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Incentives - Revisited

We have often shared our thoughts on incentives, how they came about, the strategies behind the incentives, the monthly tactics deployed by manufacturers, dealers, and customers.

The auto business embarked on a vector of "dynamic pricing" several years ago, lets not be so naive as to think that big data does not have a powerful influence on the decisions that are made on a monthly basis.

Financial services are also an intrinsic part of the incentive strategy.

We could keep on going with a myriad of stuff. We urge you to use our search feature to access out previous thoughts on "incentives" and "financial services".

With Ford in the US initiating a strong incentive campaign till the end of the year, suddenly incentives are on the forefront, with every pundit, analyst sharing thoughts and their opinions.

Let's bring it closer to Canada.


The moment most manufacturers relinquished leasing in Canada, and embarked on a longer than shorter term financing strategy. It was a brave new world, shifting the residual risk to CMS (Citizen Main Street), while CMS in the ensuing years has shifted the trade in deficiency to the manufacturer.


Transactions across Canada are closed on the basis of a monthly payment, the magical $500 per month is the average. To deal with the lower CDN dollar, deficiencies on trade ins, incentives are an intrinsic part of doing business. Yes...CMS is keenly aware on how to use incentives to uphold his mobility model.


The manufacturers that staid the course with leasing as well as financing have a substantial competitive advantage, which will become even more obvious in 2016.


The "incentive" that is rarely discussed are the various volume bonuses from the manufacturer to the dealer for reaching monthly agreed upon new vehicle sales objectives. If retail incentives to the customer might skew the business strategy, volume bonuses add an additional layer of skewing.


Back in the day when most dealerships were owned / operated / managed by an individual, the dealer had to make money to stay in business. It was the acumen of the dealer to be a consummate "horse trader" to make money. Incentives were rare to non existent. As well the business office did not exist yet to sell additional products.


Fast forward to today with the "dealer group" phenomenon, hired individuals to manage dealerships, layers upon layers of technology, and several competing franchises owned by the same group. Its an additional impetus to uphold incentives and bonuses.

What do you think...




Exhaust Systems

Very restricted exhaust systemThe other day LPR a member of the Strada Crew uncovers an interesting, and informative video on exhaust systems, and the art, science, engineering that goes into any exhaust system on any vehicle.

For whatever reason we collectively pay little to no attention to most exhaust systems on vehicles. They have catalytic converters, oxygen sensors, some even bypass mufflers to increase the noise level.

Agreed the rumble of a V8 still gets everyone's blood flowing a little faster.

If you ever wondered what gear heads knew about exhaust systems way back in the day.


If you had a reasonably aggressive V8 under the hood, the stock (factory) exhaust system was your enemy. It was full of restrictions that would affect the operation of the engine. Some systems had mufflers, resonators, and catalytic converters in the later years.

Your first quest was to alleviate restriction, and depending on your budget you would deploy different strategies.


Back in the day if you could afford headers you were totally cool. On a small block Chevy the individual pipes were small, in a street car the collector would be on the longer side to have more torque.


Low restriction mufflers, were also know as "glass pack" mufflers, reasonably priced, not much muffling, and quite loud.

Exhaust Pipes:

Ideally bigger than smaller, the least length of pipe past the muffler the better. Obvious that the configuration of the vehicle would dictate the location of the muffler, the various bends, and the lenght of the pipes.

Balance Line:

When you were stuck with longer than shorter pipes, a well placed "balance line" also known as an H pipe would improve the scavenging of the exhaust system. 

Exhaust Guy:

Having an exhaust guy that could make an entire exhaust system to your requirements from scratch was an absolute necessity.

Some Things Never Change:

With all the technology, you still need to get exhaust gases out of the combustion chamber into the atmosphere in an efficient fashion to maximise the performance of any engine.

An informative video on exhaust systems.




Gone Fishing

Yes...The Colonel is gone fishing for a few days.


Corvette's at Lemans in 1960

From 55 years ago...totally cool video.



Vroom Room

Good Morning,

Its Friday the 13th, its the Vroom Room, enjoy the cappuccino and biscotti, join the conversation.

Yes...its the middle of November and a little chillier where we are, must be that time of year again.

If you have been a gearhead for a few decades, you remember George Barris, and anything that came out of his shop as being the ultimate custom...back in the day. The days of "candy apple" and "metalflake" paint on cars. From Rodders Journal an informative article on George Barris.

You could see it coming, Hyundai officially announced that Genesis will become their luxury brand in the coming years. Now imagine that Cadillac is still struggling to get a solid grip on that segment in Canada. It will be interesting to see how Hyundai will evolve. Just in case you are not familiar with a Genesis sedan, a few years ago we had an opportunity to spend a few day with a V6 Genesis.

We don't make a big production of Remembrance Day, especially that most of the folks that participated in the major conflicts are in a better place now. While to folks that were deployed in recent conflicts are often overlooked when they return home. But...the guy that was a POW in Tunisia holds a special place.

Our usual old race cars from the US Vintage Racing Championship at COTA.




Market Metrics October 2015

Everyone focuses on monthly sales with percentage increases, decreases, as you know we always focus on what is behind the numbers.

We are witnessing a record year in Canada on top of another record year (2014).

JD Power publishes a monthly Market Metric which provides additional insight into the monthly sales figures. What caught our attention this month is the loan terms.

Lets take a look...compared to last year at the same time.


Have increased by 3% compared to 2014 to 25% which is still low compared to the golden days when it was at close to 50%.

Days to Turn:

Has increase appreciably for new vehicles (+8%), and moderately for used vehicles (+3%), there is more inventory on the ground. You can see more deals to the end of the year.

Monthly Payments:

Remain a constant, which reinforces the mobility model.


New vehicle retail prices (MSRP) are increasing which was expected with the lower value of the CDN dollar, while transaction prices have endure a minor increase.

Loan Terms:

At 73% of loans above 72 months, its finally gone above 70% for the first time in several years. Record year, higher prices, almost constant monthly payments. Obvious that the loan terms are creeping up to move more "iron/metal".

Negative Equity:

In the business its known as "upside down", its about the same, although it would not be surprising if the amounts of negative equity are increasing, which is another factor that lengthens the loan terms.






Customer Service / Satisfaction

We are all inundated with a myriad of opinions, on the vagaries of customer service. It seems that every expert, analyst, pundit has a thought on "customer service" in this age of social media, review sites, and merchants seeking reviews.

Here is the deal...

If you have the feeling that some folks/businesses are missing the customer service boat in an age of social media you would be correct while other miss the boat big time.

You have the feeling that some businesses are so engrossed with themselves that they miss who is the customer you might be right again. 

Being humble, and apologising gets lost in the trees of arriving at a not my fault excuse. You are right again.

Some industries are notorious for poor customer service, and perhaps you should not be surprised when you are at the receiving end from those industries. Try to get the carrier for your mobile device to do anything, unless there is a profit for them is a real challenge.

Auto dealers want you to rate them to embellish their image and public persona. If you are prompted to rate a sales person and/or a dealer wait some time and see how your relationship with that person or dealer develops.

Folks in the restaurant and hospitality business, the ones that have their act together are keenly aware that any customer empowered by social media can either embellish, or stain their service/quality/satisfaction image. While others still behave as if they are the only business on the planet, and could not care less.

Irrelevant of what business you are in, in an age of social media, and review sites. You know the saying "Walk in the other person's shoes" empathetic, understanding, reflect on the nature of your business, and more important why customers frequent your business.




The Art of Driving

If you remember way back in the day, when cars compared to today were outright dangerous.

Back in the day when seat belts, collapsible steering columns did not exist yet.

Back in the day when if an accident did occur people in the car would go flying all over the interior, risk being impaled by the steering column, or go through a windshield.

Compared to today driving was dangerous, you would put yourself in harms way.

If you remember the demise of muscle cars, was primarily due to insurance companies refusing to insure them. In addition to dropping the compression ratio in 1971.

Back then folks had this innate sense that if anything untoward would occur in a car, you would get hurt, you might go flying out of the car, an encounter with a windshield or dashboard was a real possibility.

The ability to drive, the art of driving was the first defense in being safe in a car.

Fast forward to today...

Vehicles are dramatically safer, with seat belts, air bags, ABS brakes, collision warning, to name a few. In addition to crush zones to absorb the energy of a collision.

It almost begs the question..."how do you get hurt in a vehicle in 2015?" vehicles have become safer, the quality of the driving has progressively deteriorated (being polite) to the point where at times it becomes genuine Wow moments of human inaptitude (being polite again).

Way back in the day there was a mantra "Safety does not sell"...referring to a padded dash. Folks did not want to pay a premium for a padded dash.

Fast forward to today, between the ongoing talk of self driving vehicles, the plethora of safety features in any vehicle, the high demand for safety features. Have we reached the point that "Driving does not sell".

Is driving especially in major metro areas becoming an after thought?

A lost art?



Range Rover Evoque Convertible

  • The world’s most capable all-season convertible is revealed in spectacular sunrise illumination in London
  • Stunning backdrop provided by Central Saint Martins, UAL, London’s world-renowned college for progressive art, design and creative thought
  • Range Rover Evoque Convertible fuses design and capability to bring something new to the world of soft top driving
  • Uncompromised open-air luxury with space for four adults
  • Broadens Evoque’s global appeal as Land Rover’s best-selling model
  • Evoque Convertible launches Land Rover BORN Summit of Creativity
  • On sale in the UK & around the world from Spring 2016
London, UK, Monday 9th November 
Having first teased the public with candy-coloured wireframe sculptures, Land Rover has finally revealed the all-new Range Rover Evoque Convertible to the world in spectacular style.

The fifth and newest member of the Range Rover family lowered its roof for the first time in a blaze of dazzling light using state-of-the-art projection technology, transforming the darkness of a cold autumn night into the golden glow of warm spring sunshine.

The stunning scene was set against the backdrop of the University of the Arts London’s famous Central Saint Martins building in Granary Square, Kings Cross, London.

The projection covered an area the size of approximately 10 tennis courts using twenty projectors, each with a combined brightness of 400,000 lumens, the equivalent of 40,000 candles. The spectacular reveal also incorporated Granary Square’s innovative and high-tech water feature comprising of 1,080 fountain jets and 4,320 individual low energy LEDs, with each jet individually controlled and lit using a giant pixel map to invoke the mood of the changing seasons.

With design at its core, the Range Rover Evoque Convertible is supremely capable, has space for four adults, a proper boot and even an innovative ski hatch for road trips to Courchevel or Aspen. This is sophisticated roof-down all-season motoring for drivers from all corners of the globe.

Gerry McGovern, Land Rover Design Director and Chief Creative Officer, said: “The Range Rover Evoque Convertible is a symbol of refinement, luxury and creative design. It’s perfectly suited to the urban surroundings of London. The Evoque’s elegant design proportions lend themselves to the creation of a Convertible, and it’s fitting to reveal the vehicle against the backdrop of one of the world’s leading centres for art and design education here in the creative hub of London.”

UAL is Europe’s largest university specialising in art, design, fashion and the performing arts. UAL is made up of six colleges including Central Saint Martins which are world-renowned for progressive art, design and creative thought.
Since its launch in 2010, Evoque has changed the luxury SUV landscape. Now Land Rover’s best-selling model with close to 500,000 sold to date, the compact Range Rover’s progressive design has redefined the perception of compact SUVs. Packed with advanced technology and equipped with fuel efficient petrol and diesel engines, the Evoque has revolutionised the sector.
Design is inextricably linked to Evoque. The distinctive shape was introduced to the world for the first time using wireframe sculptures in 2010 – an artistic theme carried forward to 2015 in the build up to the reveal of the latest member of the Range Rover family. Six new Convertible wireframe sculptures were first shown in London’s most exclusive addresses earlier in October, and today formed part of the production model’s dramatic debut.
The reveal of Evoque Convertible also marks the start of a new partnership between Land Rover and the BORN Summit of Creativity ( BORN is a unique crowdfunding business set up to commercially mobilise the world’s global creative talent. The Summit of Creativity is an annual celebration of the most promising creative ideas from around the world, reflecting Land Rover’s commitment to fostering and nurturing the talent of tomorrow.
In the run up to the BORN Summit of Creativity, which takes place in Courchevel, France, in March 2016, Land Rover and BORN will release a series of short films exploring the processes and challenges of established creative leaders, and how they are encouraging emerging talent.
The Range Rover Evoque Convertible will go on sale from Spring 2016.
Range Rover Evoque Convertible reveal film available to view and embed from here: 

Behind Closed Doors - Revisited

Last year we published "Behind Closed Doors" our thoughts on the relationship between manufacturers, and dealers.

Little has changed the trend that dealer groups are acquiring stand alone (mom and pop) dealers continues, while bigger groups acquire smaller groups. The trend that other investors would follow Warren Buffet in acquiring dealer groups is slowly developing in the US...unless its already a friend that is loking to invest money.

Groups acquiring dealerships in metro areas and viable secondary markets will continue.

Manufacturers love groups, although they bring up covenants and the number of franchises a group can own, they love groups, that have deep pockets to image the brick and mortar, subscribe to a myriad of inititaives. More important "play the game", stay within the process.

The puveyors of technology love groups too, technology is the enabler of groups, starting with the DMS a few decades back.

If you get the feeling that its becoming a "process" you might be correct. The franchise process, the brick and mortar process, the warranty claim process, the parts process, the sales process, the showroom process, the customer satisfaction process, the incentive process, the business office process.

For every process there is technology that permits the measurement, and management of the process.

Then the manufacturer disrupts the process by "pushing" additional inventory.