Automotive News Canada - April 2019 - 1

CARBON TAX IN EFFECT: WHAT IT MEANS TO AUTO/P3

APRIL 2019 | VOL. 4, NO.4 | AUTOMOTIVENEWS.CA FOR BREAKING NEWS AND DIGITAL EDITION

Car sales continue dive: Could the bottom be zero?
By JOHN IRWIN
TORONTO BUREAU

TORONTO - THE NEW-PASSENGERcar market will collapse over the next
two years as consumers continue to
gravitate toward utility vehicles, say
industry experts.
Robert Karwel, senior manager of
J.D. Power's Canadian automotive
practice, said he expected cars to make

Low payments push
Canadians into utility
vehicles, but a real death
shot could come from
U.S. President Trump

up 25 per cent of the new-vehicle market by the middle of 2019, and 20 per
cent in 2020.
"It's not a coincidence at all that

EV REPORT CARD

ONLY TWO PROVINCES EARN PASSING GRADES/P16-17

For job gains,
look beyond
auto plants
Hiring is on the
rise as dealerships,
suppliers, the
aftermarket
sector and even
manufacturing
show growth

from the 2008-09 economic collapse.
The rise in employment
comes amid uncertainty over
the future of Canadian auto
production, which has fallen 25 per cent, according to
Ontario government data.
Jobs at dealerships, for
instance, rose 20 per cent
since 2010 to 159,045, while
aftermarket jobs jumped 17
By JOHN IRWIN
TORONTO BUREAU
per cent to 407,253.
"The politics in any country tend to - from an autoTOTAL AUTOMOTIVEmotive perspective, anyrelated employment
way - only look
has grown by 17 per
at manufacturcent since the start
ing," said Dennis
of the decade, drivDesRosiers, presien in large part by
Automotive jobs
dent of DesRosiers
have been increassurging sales, lonAutomotive
ing since the
ger-lasting vehicles
Consultants. "And
Great Recession,
and Canadian vehithe theory behind
a result of higher
cle ownership reach- vehicle sales and
that is that manufacownership rates.
ing record levels.
turing is mobile and
Total employment:
According to
when you lose it, it's
* 2010: 703,451
data supplied
gone. Whereas the
by DesRosiers
* 2011: 715,513
nonmanufacturing
Automotive
* 2012: 733,136
side, if a dealer on
Consultants Inc.,
one side of Toronto
* 2013: 745,660
823,052 Canadians
closes, another one
* 2014: 766,516
were employed in
opens up across the
* 2015: 782,592
auto-related jobs in
street. It's technical* 2016: 790,243
2018, ranging from
ly net-neutral in the
* 2017: 803,584
dealerships and
country.
* 2018: 823,052
aftermarket com"So I understand
Source: DesRosiers
Automotive Consultants
panies, to assembly
the politics of it. It's
plants and suppliers.
bad to lose manufacThat compares with 703,451 in turing because it has a
2010, when the industry and
the economy as a whole were
just beginning to emerge
SEE MANUFACTURING PAGE 24

MORE JOBS

Karwel: Longer
loans make
more expensive
utility vehicles
affordable.
FILE PHOTO

It's a slowing
market,
and dealers
are taking
long-term risks
in the struggle
to earn automaker
incentives

the rise in popularity of utilities
has also meant that
the average loan
term in Canada has
increased and that
our dominant loan
term is 84 months,"
Karwel said. "That's
the only way customers are spending
on average $13,000 or

$14,000 more to get a utility body style
vehicle and still make it affordable."
Cars accounted for 29.7 per cent of
all 2018 new-vehicle sales in Canada,
according to the Automotive News
Data Center in Detroit. Despite sales of
more than two million vehicles for the
second time in history, total car sales
finished below 600,000 units. Compare
that with 2009, when automakers sold

SEE U.S. TARIFFS PAGE 26

STAIR-STEP
PROGRAMS

THE DANGER
OF

falling

down
By JOHN IRWIN
TORONTO BUREAU

AS NEW-VEHICLE SALES DECLINE,
a growing number of Canadian auto dealers
are balking at stair-step incentive programs, blaming them
for damaging long-term profitability.
"You may get the money
that month or that quarter,
but it costs you in the long
run. It costs you at year-end.
It's not a fun game to play,"
Michael
said Michael Wyant, COO of
Wyant of
the western Canada-based
the Wyant
Wyant Group, which has Fiat
Group says
Chrysler, Ford, Hyundai,
stair-step
Mercedes-Benz and Audi
programs
stores.
eventually
The programs automakers
catch up with
employ to incentivize dealers
dealers.
to be aggressive on new-vehiFILE PHOTO
cle sales vary from brand to
brand. Those structured as stair-step plans
generally offer lucrative bonuses to dealers for
hitting increasingly higher sales targets.

EXCLUSIVE
LEAD SPONSOR

While the Canadian new-vehicle market
soared to new heights earlier this decade, targets were attainable for many retailers. Some
became dependent on those bonuses for much
of their revenue, said dealers interviewed by
Automotive News Canada.
But as sales begin to decline, many dealers
are finding it harder to hit those targets, causing some stores to either miss out on crucial
revenue or consider undertaking questionable
tactics to reach them. And dealers often order
extra vehicles and boost marketing spending
to hit them, making it costly to fall short of targets.

SQUEEZING PROFITS
"They just fundamentally don't work
in a difficult marketplace," said Dennis
DesRosiers, president of DesRosiers
Automotive Consultants Inc. "When the market is growing, they work, and they work very
well. They really do get dealers to become very
aggressive. The amount of money at stake can
be huge, and so it really motivates dealers to
go after it. Unfortunately, they only were able

SEE THE STAIR-STEP PAGE 24

FINAL MONTH
DEALERS: TO REGISTER

GE 3
A
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Automotive News Canada - April 2019

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