Automotive News Canada - February 2024 - 15

* FEBRUARY 2024
15
Canadians sacrifice brand for lower cost
A Deloitte survey
finds that 43 per cent
of buyers intend to
switch, which 'should
be a big red flag
for the industry'
By GRACE MACALUSO
MANAGING EDITOR
AFFORDABILITY IS AMONG
the top reasons Canadian car buyers
are looking to change brands,
according to Deloitte's 2024 Global
Automotive Consumer Study.
" Right now . . . about 43 per cent
of consumers are
intending to switch
not only brands
but switch out of
the brand family
vehicle that they
currently own, "
Ryan Robinson, the
financial advisory
company's automotive
research leader,
said on the Jan.
26 Automotive News
Robinson: With vehicle prices
already high, the extra price
premium on electric vehicles
has created " a pretty big issue
for the industry to tackle going
forward. " FILE PHOTO
different round out the top three
reasons compelling consumers to
switch brands.
SCAN
TO LISTEN
The Deloitte report also said
buyers generally underestimate
what their monthly payments will
likely be.
Canada Podcast. " That should be
a big red flag for the industry at
the moment. "
Interest in new technologies
and the desire to try something
" About 84 per cent of new-vehicle
intenders are expecting
to pay less than $750 a month, "
said Robinson, adding that 63 per
cent expect to pay less than $500
monthly.
" So, two-thirds of Canadians
are arguably out of touch. "
Figures from J.D. Power estimate
average monthly loan payments
were $855 in January while the
average transaction price for a
new vehicle was $49,000.
That's " causing a lot of sticker
shock for consumers when
they're coming back to market. "
While Robinson expects interest
rates to begin falling in the
second half of the year, vehicles
remain expensive. " And when
we're talking about electric vehicles,
asking people to pay a premium
on top of that, it's a pretty
big issue for the industry to tackle
going forward. "
Robinson discussed a range of
issues facing the industry. The
interview has been edited for clarity
and length.
IS CONSUMER INTEREST IN
ELECTRIC VEHICLES COOLING?
That's coming through in our
data. When we asked consumers
what type of engine they
would prefer in the next vehicle,
47 per cent of Canadians said
they would much rather stay
with a gasoline or diesel. So,
when we consider some of the
stakes in the sand from a regulatory
standpoint that are trying
to move us toward an electrified
future, that was a bit of a hockey
stick in terms of our expectations
of where that adoption
needs to go between now and
2035.
HAS THE EV MARKET RUN OUT
OF EARLY ADOPTERS?
EV adoption was targeted
toward those early adopters,
more premium-segment customers
willing to pay
a premium price
to get access to
this technology.
Right now, the
other elephant in
the room has got
to be affordability. Over the last
20 years, we've created, essentially,
a light-truck market out
of the Canadian market, which
structurally drives up pricing.
And, we're asking people to
make this journey with us to an
electrified future, which has a
cost associated with that. We're
seeing that consumers may
be hitting that breaking point
and saying: " Look, enough is
enough. We need to have affordable
transportation. "
HOW CAN THERE BE MORE
AFFORDABLE EVS IF THE COST TO
BUILD THEM DOESN'T COME DOWN?
Unfortunately, it's not an
easy fix. And it does take time.
When you think about EVs,
incentives play a role in creating
affordability. Longer
term, there's more of a structural
problem that we're dealing
with as an industry, in that
vehicles are too complicated
and too costly as a result to
build. So the industry needs
to find ways to take complexity
out of the manufacturing
process, And that's not easy. It
takes time. It takes a couple of
vehicle generations to do that.
IS THERE A LEASING COMEBACK?
Maybe. It's another lever
that you can pull to try to
create that affordability on
a month-to-month basis. But
it's a little bit at odds with
what we're trying to do on
the EV front. One of the most
important questions facing
captive-finance companies
is where EV residuals are
going to land. Nobody knows
because we still need more
EVs hitting the secondary
market. If we're saying leasing
is the answer, but we are
hesitant to jack the residuals
up on EVs because we don't
know where they're going to
land, then there's no easy fix
to this. - ANC
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Automotive News Canada - February 2024

Table of Contents for the Digital Edition of Automotive News Canada - February 2024

Automotive News Canada - February 2024 - Intro
Automotive News Canada - February 2024 - CT1
Automotive News Canada - February 2024 - CT2
Automotive News Canada - February 2024 - 1
Automotive News Canada - February 2024 - 2
Automotive News Canada - February 2024 - 3
Automotive News Canada - February 2024 - 4
Automotive News Canada - February 2024 - 5
Automotive News Canada - February 2024 - 6
Automotive News Canada - February 2024 - 7
Automotive News Canada - February 2024 - 8
Automotive News Canada - February 2024 - 9
Automotive News Canada - February 2024 - 10
Automotive News Canada - February 2024 - 11
Automotive News Canada - February 2024 - 12
Automotive News Canada - February 2024 - 13
Automotive News Canada - February 2024 - 14
Automotive News Canada - February 2024 - 15
Automotive News Canada - February 2024 - 16
Automotive News Canada - February 2024 - 17
Automotive News Canada - February 2024 - 18
Automotive News Canada - February 2024 - 19
Automotive News Canada - February 2024 - 20
Automotive News Canada - February 2024 - 21
Automotive News Canada - February 2024 - 22
Automotive News Canada - February 2024 - 23
Automotive News Canada - February 2024 - 24
Automotive News Canada - February 2024 - 25
Automotive News Canada - February 2024 - 26
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