Automotive News Canada - July 2017 - 9

* JULY 2017

Dealers 'won't put
our heads in the sand'
CONTINUED FROM PA GE 1

be sold on the Internet right now
if that was the case," Bourgon
said. "Right now, you don't see
the infrastructure or the demand
in place to even support the timeline suggested."

vehicles will be fleet owned, that
car insurance costs will fall 90 per
cent, and almost US $50 billion in
revenue from gasoline
taxes will be lost (in the
MILLENIAL MINORITY
United States).
"Dealerships are an
Ready Honda owner
essential element of our
Bob Redinger in
business going forward,"
Mississauga, Ont., is
said Ted Lancaster,
dubious of the report's
vice-president and chief
projected timelines.
operating officer of Kia
"The big thing that's
Canada.
holding back electric
Joe McCabe,
Dealers must adopt
cars is obviously the
president of
new ways of reaching
driving range and operAuto Forecast
consumers, particularly
Solutions.
ating in cold temperaby embracing new ways
tures to make [them] viaof easing the transition
ble for day-to-day use,"
from online shopping to
Redinger said. "For shortin-person purchasing, but
term commuting yes, but
the physical aspects of
who's really buying cars
buying a car - test drivfor short-term commuting, having features proping? Not the majority of
erly explained - remain
drivers."
critical to the process,
Joe McCabe, president
Lancaster said.
of
Pennsylvania-based
Bob Redinger,
"If you step back,"
owner of Ready Auto Forecast Solutions,
White said, "there have
which has most of its cliHonda in
been predictions of the
ents in Canada, says the
Mississauga,
demise of the automobile
report is reactionary to
Ont.
dealer network since the
the current cycle of elecadvent of the Internet, and these
trification.
have proven to be false over time."
"I think there are too many
moving parts to completely throw
STILL SINGLE-DIGIT SALES
the entire sales model on its ear,"
"You still have some 24 million McCabe said. "I think we're very
vehicles on the road in Canada
far away from having a tipping
that need places to be serviced.
point where most vehicles are
There are still going to be a couelectrified and subsequently there
ple more million a year [vehicles
are no dealers anymore."
sold], of which less than one perSCALABILITY QUESTIONED
cent at this point is EVs."
White acknowledges that elecChad Heard, spokesman for
tric vehicles will require less serHyundai Canada, said the Genesis
vice as they have fewer moving
online-concierge model works for
parts, but said they present a chal- a small-volume premium product
lenge of a different sort. "If anybut would be hard to scale up for
thing, the electronics are going to
mainstream brands.
become so complex and complicat"What the industry will more
ed, they'll require a very educatlikely see over the next 10 years
ed, well-trained network to comis a simplification of the shopping
plete those repairs because everyand ownership model through
thing breaks down at one point or
digitization," he said. "If a cusanother," he said.
tomer is buying a vehicle, moving
things such as trade-in evaluation
CHANGE IS COMING
or lease and finance paperwork
Todd Bourgon, executive direc- online allows dealerships to spend
tor of the Trillium Automobile
more time educating the customer
Dealers Association (TADA) of
about the product, how it's differOntario, agrees. "We won't put
entiated from the competition and
our heads in the sand and sugmost importantly, how the feagest the service model is going
tures work."
to be the same; it will definitePaul McCallum, vice-president
ly change," Bourgon says. "But
of global automotive accounts
the thing we know for a fact is
at Bond Brand Loyalty in
you can't figure out if the space
Mississauga, Ont., said predicting
in that vehicle is functional for
the future in today's fast-changing
you and your family by not being
world is a fool's game.
able to sit in it, and you can't do
"I can guarantee that whatever
that if you're just buying it on the
you and I might agree might hapInternet.
pen in 10 years, we're going to be
"Quite honestly, all cars would
wrong," he said. - ANC
The new Tesla Model 3, in production now,
is purchased directly from the company, not a
dealership. And as an electric car, it could need
less servicing than an internal-combustion vehicle.
(PHOTO: TESLA)

Pattison says dealerships
will change, not disappear
CONTINUED FROM PA GE 1

with Automotive News
Canada. "The showroom
holds 26 cars, 26 new cars.
I don't think in the coming
years that it'll work that
way."
Pattison certainly has
fond memories of the car
business from when he
bought his first dealership,
a Pontiac-Buick store in
1961. One wall of his airy
18th-floor office overlooking
Vancouver's Coal Harbour
features shelves of photo
albums chronicling lavish
sales promotions, staff parties and happy customers.
But he is also clear-eyed
about those days. "The
used-car salesman with a
straw hat on, smoking a
cigar, was real."
From sales ethics to
customer satisfaction,
Pattison believes much
has improved from the
time car dealerships lined
Vancouver's Georgia Street,
now studded with glass towers.

CREDITS JAPAN'S QUALITY
"The quality of the sales
people are much better than
they used to be," he said.
"The Japanese are the ones
that changed that. They
taught people like me really what customer satisfaction was all about. I went to
Japan and, boy, I came back
a different person."
Pattison Auto Group has
25 dealerships in Western
Canada across 12 brands
that sold 21,400 vehicles last
year.
It's one unit of the
Pattison Group's highly
diversified holdings, which
includes broadcasting,
entertainment, food, real
estate, advertising, forest
products and packaging.
At 88, Pattison remains
CEO of the second-largest
private company in Canada
with annual revenue last
year of $9.6 billion. He
drives himself daily across
the Lions Gate Bridge from
his West Vancouver home,
currently in a Chrysler
Pacifica. On sunny summer
days he might take his 1975
Pontiac convertible.
Ironically, the birth of
Pattison's business empire
stemmed partly from GM's
unwillingness to grant
him another franchise
after launching his first
Vancouver dealership.
"I was making money,"
he said. "I don't golf and I
was looking for something
to do so I went into radio,
as I was a big advertiser in
Vancouver."
Pattison cut his teeth
selling used cars to help pay
his way through university. He dropped out when a
chance came to buy his own
lot. Local Nash dealer Dan
McLean got it eventually,

but hired Pattison as manager, then took Pattison
with him when he acquired
a Cadillac-Buick dealership.

MISJUDGED OPPORTUNITY
Pattison admitted passing on the first serious challenge to the dominance of
big American iron.
"VW first came looking for a dealer in '59.
They came to us, offered
us the province of British
Columbia distributorship.
My boss didn't take it. I recommended the car would
never sell."
Pattison remedied that
misjudgment. His portfolio
now includes VW and Audi,
as well as Hyundai, Toyota,
Lexus and Subaru.
Pattison bought his

NOTABLE
HOLDINGS
* Jim Pattison Auto Group,
25 stores in B.C., Alberta,
Manitoba, sales volume of
21,400 in 2016. Brands:
Toyota, Lexus, Subaru,
Volvo, VW, Audi, Hyundai,
Chrysler, Jeep, Dodge,
Ram, ProMaster commercial vans.
* Pattison Lease, operates
nationally with 35,000 vehicles under lease or management.
* Jim Pattison Broadcast
Group, 43 radio stations,
three TV stations, and
eight online news portals in
Western Canada.
* TNG, North America's largest magazine wholesaler.
* Canfor Corp., world's second-largest lumber producer with 38 operations
in Canada, U.S., Japan,
China and Korea.
* Overwaitea Food Group,
158 stores under four banners in Western Canada.
* Pattison Sign Group, operates four plants in Canada
and the United States,
and leases and maintains
24,900 signs.
* Pattison Outdoor
Advertising, dominant outof-home advertising player in Canada, more than
220,000 displays.
* Westshore Terminals, Port
of Vancouver coal loading facility, shipped about
27 million tonnes of coal in
2016.
* Jim Pattison Real Estate,
owns and manages 33
U.S., Canadian shopping malls totalling 13 million square fee (1.2 million
square metres).

Jim Pattison sold his first
used car, a 1939 Dodge,
nearly 70 years ago, and
bought his first new-car
dealership at 33
(PHOTO COURTESY
J I M PAT T I S O N )

first GM dealership with
a $40,000 loan from the
Royal Bank of Canada and
another $230,000 from GM's
Motors Holding arm, which
helps aspiring dealers who
have experience but no capital.
He would eventually
have three GM stores; he
sold the last in 1992.
Pattison remains
grateful to GM for helping launch his career but
chafed under rules that at
the time forbade owning
multiple GM dealerships,
never mind competing
brands.
Pattison bought his first
Toyota franchise in 1980
without first clearing it
with GM.
"They immediately sent
me a letter telling me they
were going to cancel me,"
he said. "I hadn't broken
any laws; I didn't break a
contract. So we had a good
visit (and) they changed
their mind and we kept the
Toyota dealer."

ARMED WITH INFO
Today, buyers are well
prepared with Internet
research before ever setting
foot in the showroom.
"People come in now
knowing what they want,"
he said.
Much of the transaction
is migrating online, including finance and insurance
and even detailed tradein valuations. Car-sharing
and new electric vehicles
with lower service requirements will force even more
change to the dealer model,
Pattison said.
Still, he believes there
will always be a role for
physical dealerships, especially outside big cities
where sales and service
choices are shrinking.
And if people continue
to own their personal vehicles, someone will eventually have to evaluate the
trade-in.
"No used car is exactly
the same," he said. - ANC

Table of Contents for the Digital Edition of Automotive News Canada - July 2017