Automotive News Canada - August 2017 - v2 - 8

OPINION

08.17

WRITE TO US

We invite letters from our readers for publication (250-word max., please indicate
"for publication"). We reserve the right to edit all submissions for length, content and
clarity. Include your name, title, company name, city and province, and tell us
your connection to the auto industry. Email letters to JKnycha@autonews.com

Knocking on Tesla's door,
but there's no one home

Tech companies that commit to research and development also
need the ability to react to market changes. ( P H O T O : R E N E S A S )

Key to the future?
Stay lean, flexible
JEFF MELNYCHUK

EDITOR-IN-CHIEF

THIS INTENTIONALLY TECH-HEAVY EDITION OF AUTOMOTIVE NEWS
Canada leads off with a Page 1 story entitled "The Next 50 Years."
With a variety of viewpoints, there is one common theme: No
one can predict the future because the technology that will power
it is caught in a swirling vortex of ideas, that will in turn trigger new
ideas and new ways of doing things. It's a moving target.
Never before in the auto industry has so much been up in the
air: What will power cars in the near future?
Who will be driving them, if anyone? Who
will be building them? And how will transportation evolve?
It's enough to give any company president the dreaded "analysis paralysis," where
if one takes too much time analyzing how to
get out of quicksand, they'll eventually be
swallowed by it. At the same time, make the
wrong move and risk jumping into even
deeper quicksand.
Since the current environment makes it
next to impossible to plan for the future, how
does a company make any headway in the
right direction? Assuming there is a right direction?
Generally speaking, smaller companies with fewer levels of
management and less infrastructure are able to make decisions
and act on them more rapidly. If five people in an office need new
computers, they just do it. Larger companies, with more staff and
layers of management might have to buy 100 new computers.
That's a big cost hit, the purchase of which requires input from
various departments and then analysis from accounting. And then
a bid process, implementation and training. How long does it take?
Visit a large company and more than likely they'll have computers
that are at least five years old.
It's a sign of internal thinking that's often archaic, partly run by
accounting departments that somehow rose to a level of affecting
corporate direction through its need to provide checks and balances. Companies run in this manner - slaves to process rather than
innovation - are likely the most at risk, although they have a significant advantage over smaller ones, and that's cash flow.
For this reason, smaller companies will likely remain suppliers to
larger companies - or simply be absorbed by them - provided
that the larger companies can make the critical leap to become
leaner and more flexible. That means a tightly focused, outward-looking management team that's immune to analysis paralysis. Sure, they'll stumble, but by reacting quickly to correct, they'll
be learning experiences and not disastrous mistakes. - ANC

To flourish,
companies will
need to reset
so that they can
quickly react to
market demands
and charge off in
new directions

EST. 1925.

PUBLISHED WEEKLY BY CRAIN COMMUNICATIONS, INC.
KEITH E. CRAIN, EDITOR-IN-CHIEF
K.C. CRAIN, GROUP PUBLISHER
JASON STEIN, PUBLISHER

DAVE VERSICAL, DIRECTOR OF EDITORIAL OPERATIONS, AUTOMOTIVE NEWS GROUP

PUBLISHED MONTHLY BY CRAIN COMMUNICATIONS, INC.

NEWS DEPARTMENT

JEFF MELNYCHUK, EDITOR-IN-CHIEF, 506.854.5024, JMelnychuk@autonews.com
JOE KNYCHA, NEWS EDITOR, 204.648.5733, JKnycha@autonews.com

CUSTOMER SERVICE

877.812.1257
Email: customerservicecanada@autonews.com

AD SALES

Karen Rentschler, 313.446.6031
Email: Krentschler@crain.com

EXACTLY WHEN TESLA'S
Model 3 will arrive in Canada -
and at what cost - is, quite literally, anyone's guess.
The electric-vehicle maker
has been as quiet as an electric motor when it comes to
offering Canadians, including
journalists, any insight on its
plans for the "affordable" electric vehicle.
Media requests are met with
radio silence, both over the
phone and via email. And any
Canadian who tweets at company founder and CEO Elon
Musk might or might not get a
response.
Musk has always balked at
mass marketing and advertising, but it's precisely the mass
market he's after when it
comes to the Model 3. Yet he
leaves his loyal legions of supporters in the dark and feeds
his critics at the same time
when we haven't heard hide nor
hair from him on the car's arrival.
Media requests placed with
Tesla aren't even met with so
much as an auto reply. They are

DIGITAL AND
MOBILE EDITOR
AUTOMOTIVE
NEWS CANADA

GREG
LAYSON

COMMENT
simply ignored. If it's the job of
journalists to be the eyes and
ears of the general public, Musk
and Co. have rendered us blind
and deaf.
One could argue that no
news is good news, but that
adage is correct only some of
the time. It doesn't generally
apply when hundreds - maybe
thousands - of Canadians have
placed deposits on the car.
The Bloomberg news service
reports that Tesla announced
last spring that 373,000 people
had placed deposits for the
Model 3 and haven't been
given updated reservation figures since. How many of those
folks are Canadian remains
unclear, but some are likely getting restless when they read the

price of the supposedly affordable US $35,000 vehicle continues to rise through additions
like paint colours. Anything
other than black costs an additional US $1,000. And, Tesla's
fully equipped car, including its
semi-autonomous Autopilot system and more, costs a hefty US
$59,500. Do the math at
today's current exchange rate
and that's roughly Cdn
$75,500 and a far cry from
affordable.
Tesla's Canadian website
says little beyond "local pricing
will be announced in 2017"
and that the "delivery estimate
for new reservations is mid2018 or later."
The automotive website
Jalopnik reported July 25 that
Canadian Troy Holmes, who
place a deposit in May, is not
happy about being kept in the
dark.
"I am up in Canada and
have no real concrete news as
to when we will see our model
3s...annoying quite frankly!"
We feel your pain, Troy.

- ANC

Unlucky landing: The night
Daewoo came to Canada
THE QUESTION, OF COURSE, HAS ALWAYS
been when, not if, China's automakers would
start selling vehicles in North America. Every year
they build more cars - an estimated 24.4 million
in 2016 - which sell in many countries beyond
the home market.
Now we're getting a sense of when that might
happen. According to a Globe and Mail report,
Guangzhou Automobile Group seeks to set up
shop in the United States in 2019 and Canada a
year later, while fellow heavyweight SAIC Motor
Corp. is also assessing the Canadian market.
Upstart Geely Automobile Holdings could arrive
even sooner with its Lynk and CO brand that
draws on fellow Geely property Volvo.
Whenever
they land,
OTTAWA
they'll want to
CORRESPONDENT
avoid repeating
the inauspiROBERT
cious entrance
BOSTELAAR
of another
Asia-based
automaker in
COMMENT
1999.
For its
Canadian launch, Daewoo Motors chose the
Montreal Auto Show in mid-January. It wasn't as
grand as the Toronto show in March, but it would
give Daewoo a big headstart on Korea rival Kia,
which was set to enter Canada later that year.
Then the roof of the Olympic Stadium collapsed under a heavy snowfall and the Montreal
show was cancelled.
Daewoo faced a dilemma. Wait until the
Toronto show and lose the lead over Kia? Or find
another venue on short notice? Studying the
auto-show calendar, Daewoo saw Ottawa, Feb.
22. Aha!
Had the automaker looked more closely, it
might have noticed that the Ottawa event was
largely a dealer show. National capital, but hardly
a national stage.
Thus, on the show's "press tour" night, a line

In 1999, Daewoo predicted profitability
within three years, but by 2002 (Leganza
pictured), the company was entering
bankruptcy. ( P H O T O : D A E W O O )

of besuited officials at the Daewoo stand was
greeted not by the respectable media showing
they could have expected in Montreal, but one
guy in shirtsleeves and khaki slacks. That was
me, the sole staffer of the Ottawa Citizen's
Driving section. Photographer Lynn Ball came by
later, doubling the press turnout.
Gamely, the executives introduced Daewoo's
entry-level Lanos, the compact Nubira and the
Camry-fighting (they said) Leganza. They spoke of
starting with 30 dealers in key markets in Ontario
and Quebec before expanding east and west.
"We are targeting to make a profit within three
years," said Daewoo Auto Canada Inc. President
Sang-il Lee.
Yet even as he spoke, Daewoo's own roof was
collapsing under the weight of massive debt. By
2002, Daewoo Auto Canada, with 37 surviving
dealers, was entering bankruptcy, not profitability.
Canadian buyers were stuck with orphans. By
2009, a Leganza CDX that originally sold for
$25,495 in 2002 was worth just $2,500.
"Daewoo depreciation is mind-boggling," wrote
cranky consumer advocate Phil Edmonston.
I felt sort of responsible.
China-based automakers, bigger and better
organized, are unlikely to duplicate Daewoo's mistakes. Still, they'll want to choose their introductory venues carefully. - ANC

Table of Contents for the Digital Edition of Automotive News Canada - August 2017 - v2