Automotive News Canada - February 2023 - 15

* FEBRUARY 2023
15
Rising interest rates might help
the Bank of Canada lower inflation,
but " in that envelope, you've
seen some companies collapse, and
[automakers] have to find someone
else to do the work. "
DEEPER DIVE IN TALENT POOL
Look for the industry to continue
making strides at improving
diversity,
equity and
inclusion.
GAC recently
began a
DE&I committee
that
will explore
ways to tap
into underrepresented
communities,
Adams
said.
Volpe: Automakers
need to be aware
that many smaller
suppliers are just
getting by.
FILE PHOTO
" We have
an undeveloped
talent
pool that
needs to
be mined,
because one
thing we
don't have
enough of
is skilled and talented labour. We
need to find new ways to bring people
into the industry, to make it
compelling. "
FOR DEALERS, RISING INVENTORIES
Canada's retailers can expect
robust profits to continue at least
through the second quarter, said
Robert Karwel, senior manager of
J.D. Power's Power Information
Network in Canada.
Dealers are " still making a lot
of money in the current market. I
don't see that changing until the
second half - when Canada starts
getting a bit more inventory, a bit
more choice - when things might
loosen up.
" To be sure, it's a cooling off,
it's not a cratering, of the market, "
Karwel said.
Of note, cash deals are rising: 22
per cent in December (slightly less
than 20 per cent for 2022) against a
pre-pandemic level of 12 to 14 per
cent.
Higher borrowing costs and
higher trade-in values are factors,
said Karwel.
" The change in trend here is that
Canadians are self financing more
often than ever before, certainly at
least since the 2009 recession timeframe. "
As
a result, leasing was down.
Dealers will shift their revenue emphasis to
parts and service from sales, said Brian Lowes,
dealer principal of Mercedes-Benz Winnipeg
and Mercedes-Benz Kitchener-Waterloo.
SUPPLIED PHOTOS
" Our lease rate for [calendar
2022] was about 24 per cent, instead
of the nearly 30 per cent " before
2020.
As well, he said, more consumers
are financing for longer terms, such
as 84 or 96 months. Karwel said
this appears to be driven by more
mainstream customers crossing
over into luxury models because of
a lack of availability of more mainstream
vehicles.
" For those customers, 84
[months] is the norm, " he said, " so
they're taking some of those habits
into the luxury space. "
The inventory shortage, which
has led to long waits for delivery,
means some vehicles being delivered
now were ordered long before
interest rates began to climb.
The issue, said
Karwel, is that
although rates are
now higher, those
deals were locked
in at lower rates
offered by automakers.
Karwel
expects
that despite pentup
demand for
vehicles, automakers
will
increase incentive
spending to try to
blunt the impact
of higher interest
rate.
Karwel: As
inventories
increase,
there will be a
" cooling off,
of the market.
FILE PHOTO
Light trucks, including crossovers,
accounted for about 85 per
cent of sales in 2022, said Karwel,
and the segment will likely carve
out a bigger share this year.
SERVICE IS THE NEW SALES
Brian Lowes, dealer principal
of Mercedes-Benz Winnipeg and
Mercedes-Benz Kitchener-Waterloo,
said that online sales and the shift
to order-taking will change hiring
practices and compensation.
" It has typically been sales driving
the high-paying jobs. I think
that's going to change. "
He expects that dealers will place
more emphasis on parts and service
as key drivers of revenue, then pay
those employees accordingly.
" Service has always been an
important retention tool, but I
think it's going to become more
and more that way as the sales process
becomes more standardized, "
Lowes said. He expects the key role
of sales staff to become " holding the
deal together " over the four to six
months it could take to deliver vehicles
to customers. -ANC
Dimitris: Amid
new options and
powertrains,
demand for
sedans like the
Corolla remains
strong.
SUPPLIED PHOTO
Dimitris: Canadians fill up on
Toyota's 'bread and butter' vehicle
The Corolla knocked the
Honda Civic off its sales
perch amid significant
supply challenges in 2022
By GREG LAYSON
DIGITAL AND MOBILE EDITOR
AMPLE INVENTORY OF THE TOYOTA
Corolla - and a diverse lineup - are credited
with ending the Honda Civic's quarter-century
reign as the best-selling car in Canada, but it's
too soon to declare whether it's the beginning
of a trend.
Toyota sold 33,096 Corollas in 2022,
surpassing Honda's 29,722 Civics.
Corolla sales fell 17 per cent compared
with 2021 and Civic sales were off 31 per
cent.
The Corolla " remains our sort of
bread-and-butter, go-to vehicle for so
many Canadians, " Cyril Dimitris,
Toyota Canada vice-president of sales
and marketing, said on the Jan. 20
Automotive News Canada Podcast.
" When we hear that it's the No. 1-selling
sedan or passenger car, we're very
gratified by that. "
Sam Fiorani,
vice-president of
" We've done a great job at keeping [the
Corolla] refreshed, " said Toyota Canada's
Cyril Dimitris. The Corolla is offered in
sedan and hatchback body styles, and with
a hybrid and all-wheel drive options. The
sporty GR, pictured, is the latest model.
PHOTO: TOYOTA
SCAN
TO LISTEN
global vehicle forecasting
at U.S.-based AutoForecast
Solutions, said the Corolla
offers more choice for consumers
than the Civic.
" A wider range of models,
including one with a
lower base price than any
Civic, and an [all-wheeldrive]
model, makes the
range more appealing to
Canadian buyers. "
The Corolla base price
is $27,564, including shipping,
while the base Civic
is slightly more at Honda's
all-in price of $28,746.
Toyota offers the Corolla sedan in eight trims,
as well as a hatchback and a sporty GR model.
The Civic comes in four trims along with a
hatchback and the performance Type R.
" I personally think we've done a great job at
keeping [the Corolla] refreshed, " Dimitris said.
" And that means new powertrains, different
powertrains, new features.
" We've added all-wheel drive to the vehicle.
It comes in a hybrid. It comes in new body
styles. Most recently, we've injected some energy
into the Corolla brand with GR Corolla. "
With that kind of selection, " we feel we're
appealing to a broader and broader audience.
And we feel there is a Corolla for just about
anybody. "
REDUCED CIVIC PRODUCTION WAS A FACTOR
It wasn't Toyota Canada's goal to target
the Civic, " especially in this environment of
supply chain disruptions and challenges, "
Dimitris said. " It's about trying to eke out
every product we can sell, every vehicle we
can sell and get it to customers.
Civic production has been harder hit by
the ongoing global semiconductor shortage,
Fiorani said. Combined production of the Civic
in Canada, Japan and the United States fell
23 per cent in 2022 compared with 2021. The
31-per-cent decline in Civic sales, however, is
so low that production numbers can't be the
only reason sales suffered, Fiorani said.
Meanwhile, combined production of the
Corolla in Japan and Blue Springs, Miss., rose
slightly in 2022, with Blue Springs output up
3.4 per cent.
In a statement, Honda Canada said that
problems spanned beyond microchips and that
it faced " significant supply chain, transport,
parts availability and COVID-related delays
more so than other OEMs. "
The automaker continues " to make supply
chain investments and [is] working
closely with our partners globally
to resolve the issues that impacted
our ability to build Civics at the rate
consumers were looking for in 2022, "
Honda spokesman John Bordignon
said. " We look forward to renewing
the competition for top spot this year. "
Disruptions have " created a challenge
for all industry members, " said
Toyota Canada's Dimitris, although
" the supply chain continues to stabilize
and get more predictable.
" Corolla was one of the vehicles
in our lineup where we were able to
maintain relatively better supply versus some
other models. "
Dimitris discussed a range of issues affecting
the industry during the podcast. The interview
was edited for clarity.
IN 2022, LESS THAN 20 PER CENT OF NEW
VEHICLES SOLD WERE PASSENGER CARS. WHERE
DOES TOYOTA STAND WHEN IT COMES TO SEDANS?
We feel there's still strong public demand in
this space and that there is a
need to be fulfilled, and we've
stayed in those markets. The
Camry and Corolla have been
strong entries that provide significant
volume to us. With the
diversification of powertrains,
adding hybrid options and all-wheel drive in
those offerings in recent years have been good
tools to sustain demand in those segments.
WHERE DOES THE TOYOTA CROWN FIT INTO
THE CANADIAN LINEUP?
Crown is our new segment-redefining flagship
sedan. It's unique in that it's going to
be 100-per-cent all-wheel drive, 100-per-cent
electrified, with two different hybrid powertrains.
It has a higher driving height but
great performance on the vehicle, with a
very spacious premium interior. It fits where
Avalon played, but with a bolder design,
more premium interior and more performance-oriented.
So it's an interesting niche
in that premium sedan market.
WHAT IS TOYOTA ASKING FROM ITS DEALER
NETWORK IN CANADA WHEN IT COMES TO
PREPARING FOR ELECTRIC VEHICLES?
We look at what we need to do to properly
service our customers. And that is charging
infrastructure but also making sure things
like the technical base and after-sales setup are
there to properly service vehicles. But we are
tied to our product and sales plan moving forward
and making sure that those regions that
are mostly affected are the ones accelerating
their investment in the various technologies.
In 2022, about 26 per cent of our product that
we sold was electrified. We're looking to grow
that to about 40 per cent in 2023.
WHAT IS TOYOTA CANADA'S STAND ON THE FEDERAL
SALES MANDATE FOR ZERO-EMISSION VEHICLES?
We believe in a diversity of powertrains to
be environmental leaders. [Battery-electric
vehicle technology] is not the only answer. Our
group continues to work with government as
to where we feel those regulations could be
improved, but we will work with wherever
those regulations land. - ANC
Automotive News Canada - February 2023

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