Automotive News Canada - January 2023 - 25

* JANUARY 2023
25
2023 sales factors: Cost, interest rates, recession
CONTINUED FROM PAGE 1
Automakers have nearly doubled their
rates to anywhere between 4.99 and 6.99
per cent, depending on the length of the
loan, since the Bank of Canada began
raising its overnight rate.
These increases present a potential
affordability problem, warned Robert
Karwel, senior manager, automotive
practice Canada, at J.D.
Power.
The average transaction
price through
November 2022 stood
at $45,000, up six per
cent from 2021's record
ber? No one knows, "
Karwel said. The average
monthly payment for
full-size trucks alone is
nearly $1,000. " We've got
a lot of high-end trucks
out there. "
ANALYSIS
Q4 2022
STATS/P28-29
high of $42,500. While last month's figures
weren't available, " my gut is telling
me, right now, in December, we broached
$50,000 for the first time in Canada, "
Karwel told Automotive News Canada in a
interview on Jan. 9.
LONGER LOAN TERMS
The average monthly car payment now
stands at $700, and that includes financing,
and loan and lease payments on all
new vehicles sold in Canada.
" How much elasticity is in that numTo
keep paying top dollar,
more buyers are opting
for 84- and 96-month
financing. The latter now
makes up 10 per cent
of the market, up from
six per cent before the
COVID-19 pandemic.
Canadians were able to
afford high prices when
interest rates were " stupid
low, " Karwel said.
" We could handle the
pricing because prices
were ameliorated by low
interest rates. Our conKarwel:
" Without
more
incentive
money
to
offset central
bank actions
to curb
inflation, we
might hit
a payment
affordability
crisis. "
FILE PHOTO
cern for the new year is payment affordability
will be greatly affected because
automakers are still spending near-record
lows on incentives. "
He said automakers are only offering
about five per cent of the MSRP in incentives.
In 2019, it was about 15 per cent.
" Without more incentive money to offset
central bank actions to curb inflation,
we might hit a payment affordability crisis, "
Karwel said. " The key context is not
falling off a cliff, but cooling off.
" How much pricing and payment ... do
you think we can keep driving upwards
as we go into a recession this year? "
Shahin Alizadeh, CEO of the 11-store
Downtown Auto Group, said incentives
are starting to come " in dribs and drabs. "
" It's a different market " today than
even a year ago.
" The significant savings customers
had, based on [low] interest rates because
they were borrowing from credit lines or
OEM captives, have disappeared now, "
he said.
He called today's buyers more cautious
and said they're opting for fewer bells and
whistles to keep costs down.
WORST SALES YEAR SINCE 2009
The 1.50 million light-duty vehicle sales
in 2022 were less than the 1.55 million sold
in pandemic-hampered 2020. And it was
the worst sales total on record since 2009,
when automakers sold just 1.46 million
amid the Great Recession triggered by the
financial crisis.
Still, most dealers enjoyed financial
success in 2022.
Without providing a figure, Karwel
said dealers posted record profitability in
2022.
" Dealers are making very good
money, " he said.
Alizadeh said 2022 was good for him,
but not as good as 2021.
" I think the industry celebrated very
surprising financial results. Margins
were high, inventory was tight, the
used cars were strong, " he said of 2021.
" Twenty twenty-two was not the same.
We held our own in 2022, we were slightly
off of 2021, and that was a bit surprising
because we expected to see a bit more
inventory. "
Hyundai Canada CEO Don Romano
agreed.
The average transaction price through November 2022 stood at $45,000, up six
per cent from 2021's record high of $42,500. Will incentive spending have to rise
to keep sales afloat in 2023? PHOTO: GREG LAYSON
" Our dealers had a record year for profitability.
I wouldn't say it's excessive. It's
where it should be. I don't think there are
any Hyundai dealers out there who would
tell you they're disappointed with 2022 in
respect to profitability. They sold fewer
cars and made more money. That's a good
combination. "
STELLANTIS, GM CANADA POST 2022 GAINS
Hyundai sold 112,559 new vehicles,
down 11.1 per cent.
" That said, I would like to have more
volume, a lot more volume, " Romano
said, " But I want to see volume grow at
a reasonable pace. Six months ago, [our
dealers] were screaming for more. But
now they're asking for more. "
That's because higher interest rates
mean it's more expensive for dealers to
carry more inventory, even though it's
still needed.
" High dealer gross and low incentives
is telling you there's still a fair amount of
demand out there, " Karwel said.
" The inventory situation is normalizing
and improving for some brands and
there's a continuation of
very dismal inventory
and supply issues with
another brand, " said
Alizadeh, who declined
to elaborate. He said
Detroit Three inventory
" is much less of an
issue. "
Romano:
Six months
ago, dealers
were
screaming
for more
stock; now
they're
just asking
for more
inventory.
FILE PHOTO
Stellantis' 2022
sales were up 4.8 per
cent to 169,799, while
fourth-quarter sales were
down two per cent to
38,568. Ford's 2022 sales
of 240,325 vehicles outpaced
all automakers,
but that was down 1.3
per cent from 2021. Its Q4
sales fell 9.7 per cent to
54,841.
General Motors had
the greatest percentage increase for 2022:
4.8 per cent to 228,003 vehicles. The fourth
quarter was up a whopping 41.6 per cent
to 55,724 vehicles.
" Improving inventory levels, along
with high customer demand for our product
lineup, were key contributors to our
success, " Sandor Piszar, vice-president,
sales, service and marketing for GM
Canada, told Automotive News Canada in
an email. - ANC
M-B global network of 10,000 chargers begins here
In North America
alone, the company
said the investment
will total just over
one billion euros -
about $1.4 billion -
over seven years
By DAVID KENNEDY
T ORONTO BUREAU CHIEF
MERCEDES-BENZ GROUP IS
planning a global network of
high-powered charging stations
to help its customers and owners
of other electric vehicles get
on their way in minutes instead
of hours.
The automaker announced at
CES in Las Vegas a road map for
building more than 10,000 fast
chargers across North America,
Europe, China and other markets
by the end of the decade.
In North America alone, the
company said the investment
will total just over one billion
euros (about $1.4 billion), spread
over the next seven years.
Mercedes-Benz aims to have
an all-electric vehicle lineup
across its key markets by 2030,
but to accelerate the transition
to EVs, company CEO Ola
Källenius said it must ensure
the " charging experience keeps
pace as well. "
" Our customers deserve a
compelling charging experience
that makes electric vehicle ownership
and long-distance travel
effortless, " he said in a release.
" We won't take a wait-and-see
approach for this to be built. "
Källenius said the new
charging network is designed to
become " another differentiator "
for Mercedes-Benz customers,
as well as a potentially valuable
asset for the company.
The company will begin building
stations in Canada and the
United States this year, following
up with chargers in other
global markets throughout the
2020s.
In North America, MercedesBenz
has partnered with EV
infrastructure company
ChargePoint, and renewables
company MN8 Energy to build
out the charging network.
MN8 is based in New York and
ChargePoint is headquartered in
California.
Across Canada and the United
States, Mercedes-Benz is targeting
400 fast-charging hubs that
will include 2,500 individual
charge points by 2027. Most stations
will be located along major
traffic arteries and at retail locations
as well as at MercedesBenz
dealerships, the company
said. It would not disclose what
portion of the chargers would
be in Canada versus the United
States.
The automaker said responsibility
for the network will fall
to its Mercedes-Benz Mobility
division, which already oversees
several other charging ventures.
Access to the network will
be open to all EV drivers, but
Mercedes-Benz customers will
get preferential treatment.
Among other benefits, those in
a Mercedes EV will have access
to a reservation function, which
the company said will mean " no
waiting " for its customers.
Renderings of the planned
charging hubs show a gas station-like
environment with
series of chargers situated
under canopies. Mercedes-Benz
said most of the stations will
have four to 12 charging ports,
with some in high-traffic locations
having as many as 30 fast
chargers. The company plans to
prioritize sites with food outlets
and restrooms nearby to give
customers the " best possible
charging experience. " - ANC
" Our customers deserve a compelling charging experience
that makes electric vehicle ownership and long-distance travel
effortless, " said Mercedes-Benz CEO Ola Källenius in a release.
ILLUSTRATION: MERCEDES-BENZ
Automotive News Canada - January 2023

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