Automotive News Canada - July 2020 - v2 - 10

OPINION

07.20

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Breakout of retail New product is the only cure
numbers is crucial for FCA plant in Windsor
JEFF MELNYCHUK

EDITOR-IN-CHIEF

WHEN THE PANDEMIC BEGAN TO HIT CANADA WITH RETAIL
closures, I'm sure my face went white as a ghost's.
Stay inside. Wash your hands a lot. Sanitize everything. Don't bring
your shoes in the house. And, whatever you do, don't touch anyone or
anything they've touched.
Life came to a screeching halt and our April Page 1 headline
reflected that: "Sales prediction: -80% in
April, -80% in May, -60% in June.
Properly analyzing
The source was Scotiabank, which was
dealership financial going off presumptions that the country
be mostly locked down for those
health means peeling would
three months, and perhaps longer. But who
off retail sales from really knew at the time.
"It's become more of a guesstimate,"
the total number.
said
Scotiabank's Rebekah Young. "Forget
Somehow.
auto, nobody's ever lived through a global
crisis like this."
Indeed April's sales were down about 75 per cent, but things
appeared to be looking up. Restrictions were easing and instead of
sales being down 80 per cent in May, they were down 44 per cent.
It was right around the middle of May on a visit to my Audi store for
service that I first heard a much different tune. Business wasn't all that
bad, they said, and people were still taking delivery of cars.
"But don't you know sales were down 74 per cent in April?"
Without seeing the dealership's numbers, I thought the person with
the mask was just feeding me a line, or maybe he was just uninformed.
But then I was hearing that other dealers were doing OK and by the
latter part of June, Hyundai's
Don Romano was telling one of
our reporters that the brand's
retail sales were actually tracking ahead of last year's.
No. Way.
That had to be a mistake,
Sales predictions in April's
but as it turns out, we were
Automotive News Canada.
talking about two separate
Fleet sales, which are being
things: Sales including fleet
hammered by travel restrictions,
(total) and sales with no fleet
make up about 20 to 25 per
(retail), which explains why I
cent of the market, according to
was hearing that dealers might
Scotiabank's Rebekah Young.
be better off than we thought.
True enough, in a drill-down of June sales, in a story that begins on
Page 1, it became obvious the impact of fleet on the overall numbers.
Sales were down 80 per cent year over year at the height of the pandemic, Young said, and remain down about 60 per cent.
"Nobody's traveling and a lot of rental business comes from airlines. That's going to be a slow recovery."
Because of thin margins, dealers are less affected by drops in fleet
sales, and retail sales provide greater opportunity for the dealerships to
make money on F&I products as well as servicing. And relationships
can be built for repeat business.
In terms of dealer health, retail matters most and the numbers
from the automakers should break those out.
Young says there's still pent-up demand from the lockdown and
that governments haven't provided any economic stimulus yet, and
industry analyst Dennis DesRosiers says automakers will be putting billions - with a "b" - into incentives.
If all this comes together at the same time, retail might be in for a
heck of a second half of the year, no matter what the overall numbers
say. - ANC

EST. 1925

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

DAVE VERSICAL, CHIEF 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
GRACE MACALUSO, MANAGING EDITOR, 226.787.0441, gmacaluso@crain.com

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Karen Rentschler, 313.446.6031
Email: Krentschler@crain.com

JUST AS ONTARIO BEGINS TO SEE LIGHT AT THE
in a new platform to build the new Chrysler
end of the pandemic tunnel, one industrial city is
Pacifica alongside the venerable Dodge Grand
bracing for another, major economic hit.
Caravan. The automaker solidified its role as the
On July 13, Fiat Chrysler Automobiles ended
city's biggest private-sector employer when it subthe third shift at its Windsor assembly plant,
sequently went on a hiring spree that brought the
affecting about 1,300 well-paying jobs in the city
total hourly work force to almost 6,000.
that borders Detroit.
The loss of the third shift - a mainstay since
The shift's demise had been looming for more
1993 - followed FCA's decision to end the long
than a year, but it comes amid an
run in May of the lower-priced
unprecedented crisis that has
Grand Caravan. But the overriding reason for the production cut
rattled consumers, said Rakesh
MANAGING EDITOR
is tied to falling minivan sales,
Naidu, president and CEO of the
with the segment shrinking to
Windsor-Essex Regional Chamber
GRACE
3.2 per cent of the new-vehicle
of Commerce.
MACALUSO
market in 2019 from 16.8 per
"With COVID, consumer confidence has been shaken," said
cent in 1999, according to
Naidu. "It makes the impact
DesRosiers Automotive
COMMENT
more painful."
Consultants.
The local unemployment rate
While the pricier Pacifica has
of 15.2 per cent in June was among the highest
been a hit with auto reviewers, sales have been
in the country and exceeded the national level of
lackluster. The Grand Caravan outsold the Pacifica
12.3 per cent.
in both Canada and the United States in 2019 -
And while the world
150,030 to 101,436, according to the
awaits the developAutomotive News Data Center in Detroit.
The three-shift
ment of a vaccine, it
Last year, FCA launched the Chrysler Voyager
will ultimately take new
to replace lower Pacifica trim levels in the United
operation at
to restore the
States, and while it hasn't announced similar
Windsor Assembly product
Windsor plant to
plans for Canada, it's unlikely the automaker will
revived the local
health.
give up economy-minivan buyers north of the border.
This auto town,
economy.
FCA, meanwhile, says it's committed to the
home to FCA Canada's
segment, citing plans to launch an all-wheel-drive
headquarters as well
Pacifica in the 2021 model year.
as its storied minivan plant, faced a long, grinding
Regardless, a new product - sure to be the
climb out of the 2008-2009 recession. Things
subject of upcoming Unifor-Detroit Three contract
started to turn around slowly after 2010 as the
talks - is key to returning the third shift to the
recovery in the North American auto industry
plant and mitigating the damage to an economy
began to take hold. But the local economy soared
already under stress. - ANC
after the automaker invested more than $1 billion

In GM's N.A. boss, Unifor sees
an 'ally' before bargaining begins
NOT LONG AFTER CANADIAN
Steve Carlisle was named head
of General Motors' North
American operations, Unifor
President Jerry Dias took the
words right out of my mouth.
He called the promotion
"nothing but positive news for
Canada."
I couldn't agree more.
While I don't ever expect a
Canadian to land
the top spot at
any of the Detroit
Three in the near
future, Carlisle's
perch might be
as lofty as
Carlisle
someone from
north of the bor- starts his
new job
der could ever
Sept. 1 as
climb.
head of
And his proGM North
motion - and
America.
official start date Will this
- couldn't
help the
come at a better auto
time. Carlisle is
industry in
set take the
Canada?
North American
FILE PHOTO
reins Sept. 1.
Six days later, on Labour Day,
we can expect Dias to name his
company's target for the union's
collective-bargaining pattern.
Which automaker Dias and
his bargaining committee pick
to negotiate with first is anyone's guess. But, having Carlisle
in his new and presumably

DIGITAL AND
MOBILE EDITOR
AUTOMOTIVE
NEWS CANADA

GREG
LAYSON

COMMENT
influential position can't possibly
hurt Dias and his position.
Back in May 2018, just after
Carlisle was first appointed head
of the Cadillac brand - after
leading GM Canada from
November 2014 through April
2018 - Dias called him "an
ally."
Well, the union boss is certainly going to need one on the
other side of the table this
go-round because, safe to say,
there will be no love lost
between the union and General
Motors. It has been a tumultuous few years in Canada.
Unifor struck the automaker's CAMI plant in Ingersoll,
Ont., for a month in 2017. After
that, GM ceased assembly at
the end of 2019 at its historic
Oshawa, Ont., plant, ending
more than a century of auto
assembly in the city. The two
weren't necessarily related, and
Dias made sure to note that he
thought Carlisle had little if anything to do with the closure

decision.
"I don't hold him responsible. That decision was made in
the upper echelon" of GM management," Dias said when
Carlisle was leaving Canada for
Cadillac in 2018.
Will Carlisle be seated at the
table when contract talks
begin? Who knows. But one
has to assume the potential is
there for him to play a key role
behind the scenes.
Then again, anything can
happen. Dias once said the late
Sergio Marchionne stepped in
to facilitate past talks with Fiat
Chrysler Automobiles.
Having Carlisle head North
America is like having an MP
from your riding in the federal
Cabinet; he or she has the ear
of the
prime minCarlisle's new
ister if it's
role gives him
needed.
"Steve
a direct line
Carlisle is a
to GM's corCanadian,
and I think
ner office.
that was
helpful,"
Dias said in 2018. "I don't think
he wanted to see Oshawa, with
its rich history, closing under his
watch. Behind the scenes, I
think he was an ally."
And that's exactly what
Unifor will need come
September. - ANC

Automotive News Canada - July 2020 - v2

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