Automotive News Canada - November 2019 - v2 - 22

* N O V E M B E R 2 019

Flexible compensation lets staff choose
what you get out of it," Carver
said. "They see it as a normal
job, not as a career.
"Typically, a good salesperson would say, 'Why would I
want to work in that environment?' "

CONTINUED FROM PA GE 1

I just stay with straight commission?'
"For us, it's not either-or.
We want to give them that flexibility."
The costs are about the
same as those incurred
under the previous commission-based model, Gubasta
said. "We have to make sure
we stay within the pay structure," she said.

'REAL MONEY' IN COMMISSIONS
One dealership group is
using a hybrid approach to
drive the recruitment of new
staff who might be scared off
by a commissions-only structure.
Zeyad Rafih, vice-president
of Windsor, Ont.-based Rafih
Auto Group, switched from a
commission structure to salary plus volume in 2014 but has
since backtracked. Rafih Auto
instead has moved to a system
where sales staff are paid salary plus a percentage of their
sales to start but transition
after six months to straight
commission.
"Anybody who's any good
only ever wants to be paid
straight commission," he said.
"Commission is where you
make the real money."
Rafih said his top sellers move about 40 to 50 cars
a month and annually earn
$200,000 to $300,000 in commissions, which are based on a
percentage of the dealership's

PROFIT PRESSURE

Zeyad Rafih switched his
Windsor dealership from
commissions to salary plus
volume in 2014, but now
pays sales staff a salary
plus a percentage of sales
to start and transitions after
six months to a straight
commission. F I L E P H O T O

profit margin on each deal.
Rafih Auto Group owns and
operates 20 dealerships representing 30 brands in Canada
and the United States.
At Winnipeg-based Crown
Mazda, General Manager Mark
Carver said he pays sales staff
a straight commission. It's the
best way to give employees an
incentive to prospect for new
business, rather than wait for
customers to walk in the door
or click through on the website, Carver said.
During slow months, the
dealership will continue to pay
sales staff, but those earnings
come out of future commissions, he said.
"If you offer someone X
amount a year, I'm not sure

While Ford of ESITrends
said shrinking margins - on
which commissions are based
- are a major factor in moving to a salary system, Rafih
argued tighter profits make it
more important to have sales
staff hustling for new and
repeat business.
That's a key reason that
Carver's Crown Mazda pays
a flat commission per sale.
While hard work earns more
sales and more commissions,
grinding a higher price out of a
customer won't, he said.
"It makes it more pleasurable for the consumer," Carver
said, because the sales staff
can focus on a smooth transaction.
Gubasta said a key benefit
of her switch to a salary is less
infighting over deals on the
sales floor. She doesn't think
it has made any difference in
staff commitment to behindthe-scenes tasks that don't
immediately lead to sales.
"Every activity they need
to perform is part of the sale,"
Gubasta said. "Not my job ...
everything is part of the job.
Whatever it takes to make sure
we take care of the customer."
- ANC

Little worry over FCA plants due to PSA merger
CONTINUED FROM PA GE 3

COMPLEMENTARY PORTFOLIOS
In Canada, however,
there appeared to be no such
fear. Unifor President Jerry
Dias contrasted the PSAFCA merger with the 1998
DaimlerChrysler union.
Unlike the latter, Dias
said the vehicle portfolios of FCA and PSA complement each other so, it makes
sense from cost-sharing and
research-and-development perspectives.
"What Peugeot builds is
for the European market, and
what we make is for the North
American market," Dias said.

Unifor represents more than
10,000 hourly workers at FCA's
Brampton, Ont., and Windsor,
Ont., assembly plants.
Vic Fedeli, Ontario minister of economic development, job creation and trade,
said he and Premier Doug
Ford have talked with FCA
executives since the merger
was announced and said they
would remain in touch with
FCA as things progress.

QUESTIONS OF SCALE
"We have been informed
that Ontario should remain
largely unaffected by [the
merger]," Fedeli said. "The
message I got was that this is

all about scale. As we see companies worldwide shifting, it
will be all about scale."
Requests for comment from
the office of Navdeep Bains,
the federal minister of innovation, science and economic development, were not
returned.
It was not clear at press
time how the merger would
impact the Peugeot brand's
plans to return to North
America by 2026. PSA has
said it would ship vehicles to
North America from Europe
or China. - ANC
- With files from Rob
Bostelaar.

New investment in Oakville unlikely until after U.S. election
CONTINUED FROM PA GE 3

product options for Oakville during 2020 talks
would likely come down to what shakes out
in the United States. In a deal with the United
Auto Workers reached on Oct. 30, Ford agreed
to invest US $6 billion ($7.89 billion) in its
American plants through 2023, potentially limiting options for Oakville.
Politics could also come into play, as 2020
Ford-Unifor talks are set to take place in
the weeks leading up to the United States'
November presidential election.
"It's not a great time to try to secure investment announcements in a country that isn't the
U.S.," Dziczek said. "But I think it's likely to
get lost in some of the noise in what will probably be a very heated campaign. And Ford does
have the largest share of U.S. autoworkers and
the largest share of their production in the U.S.,

so I wouldn't know if they would get dinged for
that. But forecasters don't see any product out
there."
McCabe said Ford is unlikely to agree to a
major investment in Oakville during 2020 talks,
though he said the plant is not in significant
danger of closing.
"No one's going to talk about investing outside of the United States until we get through
our next election cycle," he said. "Negotiations
next time with Unifor are going to be solid.
[Ford will] say, 'We're humming along. We have
Edge and we have the Nautilus, so we're good
here.' But the next one is going to be cloudier
because we see the Nautilus exiting."
He said the most likely product for Oakville
at that point could be an electrified Edge or
a new electric vehicle based on the Edge, but
Stoneley declined to say if Ford plans on introducing such a model to the lineup. - ANC

October sales show
signs of 'strength'
'Bottomless
appetite' for
SUVs and trucks
continues

shows "some modest
strength" in the sales figures,
especially when compared
with data from October 2018,
which the bank said "stood
out as the only [relatively]
decent month in an otherwise
By GREG LAYSON
very challenging fall of 2018."
D I G I TA L A N D M O B I L E E D I T O R
Automakers remain on
pace to sell 1.94 million new
EVEN THOUGH NEWvehicles this year, according
vehicle sales declined slightto Scotiabank.
ly in October - an estimat"Market fundamentals
ed 0.9 per cent - analysts say
otherwise remained solid,
the month showed signs of
namely job and wage growth
"modest strength" and "resilremain strong, housing mariency."
kets are surging again, and
Automakers sold an esticonsumer credit growth
mated 160,969 new vehicles
remains healthy," Scotiabank
last month, according to
Economics said in its monththe Automotive News Data
ly Auto News Flash bulletin.
Center in Detroit.
David Adams,
Monthly sales totals
head of the Global
are estimates now
Automakers of
that the Detroit
Canada, is also optiThree automakers
mistic.
have turned to quar"Light-vehicle
terly reports.
sales are over 1.6 milDesRosiers
lion vehicles - which
Automotive
used to represent a
Consultants in
very good total calenToronto estimated
Robert Karwel: dar year sales volume
Consumer
sales to be down 0.1
- so things are slowdemand for
per cent to 160,216
ing down, but it is not
utilities and
units.
drastic," Adams said
trucks is
"I was surprised
in a statement.
"good news"
at the resiliency
Canadian new-vefor car makers hicle sales have fallof sales," Robert
despite
Karwel, senior
en in 19 of the last
October's
manager of J.D.
20 months, accord0.9-per-cent
Power Canada's
ing to the data censales dip.
Power Information
tre. Despite an initial
FILE PHOTO
Network
report of a 0.1-perAutomotive Division, said
cent decline in August, sales
in an email. "It was a pretty
that month were actually
good month."
up by 0.5 per cent once the
Scotiabank said estimates
Detroit Three reported quaralso suggest fleet sales were
terly numbers, which led the
flat in October, "therefore
data centre to adjust its originot providing much offset to
nal August total.
the decline in retail perforTRUCKS STILL RULE SALES
mance."
The financial institution
Light trucks accounted for
has in the past suggested fleet more than 76 per cent of all
sales can be used to prop up
new-vehicle sales in October.
slumping retail sales making
"That light trucks are still
the overall industry appear
running away from car sales,
healthier. That was the case
and carrying our industry is
in February and March when
amazing; there seems to be a
Scotiabank noted "abnormalbottomless appetite for utilly high fleet purchases."
ities and trucks in Canada,"
Automakers have now sold Karwel said. "I would say that
an estimated 1.67 million new
is pretty good news for the
vehicles through the first 10
manufacturers, as these vehimonths of 2019, down an esticles command higher prices
mated 3.8 per cent year-overand more profit, so even in
year, according to the data
a down market we are doing
centre.
pretty well."
Scotiabank said October
On average, a light truck
transacts at about $10,000
more than the average passenger car, Karwel said. The
average transaction price for
a new light truck stands at
Compared with the
$37,885.
same month a year ago
Overall, the average transaction price through three
Honda Fit +252%
quarters of 2019 now stands
Honda HR-V +260%
at $35,284, up 6.8 per cent over
Nissan Kicks +159%
Hyundai Sonata -69%
the first three quarters of
Nissan Titan -73%
2018. At the same time, incenNissan Leaf -68%
tives per vehicle through
three quarters are down 12.4
per cent to $5,531 each.
J.D. Power says the drop
Range Rover Evoque +115%
in incentive spending could
Kia Niro +76%
potentially save automakers
Toyota Camry -45%
$1.4 billion by December.
Subaru Forester -29%
- ANC

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Automotive News Canada - November 2019 - v2

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