Automotive News Canada - April 2019 - 6

* APRIL 2019

TRENDING
STORIES
automotivenews.ca

ONGOING WEB COVERAGE

FIGHT
FOR GM OSHAWA
Citing productive conversations, and on the heels of a cryp-

tic tweet by Prime Minister Justin Trudeau, Unifor has stopped
its aggressive ad and social media campaigns against GM. It
has even dialed back its call for a boycott of GM vehicles made
in Mexico. Unifor, which represents about 2,600 workers at the
plant, now says some of the jobs might be saved.

Randy Guenthner and Gigi Lee get the keys to their Volvo V60 R-Design, under subscription through
Care by Volvo, from David Carroll, national sales manager for Volvo Car Canada. All Care by Volvo
customers are first-timers to the brand, said Alexander Lvovich, managing director of Volvo Car Canada.
P H O TO : S T E P H A N I E WA L L C R A F T

Path of lease resistance
Subscriptions attract
younger customers
to high-end brands;
most are conquests
By STEPHANIE WALLCRAFT
TORONTO CORRESPONDENT

TORONTO - AFTER LEASING
vehicles for years, Randy
Guenthner and his wife, Gigi Lee,
decided to opt for the "flexibility"
and predictability of an auto subscription service.
"When you lease a car, there
are still surprises, a down payment, and you're locked in for
the period of time, the term of
the lease," said Guenthner, 41. "I
like the flexibility here and that
after a year, we could swap up to
another car."
The Toronto couple recently became the first customers of
Care by Volvo, the Swedish automaker's subscription service that
launched in Canada last fall.
Targeting premium-car consumers who want to avoid a longterm commitment to a vehicle,
Care By Volvo is among a growing number of subscription programs that cater to a demographic largely made up of young,
urban professionals such as
Guenthner and Lee.
Subscription services are
attracting "a completely different type of customer," said
Alexander Lvovich, managing
director of Volvo Car Canada.
"We're talking about younger.
... They're all coming from tech
industries. And the most critical
part is that they're all new to the
brand. They're all conquest."

In February, Lvovich told
attendees of the Automotive
News Canada Congress in
Toronto that 46 per cent of Care
by Volvo customers are under
35 years old, and 50 per cent of
orders are completed using a
smartphone or tablet.
Guenthner, an IT consultant,
and Lee, a market-research professional, came out of a lease with
another automaker. After their
first-ever test drive at a Volvo
dealership, the couple chose the
V60 R-Design. Aside from the
subscription service's flexibility
and an all-in-one fee that includes
maintenance, they eventually
want to drive an electric vehicle,
Guenthner said.
"I'm excited about EVs and I'm
interested in seeing what Volvo
is coming out with [and] I'm hoping in a year or two years that
we'll be able to move into an EV."
In the United States, Care by
Volvo has seen a 92-per-cent conquest rate.
Porsche Cars North America
reports similar figures for its
Porsche Passport program,
which launched in metropolitan
Atlanta in 2017. Eighty per cent
of Passport customers have never
owned a Porsche.
Passport allows users to swap

VOLVO GOES NATIONWIDE
Care by Volvo is the first subscription program to be offered
across the country by an automaker. Models of the S60 sedan
and V60 wagon are available,
with the Momentum trim priced
at $949 a month and the R-Design
at $1,049 a month.

Alexander Lvovich, managing
director of Volvo Car Canada,
said the automaker's
subscription service is
introducing new customers
to the brand.
P H O T O : G I A N C A R L O PA W E L E C

vehicles more often than Volvo's
program, with the average subscription lasting for three months
and a vehicle change taking
place twice a month on average.
Porsche Cars Canada confirmed
that the company is "considering
bringing such an initiative here,"
spokesman Patrick Saint-Pierre
said.

A LEASE BY A DIFFERENT NAME?
This high level of flexibility is a trait shared by Portfolio
by OpenRoad, a luxury multibrand subscription service operated by OpenRoad Auto Group,
a dealer group in metropolitan Vancouver. The program,
launched in November 2018,
currently has 16 clients paying
$2,500 to $3,500 a month to access
an inventory from nine luxury
brands that rotates seasonally.
Portfolio is used primarily by
executives and entrepreneurs
and permits up to four vehicle
changes and 2,500 kilometres of
driving a month, said Alexander
Parsons, assistant manager of
Portfolio by OpenRoad.
Care by Volvo, Parsons said, is
not a true subscription service.
"I think they've done a terrible job of launching that, especially in Canada," he said. "It's
completely inflexible. You're
locked in for a year.
"I think it gives people a false
pretense as to what a subscription actually is. ... It's an amazing short-term lease model, and
they've done a great job there. I
just wish they would actually call
it that."
But Volvo's Lvovich said the
marketplace can accommodate
"multiple forms of subscription."
"We designed Care by Volvo
for premium-car buyers interested in having a single monthly
payment that covers most of the
costs associated with a new vehicle," he said. "It offers the flexibility to change vehicles after
12 months. This is currently the
only national program of its type
available in Canada." - ANC

USMCA'S
BUMPY ROAD
For the new North American trade accord to be ratified, U.S.

President Donald Trump will need the help of a political rival with
a track record of blocking such deals. Meanwhile, Canada says it
won't back the deal with U.S. metals tariffs in place. It's a race to
seal the deal in Canada before the current session of Parliament
ends and the election campaign begins.

CANADIANS CHASING LOWER PAYMENTS

ECONOMIC DATA RELEASED IN LATE MARCH SHOWS A
pronounced shift to auto leasing from
buying, as rising interest rates affect
the payments of longer-term loans.
Leases accounted for 36 per cent
of the $7.85 billion in new loans from
auto financiers in the fourth quarter of 2018, the biggest share since
PHOTO: GREG LAYSON
before the financial crisis, says Equifax
Canada, the country's largest credit reporting firm.
"We're starting to see consumer behaviour shift to keep the
payments as low as possible," says Bill Johnston, vice-president
at Equifax Canada.

JUST HOW POPULAR IS A PORSCHE EV?

PRODUCTION CAPACITY FOR THE TAYCAN WILL BE
increased after more than 20,000 potential buyers worldwide
registered to purchase Porsche's first electric car, matching the
entire annual output initially earmarked for the four-door sedan.
"The overwhelming interest in the
Taycan shows us that our customers and fans are just as excited about
the first Porsche electric athlete as we
PHOTO: PORSCHE
are," Porsche sales chief Detlev von
Platen said in a statement. "We've therefore increased our production capacities."
"At this time, there is strong customer interest for our all-electric model, the Taycan," Porsche Canada spokeswoman Kristi
Ferguson said in an email without disclosing the number of
Canadian registrants.

HYUNDAIS RECALLED FOR SOFTWARE FIX

A "PRODUCT IMPROVEMENT CAMPAIGN" BY HYUNDAI
Canada means the recall of 255,370 vehicles to update software
that detects potential problems before an engine failure.
Current engine-control-module software
might not notify owners of potential engine
failures before they happen, Transport
Canada says on its website. An engine failure would cause a sudden loss of power
with an inability to restart, the safety agency
warns. A sudden loss of engine power could
increase the risk of a collision.
PHOTO: REUTERS
The affected Hyundai vehicles - model
years 2011 through 2018 - include the Santa Fe Sport and
Tucson utility vehicles and the Sonata sedan.

TESLA STORES STAY OPEN, BUT PRICES RISE
IN A BID TO KEEP ITS STORES FROM CLOSING, TESLA
announced in March that it would raise its prices by about three
per cent on all vehicles in inventory, worldwide. The increase
took effect at midnight April 1.
In late February, CEO Elon Musk announced plans to close
most of the automaker's bricks-and-mortar stores as part of a
cost-cutting move, but subsequently reversed that decision.

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Automotive News Canada - April 2019

Table of Contents for the Digital Edition of Automotive News Canada - April 2019