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Entries in Strategy (1)

Monday
May162016

Windows of Opportunity

In the auto business there have always been "windows of opportunity" in one fashion or another. Obvious that by the time a window of opportunity becomes "pedestrian knowledge" its already on the wrong side of the curve.

What is a window of opportunity? A window of opportunity is a short time period during which an otherwise unattainable opportunity exists. After the window of opportunity closes, the opportunity ceases to exist.

As you can appreciate empowered by technology, "windows" open and close with increased rapidity. Yes...some folks "get hung up to dry".

The value of the Canadian dollar has presented several windows of opporunity during the past decade. Let's consider 2016 and looking ahead for the short term.

Yes...we all know that the CDN dollar has tanked, visited the bottom of the dumpster for the past several months.

The tanking has created a unique window of opportunity for the auto business in Canada.

Customers

For CMS (Citizen Main street) the lower value is unique in generating robust used vehicle (trade in) values for numerous makes, and models. Stronger values have a direct impact on the level of negative equity. Need we say much more?

Dealers

Its presented a unique opportunity to pay aggressive amounts for trade ins, to close deals. As well as managing used vehicle inventories. Could it be that its a factor in record Canadian new vehicle sales this year?

Manufacturers

Have ramped up the inventories of new vehicles, applying pressure on dealers to move iron. While deploying selective "dynamic pricing".

Auctions

Are enjoying a golden time selling a myriad of vehicles to "American" buyers.

Its all good for everybody...

But...and there is always a but...by now its coming to an end.

If an additional 100,000+ used vehicle were exported from Canada to the US in the grand scheme of things it might be a drop in the bucket, especially for the US market. But it also made it easier to close deals in Canada, and manage inventories.

The bigger BUT...

The scarcity of used vehicles in the US is a thing of the past, they are not so scarce anymore. While its anticipated that values will continue on a downward slope from now till the end of the year.

From our perspective this "window of opportunity" is closing.

Is there a lesson...absolutely...don't get caught too far on the wrong side of a closing "window of opportunity".