintenance schedule for
her Volvo XC60 plug-in hybrid is
once per year.
" That's it, " she said, and that
kind of infrequency means lost revenue.
" How are you [the dealer]
going to make it up? You have to
look for other products. "
Garagan:
Service
packages
are valuable
because
problems can
be addressed
before they
become
bigger and
more costly.
SUPPLIED
PHOTO
The extended-service
contracts
and other
packages help
both customers
and dealers,
Garagan said,
because problems
are caught while
they're small and
before they mushroom
into bigger
repairs.
" I'm shocked at
how much we're
paying for repairs
on our contracts.
It used to be:
'Oh, $5,000! Was
that an engine?'
Now, an engine is
$10,000. "
Given that
the average age
of internal-combustion
vehicles is 12 years, " that
means there are many vehicles
still roaming the streets that
are 25 years old and older, " said
Sam Fiorani, vice-president of
global vehicle forecasting for
AutoForecast Solutions.
" Given the value of a 10-year-old
Tesla Model S, the idea of a 15- or
20-year-old electric vehicle operating
reliably isn't out of the realm of
possibility. And batteries are only
going to get better. "
Protection packages that keep
paint looking new, fix glass chips
and repair small interior issues are
important to maintaining a vehicle's
value, Fiorani said.
" Designing F&I products around
cars that will regularly last a
decade or more without significant
repairs is a must, " he said.
" Encouraging maintenance of
EVs will maintain the vehicle's
residual values, which should be
part of the leasing packages for
EVs and all vehicles.
" A penny saved now could be a
dollar earned later. " - ANC
act negotiations with the Detroit Three automakers began in
mid-July while Unifor negotiations with the Detroit Three in Canada
began Aug. 10. The UAW's current contract expires before Unifor's,
which could mean UAW strikes - or deals - before Unifor talks
get under way.
The funding standoff betw BATTERY BUILDUPeen NextStar Energy (Stellantis in Windsor,
Ont.) and the federal government is finally over, which clears the
path to land another EV battery plant investment. Ontario Economic
Development Minister Vic Fedeli has long hinted that the province
might secure another facility.
BRIGHTDROP VANS ARE HEADING TO MEXICO
GENERAL MOTORS SAID IT WILL SELL ITS CANADA-MADE
BrightDrop electric delivery vans in Mexico this year. BrightDrop,
which launched in 2021, began building the Zevo 600 van in
December at GM's CAMI plant in Ingersoll, Ont. The smaller
Zevo 400, also slated for Mexico, is expected to enter production
this year. The plant resumed production July 31 after two weeks
of summer downtime and an additional two-week idling because
of a battery shortage.
BATTERY PLANT GOES ON A HIRING SPREE
NEXTSTAR ENERGY, A JOINT VENTURE BETWEEN
Stellantis and LG Energy Solution, has begun the process of hiring
thousands of people at its
$5 billion electric-vehicle battery
plant in Windsor, Ont. NextStar
on July 31 launched the recruitment
of 130 people, including
30 white-collar workers who will
" launch and grow the business
operations. " The other 100 will
FILE PHOTO
be a core team of production engineers and technicians. They will
begin international training in October, learning how to run a largescale
battery plant.
1 IN 5 VEHICLES HAVE OUTSTANDING RECALLS
ABOUT 6.6 MILLION " UNSAFE VEHICLES " ARE LIKELY ON
the road despite having unresolved safety issues, according to
Transport Canada. The government agency estimated that one
in five of the 33.3 million vehicles registered as of 2019 had outstanding
recalls, potentially endangering occupants and other
road users. " Safety issues affecting vehicles, restraint systems
for children and disabled persons, and tires can lead to property
damage, injury or even death, " Transport Canada said.
ENVISIONING A 100% GREEN TIRE
CONTINENTAL OF GERMANY HAS UNVEILED A TIRE
with up to 65 per cent sustainable materials,
the most of any of its tire lines in production.
Those materials include recycled and renewable
sources such as plastic bottles and silicate
made from the ashes of rice husks,
according to the manufacturer. By 2030,
Continental plans to have its tires made up of
more than 40 per cent recycled and renewable
materials, up from between 15 and 20
per cent today, the company said. Continental
PHOTO:
CONTINENTAL
expects its tires to be made entirely of green materials by 2050.
AUTO PRODUCTION BOOSTS MAGNA'S OUTLOOK
MAGNA GENERATED US $332 MILLION (CDN $440 MILLION)
in net income in the second quarter, compared with a loss of US
$156 million ($205 million) for the same period last year. Revenue
in the quarter grew to $11 billion ($14.5 billion). Magna said it
expects its 2023 revenue to be anywhere from US $1 billion to $3
billion ($1.3 billion to $4 billion) higher than its previous forecasts
of $41.9 billion to $43.5 billion ($55 billion to $57 billion). The optimism
stems from automakers increasing production to meet consumer
demand for pickups, crossovers and SUVs. - ANC
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Automotive News Canada - August 2023

Table of Contents for the Digital Edition of Automotive News Canada - August 2023

Automotive News Canada - August 2023 - Intro
Automotive News Canada - August 2023 - 1
Automotive News Canada - August 2023 - 2
Automotive News Canada - August 2023 - 3
Automotive News Canada - August 2023 - 4
Automotive News Canada - August 2023 - 5
Automotive News Canada - August 2023 - 6
Automotive News Canada - August 2023 - 7
Automotive News Canada - August 2023 - 8
Automotive News Canada - August 2023 - 9
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Automotive News Canada - August 2023 - 12
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Automotive News Canada - August 2023 - 31
Automotive News Canada - August 2023 - 32
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