Automotive News Canada - February 2024 - 10

10
02.24
OPINION
Does transaction price
trump sales volume?
THERE'S A FASCINATION WITH SALES
numbers that I've never really understood.
Like
sports scores, everyone wants
them to go up and up, and people
cheer when nice, fat, round numbers
are achieved or broken.
Like when hockey legend Wayne
Gretzky scored 100 goals in one season
with the Edmonton Oilers, or when
Scott Crossfield broke Mach 2 in a
Douglas D-558-2 Skyrocket aircraft.
We love round numbers because
they're perceived as barriers to be broken,
but ultimately, they're arbitrary
and not really barriers at all. They're
just numbers.
We learned in
great detail
during the
pandemic that
higher sales
volumes
can give an
imperfect -
or even false -
impression of
industry health.
The Canadian auto industry rejoiced
when sales in 2017 topped two million.
The final count of 2,043,943 cars
and light trucks was
a 4.6-per-cent gain
over 2016's 1.95
million, itself a
record.
Two million sales
became the gold
standard of success,
and when
2019 sales of 1.94
million fell ever so
slightly below that
magic number,
there was a mood
of " uh oh " in the
air.
Then the pandemic
hit, and the
1.55 million vehicles sold in 2020
made 2019 look like a pleasure cruise.
What we learned, in great detail,
during the pandemic is that there's
much more to financial viability than
the sheer amount of metal moved.
On the surface, the 1.7 million vehicles
sold in Canada in 2023 should
have indicated a lean year. Then why
was the industry acting like it won
Lotto 649? Primarily by selling 1.7 million
vehicles for more money and
greater profit and having less inventory
carrying costs because there was little
inventory to carry.
But better off than the pre-pandemic
years with their now-enviable volumes?
As luck would have it, January
2024 sales were comparable to those
in pre-pandemic January 2019, so
let's compare the numbers behind the
numbers. (Note: The Automotive News
Research & Data Center in Detroit
EDITOR-IN-CHIEF
JEFF
MELNYCHUK
doesn't have January 2020 sales -
the last January before the pandemic
- because a number of automakers
began to transition to quarterly reporting
from monthly; 2019 numbers will
have to suffice.)
Here's the most interesting comparison:
According to the Page 1 sales
story, the average January transaction
price was an estimated $49,000,
which is 40 per cent above the January
2019 average of $35,000, according
to J.D. Power Canada. In terms of
gross dollars, with equal sales volume,
this January was 40 per cent better
than January 2019, not adjusting for
inflation. Forty per cent. And automakers,
although building fewer vehicles,
were making a lot more money per
vehicle.
What about dealer profits? January
figures weren't immediately available,
but the average in 2023 was 5.5 per
cent per vehicle, while in 2019 it was
four per cent. That's 5.5 per cent on
a 40 per cent higher vehicle transaction
price. The Page 1 story doesn't
do the arithmetic because the percentages
are for the whole year and
not the month. But if they were
monthly, four per cent of $35,000 is
$1,400, while 5.5 per cent of
$49,000 is $2,695, which is nearly
double per vehicle. Again, not factoring
inflation.
Keep in mind that more expensive
vehicles likely pull in additional profit
for the finance and insurance office,
although we don't have that data at
our fingertips.
There are warning signs about
affordability (the perfect storm of high
vehicle prices, high interest rates and
high inflation); transaction prices are
inching downward as buyers forego
pickups for more affordable wheels,
and that means declining profits, even
if sales volume remains unchanged.
For the sports-score minded, please
go ahead and cheer two million sales if
it ever happens again. It sounds better
than 1.7, but we know it might not be.
- ANC
SCAN TO
SEE BOB
AALTONEN'S
LINKEDIN VIDEO
West Edmonton Volkswagen had
been driving for about a year.
The video, posted on the store's social channels,
tells viewers that EVs are " well suited to the most rigorous
conditions in Canada. "
People fear what
they don't know, and
misinformation about
EVs is not helping the
transformation.
EVs, he said, " perform extremely well, start reliably
in the coldest conditions, your cabin will heat up faster
than a gas vehicle, and it will stay warmer throughout
your driving experience. "
Aaltonen told Automotive News Canada he was
compelled to post the
90-second video because
of " misinformation " surrounding
EVs. And he dismisses
suggestions that he
might be fighting an uphill
battle in a province dominated
by the oil and gas
industry. Still, media
reports about waning public
interest in EVs, cold weather pummeling battery
range and horror stories about long lineups at charging
stations abound (see story on Page 1).
Aaltonen is undeterred. " There are a lot of people
curious about EVs and need a reliable source of information.
You may not be in the market to buy one, but
you deserve to understand it. "
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One Alberta dealer's campaign to
bolster the case for electric vehicles
DEALER BOB AALTONEN CHOSE EDMONTON'S
recent bone-chilling cold snap to counter the negative
press engulfing electric vehicles.
On a January day with temperatures
hovering around -37 C,
Aaltonen shot an outdoor
video extolling the
virtues of the
Volkswagen ID4, a battery-electric
crossover
the dealer principal at
Though Alberta is not a hotbed of EV adoption, ZEV
registrations rose to 9,338 in 2022 from 83 in 2012,
and make up 0.26 per cent of all vehicles on the
road, according to provincial government figures.
Based on that data, the Electric
MACALUSO
MANAGING EDITOR
GRACE
Vehicle Association of Alberta predicts
EVs will make up 26 per cent of
total registered vehicles on provincial
roads by 2032.
To help the EV narrative,
Aaltonen's dealership opened a satellite
store in December at West
Edmonton Mall.
" About 60,000 people a day pass by our location, "
he said. " We have an EV test-drive centre around the
mall, and starting February, customers will be able to
drive an EV when they visit the
mall. We tell them the good
part of the story. "
The dealership, located 18
kilometres north of the mall,
offers customers a 48-hour
EV test drive, an EV service
centre, and will soon assemble
a sales team dedicated to
selling electric vehicles.
EVs make up about four
per cent of new-vehicles sales
at the dealership, which
opened its doors in
September, but there's a long
way to go given Volkswagen's
stated goal to be 100 per
cent electric by 2035.
" A lot of people are interested
in learning about
Bob Aaltonen,
dealer principal of
West Edmonton
Volkswagen, took
to social media to
show the upside
of driving a
Volkswagen ID4 in
-37 C weather.
PHOTO: LINKEDIN
SCREEN GRAB
zero-emission vehicles, he said. " They understand this
is where the industry is heading. " - ANC
More brands to see, touch and
drive at CIAS, thanks to Campbell
Campbell's
unwavering
belief in the
value of auto
shows has
brought
stability
to CIAS.
PUBLISHED MONTHLY BY CRAIN COMMUNICATIONS, INC.
KC CRAIN, GROUP PUBLISHER & CEO
JEFF MELNYCHUK, EDITOR-IN-CHIEF, 506.866.8236, Jeff.Melnychuk@autonews.com
GRACE MACALUSO, MANAGING EDITOR, 226.787.0441, Grace.Macaluso@autonews.com
GREG LAYSON, DIGITAL AND MOBILE EDITOR, 519.567.8877, Greg.Layson@autonews.com
DAVID KENNEDY, TORONTO BUREAU CHIEF, 416.712.1378, david.kennedy@autonews.com
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TIM DIMOPOULOS, MANAGING DIRECTOR/PUBLISHER
416.560.7663, tim.dimopoulos@autonews.com
ADVERTISING SALES
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CHRISSY TAYLOR, VICE-PRESIDENT EDITORIAL OPERATIONS, AUTOMOTIVE NEWS GROUP
KC CRAIN, PRESIDENT & CEO
KEITH E. CRAIN, EDITOR EMERITUS
JASON CAMPBELL DESERVES A
lot of credit.
The general manager of the
Canadian International AutoShow
in Toronto (CIAS) and his team
brought stability to an event that
had been disrupted
for years
by the COVID19
pandemic.
They scrambled
just to
stage a show in
2023. The
number of
brands on the
floor paled in
comparison to
shows of the
past. It lacked
some of the biggest names, such
as Ford and Lincoln.
But Campbell and staff improvised
and delivered the indoor
electric-vehicle test track. It was a
hit among the 350,214 people
who visited the Metro Toronto
Convention Centre.
For this year's show, Feb.
16-25, hard work and tenacity
paid off. There were two tracks for
the event; one indoors and one
out. GMC had a Hummer EV on
hand and the Ford F-150
Lightning was there, too. All told,
potential buyers had more than
25 EVs to test drive, more than
twice the number of 2023.
Campbell called it " big growth
of what we did last year. "
DIGITAL AND
MOBILE EDITOR
GREG
LAYSON
About 6,000 test drives were
made in 2023.
" I think we're going to be closer
to 10 to 12,000 test drives this
year, " Campbell told me while setting
the table for the show on the
Feb. 9 Automotive News Canada
Podcast.
Final 2024 numbers weren't
yet available by press time.
And there was more growth on
the floor of the convention centre
where 44 brands showcased their
vehicles. That's nearly 60 per cent
more than the 28 in 2023.
Among the brands that
returned for 2024 after a hiatus in
2023 was Ford.
" They saw the success and the
number of people that came
through even from the early first
weekend of the [2023] show, and
we were talking to them, saying,
'Look, let's get you guys back as
part of the program,' " Campbell
said.
This year, Ford was the biggest
exhibitor by floor space at 10,000
square feet (900 square metres).
Neighbours include newcomers
Fisker, Rivian and Lotus. Infiniti,
which returned with a standalone
display, was also on hand, as was
Porsche.
Yet, Campbell wants more.
" We still are not there yet. We
would like to have every brand
that's selling in the
country back into
the show, " he said.
" I think that we're
slowly getting there.
" Physically, we
can't grow any bigger.
We occupy
every nook and
cranny of the building. "
SCAN
TO
LISTEN
That's because
Campbell never gave up on auto
shows, never quit hustling, never
quit selling to automakers and
their dealers the benefits of connecting
with hundreds of thousands
of potential customers.
- ANC
Crowds were strong at the
2023 Canadian International
AutoShow, pictured, but there
were only 28 brands showing.
This year there are 44, and the
plan is to eventually get every
brand selling cars to return.
FILE PHOTO

Automotive News Canada - February 2024

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