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Entries in Auto Business (38)

Wednesday
Jan182017

Middle of January 2017

Yes its mid week and a few days past mid month.

We start the year, we want to get a "feel" for what is going on around us, we take a look at our plans, direction, and really take it all in to improve the understanding.

What caught our attention...in no particular order.

Eyeballs:

Unreal how everyone is scrambling for eyeballs to monetize whatever they are doing. Obvious some are even bolder than the bold.

Autonomous Vehicles:

Although its all moving in the direction of AV's we are not there yet, its progressing, a ton of folks are learning, and technology is being calibrated. Is there an upside for Canada?

People:

If you are in the auto business, you are in the people business...its that simple. Been like that for decades. Even with all the technology, all the empowerment...still in the people business.

Politics:

Its a great arena for a bunch of folks to try and get more eyeballs for their platform. In 2017 disruption is a huge eyeball attractor (is there such a word). Lets leave it at that.

Glass Palaces:

The retail auto landscape in Canada in reaching "peak glass palace" (which is often the price of entry) you have to wonder what's up next...the glassier palace on top of the glass palace?

Finance Terms:

"You can finance them for longer because they last longer". In 2017 the naivete of the statement is mind boggling, and completely detached from the reality in Canada.

Peak Technology:

Ask yourself "Are we reaching or have we reached peak technology in the auto business in Canada?" At some point its all pedestrian technology that anyone can access.

Motorcycles:

Boomers powered a generation of V Twin cruisers. Now the industry is still seeking a footing with younger generations. Is it a sport bike, is it a cruiser? One thing is certain it has to be less money. Victory shut down, MV Agusta is still challenged.

Utilities:

They are versatile, more profitable for manufacturers, and fashionable (life style vehicles). Are dealers making money with utilities?

Pick Ups:

The old school full size body on frame car, reincarnated as a pick up, and add a transfer case for good measure. By now we all know that an F150 is aluminum.

Real Estate:

Will keep on inching up especially in the GTA. The next few months will be revealing.

Interest Rates:

That they inch up by 25 points, manufacturers will continue to subsidise lower rates. Its not a big deal.

Used Vehicle Values:

We have been fortunate in Canada to move a ton of used iron to the US in the past. Will it continue? Probably but at lower prices. Values will come down in 2017.

Auto Shows:

Its not the reveals (eye candy), its the attendance by CMS (Citizen Main Street) that makes the difference, and moves iron.

Millennials - Gen Y:

Are increasingly becoming a factor in the Canadian auto business.

Disruption:

Ongoing in 2017, its a time when a "tweet" can quickly get folks do a 180.

Individual in the Back of the Room:

Might as well coin another one IBOR (individual in the back of the room), the person that observes the pedestrian knowledge and behavior to gain an advantage. You want to be an IBOR in 2017.

Time:

The equaliser, its the same for everyone, a precious resource that is constantly accelerating with increasing velocity. Successful individuals start their day early...very early.

We suggest that you make your own list of some of the stuff that has caught your attention so far this month.

 

 

Tuesday
Jan102017

Canadian Sales - 2016

Our review of Canadian Sales for 2016.

 

 

Thursday
Dec152016

Its a Car not a House!

Do you remember when the auto business was melting down in North America in 2008/2009, agreed it almost looks like ancient history today.

Back then an inexorable shift from leasing which had a 50% penetration in Canada to finance terms (usually longer) was initiated by all the manufacturers with a few exceptions. The thought vector was simple "let's shift the residual risk to the consumer" taking it off the books of the manufacturer controlled captive finance companies.

We all know the auto business works best on a 36 month cycle. With time the auto business in Canada embarked on a voyage of rolling over deficiencies (on trade ins) and pulling ahead from an 84 month term to a 36 month cycle.

Looking at data from JD Power Market Metrics YTD November.

..................Lease.......Finance.......Over 72 Months

2012............21%.........61%.................58%

2013............19%.........62%..................62%

2014............23%.........59%..................67%

2015,,,,,,,,,,,,26%.........57%..................74%

2016............26%.........57%..................72%

If you conclude that CMS (Citizen Main Street) who had a strong affinity for leasing a vehicle is now caught up in a circle of rolling over deficiencies...we agree with you.

Manufacturers and financial service providers are caught up in having mechanisms to "roll over" deficiencies. While prices, and incentives are inexorably increasing.

Reflect on this...CMS who usually agrees to a 5 year mortgage term on a 25 year amortization period, is on at least a 6 or 7 year term for a vehicle.

Needless to tell you that the average monthly finance payment has escalated from approximately $530 per month in 2012 to approximately $575 per month in 2016.

Terms get longer while monthly payments creep higher.

The overview of Creeping Auto Loans in Canada.

The remark from the individual in the back of the room "How long can we keep this up?"

A different view...

Click on image to enlarge

 

Wednesday
Dec142016

Inventory Levels

If you are in the auto business, or just a casual observer you are aware of inventory levels at dealers by the number of vehicles that are displayed (parked) on the premises.

Way back in the day, before technology, inventory levels were more of a gut feel, with simple ratios (up to a point). In addition to the mantra "You cannot sell from an empty shelf". Usually there was more than less inventory on the ground, be it new vehicles as well as used. 

One strategic vector for new inventory was to have specific models, or specific options that provided a competitive advantage. Those were the days of Bespoke Vehicles from the factory.

New vehicles are assembled in a "just in time" process where most if not all components are just in time, and sequenced to the assembly line. These vehicles that are assembled just in time, get stored on various dealer facilities for months prior to being sold. Reflect on this for a moment...

When components were stacked at assembly plants, and vehicles were stacked on dealer's lots it sort of all made sense.

At one time...the revenue generated by finance contracts from the captive finance company, would often cover the floor planning of the new vehicle inventory. Reflect on this too for a moment.

in 2016 with a ton of technology at the factory, at the dealer, and empowering the consumer, inventories of new and used vehicles remain stagnant, with modest improvements, if any from the good old days (gut-simple ratios).

Looking at "Days to Turn" in Canada from JD Power Market Metrics for YTD November.

Days to Turn

....................New............Used

2012..............69...............61

2013..............65...............60

2014..............62...............59

2015..............70...............60

2016..............73...............61

From the customer's perspective its irrelevant how many vehicles are on the ground at any time, and for how long. For the dealer its an expense. When new vehicle inventories surge its an additional expense.

You have to wonder with record sales, an ample supply of all sorts of technology, why the new vehicle inventory is so high in Canada this year.

What do you think?

 

Tuesday
Dec132016

Global Sales November 2016

When a chart tells the whole story...

Click on chart to enlarge

 

 

Thursday
Dec082016

Cars Online Trend Study 2016

The annual Cars Online from Capgemini

 

 

Thursday
Nov242016

Some Reflections 

As we are closing in on November and many folks are looking ahead to 2017. In no particuler order, some of our thoughts.

November

We are anxious to see the Canadian sales results for the month. We are anticipatiing a "good" month close to or equal to last year. Its the push prior to Christmas.

The Best of...

Have you noticed the waning interest in the 10 best of this or that, the finalists, or the car of the year and so on. Think about it its the customer that decides what the best of anything is all about.

Mobility

The auto business and prior to autos it was horses have been poviding mobility for a few centuries. Fascinating when suddenly there are all sorts of mobility experts, visionnaries. Think about this for a moment.

Autonomous Vehicles

At some point we will have level 4 AV's on the roads...yes at some point. The technology is almost there, the infrastucture not so much, and how AV's will interface with non AV's will be interesting.

Hatchback

At one time you could not give away a hatchback in North America. Now its the new flavor, must be the utility thing...tailgate...hatchback.

Electric Vehicles

Yes...we are firm believers in electric vehicles...the initial torque is intoxicating at a time where there is rampant congestion all over the place.

Subscription

Hyundai is on to something by offering an auto subscription. Not ownership with forver terms, or a lease with a wear and tear factor. Here is a subscrition so much a month, enjoy the mobility.

People

You know that saying "We are in the people business through cars" late we have learned that "We are in the people business with social media". Reflect on this...

Software

There is a piece of software to do anything and everything, from ABS brakes, to a DMS is a dealer, to going around with a ton of software on a mobile device. Reflect on this and that we are still humans.

Time

Its an hyper precious commodity, a formidable equaliser on a vector that is increasing in velocity. You need to accelerate time...

Leadership

Its evolving, more demanding, and lacking in many ways. The expectations from leaders are increasing, and will continue to increase in 2017.

Passion

Where would you be without passion? Where will you be with more passion?

 

 

Wednesday
Nov162016

Auto Fashion Business

With the start of the auto show season and cycle.

Have you ever considered that the auto business is also the auto fashion business.

Reflect on this for a moment...unveiling new models (new fashion) has been an auto business ritual for years and decades.

Similar to the clothing business, the auto business has every day fashions all the way to high fashion. The new urban utility from a manufacturer, to the new cabriolet from another manufacturer.

While most of the business evolves in the mainstream fashion of utility vehicles and sedans with a myriad of niches around them to capture opportunistic sales.

When we mention that the metal must resonate with you, its a case that the "fashion" must resonate with you, while enhancing your personal brand.

If a utility vehicle is what you need to enhance your personal brand, while providing the required transportation for your needs...get one. If like The Colonel you prefer a lead sled with some attitude get one of those.

Its back to the metal must resonate with you.

The fashion must appeal to your emotions.

Keep in mind that the utility segment of the auto fashion is life style oriented, its primarily fast fashion for the masses. Reflect on this for a moment.

Oh...in the auto fashion business you can lease the product (fashion) where else can you do that?

We could keep on going but you have surely grasped the vector of our thoughts.

 

Tuesday
Nov012016

Digital Reroutes

A though provoking paper...

 

Tuesday
Oct252016

Is The Last Quarter A Pivot?

October is the first month of the last quarter of 2016, big deal we all know that. Absolutely, and in a few days October will conclude, and we will get an improved overview of how the quarter will develop, the year, and the horizon for 2017.

Its a loaded sentence...lets take a look at the auto business in Canada.

  • At the end of the 3rd quarter it remained a record year with signs of a slow down.
  • The mortgage rules changed half way in October. What does it have to do with the auto business, perhaps nothing...
  • CMS (Citizen Main Street) by now fatigued of powering the Canadian economy.

Are we reaching a pivot point?

  • Longer term financing has remained a constant for the past few years.
  • The auto business is pulling ahead on the terms and rolling over deficiencies.
  • CMS can easily pull back on the terms, and seek an elusive equity position.

In a few days we will have a clearer picture of the landscape.