Automotive News Canada - June 2023 - 32

32
* JUNE 2023
May sales solid and may last - or may not
Vehicle demand is strong
and output is increasing,
but inflation and high
interest rates are troubling
By GREG LAYSON
DIGITAL AND MOBILE EDITOR
AS 2023 APPROACHES THE MIDWAY
point, it appears there are as many reasons
for optimism about new-vehicle sales
as there are for pessimism for what lies
ahead.
North American production is ramping
up, demand remains high, and vehicles
sold at a faster pace in May compared
with April, according to J.D. Power
Canada.
Scotiabank
Economics, however,
issued a series of warnings
in its June 7 Global
Auto Report.
Karwel:
" Cautiously
optimistic. ...
I think we'll
sell more
vehicles
this spring
and indeed
this year in
Canada. "
FILE PHOTO
" Sticky core inflation,
along with still-tight
labour markets and
activity in the housing
market picking up, pose
headwinds, " the financial
institution said.
The statement came
minutes before the
Bank of Canada raised
the overnight lending
rate by 25 basis
points to 4.75 per cent,
the highest it has been
since 2001.
New-vehicle sales were up about 13.5
per cent in May compared with the same
month a year ago, according to estimates
by DesRosiers Automotive Consultants
(DAC). It said automakers sold an estimated
160,000 units, compared with 140,725 in
May 2022.
'RETAIL VELOCITY IS STILL QUITE FAST'
The number of days it took for a vehicle
to turn in May stood at 41, slightly less
than April's 43 days.
" While we've been slowing down for
the past six months, this retail velocity
is still quite fast compared to historical
norms, pre-COVID, or 60 to 75 days to
turn [in 2019], " said Robert Karwel, senior
manager of the automotive practice at J.D.
Power Canada.
J.D. Power is " cautiously optimistic "
about the final seven months of the year,
Karwel said. " Indicators are generally
pretty good so far, and I think we'll sell
more vehicles this spring and indeed this
year in Canada, " he said.
Scotiabank forecasts 1.7 million sales
in 2023, unchanged from a month ago. It
expects 1.83 million in 2024 " as inflation
comes down
and rates
pressures
ease. "
MAY SALES STATS/P33
" It all lends credence to the unmet-demand
theory, " Karwel said.
Retailer performance remains " quite
good, with high margins [and] high F&I
sales, " he said.
Trade-in values and down payments
remain high, offsetting the rising interest
rates at banks and the higher rates
currently being offered by automakers
through their captive lenders, Karwel
said.
Demand for brands with a lot of bodyon-frame
product - typically large pickups
and SUVs - is slowing because
monthly payments and interest rates are
rising, he said.
DEMAND STILL OUTPACING SUPPLY
The average transaction price of a new
vehicle stood at $49,000 in April. May
numbers aren't yet available.
" Brands who dominate in small SUVs
and cars are turning as fast as ever, and
they cannot produce enough vehicles, "
Karwel said.
May marked the second month this
year in which sales were up over 2021
numbers, which were higher than in 2022
in all but November and December.
DAC said that May is usually the strongest
sales month of the year. From 2010 to
2019, May took the crown eight times.
" The last three years have seen very
different sales patterns, however, with
first the pandemic and then the semiconductor
shortage, meaning that the traditional
spring selling season failed to materialize, "
DAC said in a statement.
May this year was " definitely a positive
sign of improved vehicle availability
across a broader array of manufacturers, "
said Managing Partner Andrew King.
However, the latest May total marks a
21-per-cent decline from 2019, when automakers
sold 203,343 new vehicles. That
was the last May before COVID-19 arrived
Honda Canada CEO Jean Marc Leclerc
thinks " we've turned the corner " on
microchip and inventory shortages.
FILE PHOTO
and the microchip and inventory shortages
began to take hold.
" While May 2023 did offer hope, it
should be noted that there is still a long
way to go, " DAC said.
Scotiabank Economics said that while
auto sales are up 3.7 per cent for the year
to date compared with 2022, they are falling
behind the pre-pandemic pace and are
now down 18.5 per cent year-to-date compared
with 2019.
However, increased output is helping.
" The upward trend in North American
light-vehicle production is helping alleviate
supply-side pressures to auto sales, "
the report said.
The seasonally adjusted annual rate of
North American light-vehicle production
reached 16.2 million vehicles in April, the
latest month for which data is available,
Scotiabank said. That's the highest seasonally
adjusted number since July 2020,
when production picked up after the first
wave of pandemic-related lockdowns, the
bank said.
" I think we were all just waiting to
see how the seasonal spring market in
Canada would start to shape up, " said
J.D. Power's Karwel. " Do we have enough
incentive spending? Do we have enough
retail units? Is demand still unmet and
still out there? These are all the questions
we were waiting to find answers to with
greater clarity heading into the May-June
market. "
HOW THE BRANDS FARED
Of the automakers still reporting
monthly sales numbers, Honda Canada
surged 53 per cent in May compared with
the same month a year ago, to 14,288 vehicles.
Honda brand sales were up 55.1 per
cent to 13,204, while Acura sales rose 30.6
per cent to 1,084.
However, that is still a 31-per-cent
decline over the pre-pandemic numbers
of 2019, when the automaker sold 20,687 in
the month.
Honda Canada CEO Jean Marc Leclerc
said the microchip and inventory situations
are improving.
" I think we've turned the corner. I
think what you're seeing there is just our
ability to deliver a bank of sold orders
that we've accumulated for a long time,
and that continues to grow, " he told
Automotive News Canada at the recent
BEV In-Depth: Mines to Mobility conference
in Sudbury, Ont.
Leclerc cautioned that microchips are
still not " free-flowing. "
" The second half of the year, we're certainly
looking for our operations to be at
100 per cent in our plants, " he said, " but
we're also cautiously optimistic. "
Sales of the Canada-made CR-V crossover
rose 61.1 per cent to 6,480. The Civic,
also made in Canada, posted an 18-percent
increase to 3,217.
But that paled in comparison by percentage
to the HR-V crossover, up 281.6
per cent to 973; Ridgeline pickup, up 310.5
per cent to 353; and Odyssey minivan, up
678.3 per cent to 467.
Kia sales rose 19.8 per cent to 7,293,
while its cousin, Hyundai, posted a 1.2-per
cent-gain, selling 10,476 vehicles.
Toyota Canada sales were down 5.9 per
cent to 21,736, however its luxury Lexus
brand saw sales increase 18.7 per cent to
3,015. Toyota brand sales were off nine per
cent to 18,721. - ANC
- With files from David Kennedy
As bargaining nears, Unifor eyes pensions and the transition to EVs
A four-pillar plan
also prefers wages
over profit-sharing
By ROSEANN DANESE
WINDSOR CORRESPONDENT
UNIFOR HAS IDENTIFIED ITS
key goals for contract talks with
the Detroit Three in August as
it prepares for what National
President Lana Payne calls a 100year
transformation of the auto
industry.
Wages, pensions, the transition
to electric vehicles, and new
investment will be the four pillars
on which the talks will pivot.
" Our goal is clear: We want
to get the best contract we can
for our members that cover off
these four priorities, " Payne told
Automotive News Canada.
" We are going to be seeing
these plants going through a
retooling period, which means
there will be downtime for our
members. And that transition is
concerning because we want to
make sure we're retaining these
workers for the future of our
plants. "
Unifor's Special Auto Council
- comprising active and retired
members from General Motors,
Ford and Stellantis - met in
London, Ont., on May 17 and 18
to prioritize the demands that
will be brought to the table when
negotiations for the union's
20,000 auto sector members
begin.
HIGH COSTS OF LIVING
The auto council delegates
raised concerns about rising
inflation, income security during
retooling for EV production,
hiring and retention challenges,
and the unionization of new
EV supply-chain facilities. They
discussed the sector's economic
forecast, the current Canadian
manufacturing footprint and
member pension plans, Payne
said.
As the union gears up for bargaining,
some
of the automakers
are
getting ready
to cut jobs.
Stellantis,
for example,
recently
announced
it was offering
buyouts to
hourly employees
in Canada.
" In response
to today's
increasingly
competitive
global market
conditions and
the necessary
shift to electrihave
remained stagnant since
2007, just before the financial crisis.
Payne:
Unifor
wants the
Detroit Three
to share
profits through
wages and
pensions, " so
that it is there
for the rest of
time. "
FILE PHOTO
fication, Stellantis is thoroughly
reviewing its North American
operations to improve efficiency
[and] reduce costs, " Stellantis
Canada spokesperson LouAnn
Gosselin said in a statement.
While Payne declined to be
specific, she noted that pensions
" Our priority is to do things
around pensions, and our priority
there will be to see what we
can achieve totally, " she said.
" You have to have a conversation
about pensions first ... and we'll
figure out how it all works when
we get to bargaining. "
WAGES OVER PROFIT-SHARING
The union has analyzed how
Unifor and its U.S. counterpart,
the United Auto Workers, have
approached compensation, Payne
said. While the UAW has adopted
profit-sharing to augment its
members' earnings, Unifor has
pursued annual wage increases,
bonuses and cost-of-living allowances.
She expects that philosophy
will continue.
" I'd much rather see the share
of the profits that our members
help make go into their wages
and their pensions and their benefits,
so that it is there for the
rest of time, " Payne said.
It will be the first time since
1999 that both the Canadian and
U.S. autoworker unions will be
negotiating contracts in the same
year. Payne said she has had discussions
with her UAW counterparts,
and the goal is to keep the
lines of communication open.
" We will continue to have dialogue
with them and work on
whatever we can together, " she
said.
Stellantis' Gosselin said, " We
look forward to the upcoming
collective-bargaining process
with Unifor. However, it is too
early for us to comment at this
time. "
Steven Majer, senior director
and HR business partner at Ford
Canada, said, " We value our partnership
with Unifor in Canada,
and we look forward to building
on our success in 2023 negotiations
as we collectively deliver
on our global Ford+ plan. "
General Motors did not reply
to requests for comment. - ANC
Automotive News Canada - June 2023

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