Automotive News Canada - September 2017 - v2 - 24

* S E P T E M B E R 2017

Canada seeks
NAFTA deal that
tips labour scale
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in Canada and the U.S. over labour standards
appear poised to remain a major issue during
NAFTA renegotiations, which were scheduled to
shift to Ottawa for the third round of talks in late
September.
Automakers and suppliers have invested heavily in their Mexico operations since
NAFTA's passage, due in large part to Mexico's
lower labour costs and free trade agreements
with 45 countries. According to the Center for
Automotive Research in Ann Arbor, Mich.,
Mexican autoworkers make the equivalent of US
$6 per hour, a fraction of what their Canadian
and American counterparts make.
Finding an agreement on labour standards
that satisfies all parties involved could prove
to be difficult, said Welles Orr, an international trade adviser with the Washington-based law
firm Miller & Chevalier.
"I'm not sure if we really get to form new
labour standard language that all people can
agree on," Orr said.

RULES OF ORIGIN
Orr, a former U.S. assistant trade representative during the George H.W. Bush administration, said another major hang-up will likely be
over NAFTA's rules of origin, which the United
States seeks to change.
Under the current agreement, 62.5 per cent
of a vehicle's parts must be sourced from the
NAFTA countries in order to be exempt from
tariffs. The U.S. is reportedly seeking to raise
that figure, in addition to pursuing a U.S.-made
requirement.
Such a requirement would likely be met with
scorn from the auto industry and from the other
NAFTA nations. Still, Orr said he believes the
three nations will reach an agreement by next
year before the Mexican general elections in
July and U.S. midterm elections in November.
"The [Trump] administration needs to get this
done," Orr said. "How far it goes based on their
objectives has yet to be seen, but I think they can
do enough to call this a modernized agreement."
- ANC

Dealerships 'responsible'
and therefore a safer bet
for buyers, but . . .
There's no guarantee that water-damaged
vehicles won't seep onto Canadian lots
DEALERS 'RESPONSIBLE'

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flood-branding or have looser
requirements.
According to the U.S. Bureau
of Justice Assistance, 38 states
fully participate in the National
Motor Vehicle Title Information
System, a national title database, while another six states
partially participate by providing certain data. While the
Texas Department of Motor
Vehicles fully participates in
the program, the Bureau of
Justice Assistance said it would
be working with state titling
agencies to ensure they take
"extra precautions" against
potential washed titles.
Tracy Mallen, program manager for the Canadian registration agency, said online commercial and government databanks have made it easier to
spot vehicles with altered titles
or histories of damage.
"Back when it used to be all
paper, that's a different story
- you didn't have the multiple
vehicle databases that you have
today," Mallen said.
Doug Longhurst, the director
of learning and communications
at the Vehicle Sales Authority
of British Columbia, said the
province has dealt with 13 cases
involving flooded vehicles since
2013.
Longhurst said that while
it is a low figure, it shows that
Canadian dealers and consumers must be vigilant in looking
for signs of water damage over
the next several months.

Mexico autoworkers make the equivalent of US
$6 per hour, far less than workers in Canada and
the United States, but three countries agreeing on
labour standards could prove difficult.

"People are a lot better
off going to a licensed dealer
because there's accountability,"
Longhurst said. "Dealers are
going to be responsible if they
don't check things out well."
Harry Mews, president
of the Ottawa-based Myers
Automotive Group, said the
dealership group relies on commercial search services to identify damaged cars offered as
trades or at auction. Myers
operates 12 new-vehicle dealerships and a Car Canada used-vehicle store.
"Your only real exposure is
through a trade-in if, when you
do your search, it doesn't pop up
that it's a flood vehicle," Mews
said. "But that's the job of the
management team in the dealerships to be able to go through a
vehicle and detect things."
Mews said an unfavorable
exchange rate could be a large
factor in preventing many vehicles from entering the Canadian
market. Imports have fallen by
nearly 90 per cent from a high
of 240,000 in 2008, when the
Canadian and U.S. dollars were

at par, the vehicle registrar
reports.
Longhurst, however, cautioned that a shortage of utilities and trucks in the Canadian
used-vehicle market could counteract that.
In the United States, the
head of the largest dealer
group, AutoNation, said its
Texas stores are already rejecting flood-damaged trade-ins
"because we are going to be held
responsible for that car."
CEO Mike Jackson said its
Houston dealers are wary of
trade-in candidates: "We have
had circumstances already
where people come in with a
too-good-to-be-true story. They
want to trade their car, saying
there's no flood damage on this.
And we open up the trunk and a
family of frogs jumps out."
- ANC

A low Canadian dollar might prevent many hurricane-damaged
vehicles from ever being imported. ( P H O T O S : R E U T E R S )

(PHOTO: REUTERS)

With Atlas and Tiguan, VW dealer sees 'light at the end of the tunnel'
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nearly 105,000 affected 2.0-litre TDI
models in Canada. Full details can be
found at vwcanadasettlement.ca.
Speranza said the August numbers
were gratifying after suffering through
perhaps the darkest 18 months of the
company's 65 years in Canada.
"You know, it was a struggle to hang
on to some of the salespeople. They
didn't want to keep hearing all the bad
news," he said. "But my guys hung in
there, and they're reaping the rewards
now."
Speranza and Braeden Mueller, gen-

eral manager of Knight Auto Haus
Volkswagen in Winnipeg, said the new
Atlas and Tiguan utility vehicles and
the Volksfest sales-incentive program
are key to the sales volume. He estimated 15 to 20 per cent of sales were to buyback recipients.
Volkswagen Canada spokesman
Thomas Tetzlaff said Atlas and Tiguan
sales have exceeded expectations, with
more than 800 Atlas models and almost
2,400 Tiguan models out the door. The
addition of 4Motion all-wheel-drive to
all models of the Golf SportWagen has
driven that model's sales to more than
double last year's sales.

The new Tiguan arrives at a time when
TDI owners are receiving their settlement money from Volkswagen.
( P H O TO : V O L K S WA G E N )

"We all had our fingers crossed
with Atlas. It's a segment we've never

been in before, so it's all-new," Tetzlaff
said. "Atlas was a home run, like as
soon as it was off the bat it was like,
'Holy cow, that one's leaving the
yard.'"
Looking forward, Mueller said he
has high hopes for the brand.
"The biggest thing is getting people to buy back into the brand, given
everything that's happened," Mueller
said. "So there's that, plus you just had
Atlas come out, which is the first time
VW's had a seven-passenger SUV, the
new Tiguan and the new Jetta next
spring, so there's light at the end of the
tunnel." - ANC

http://www.vwcanadasettlement.ca

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