Uncertainty is now

As an economist, Poloz advises governments by offering an analysis and forecast based on risk. He prefers to have stability and to be able to plan ahead, which is a far cry from what anyone has had between the pandemic and other global forces of change that have paved the way for a period of intense disruption for businesses.

“There are very fundamental reasons why volatility in business is much higher today,” said Poloz in an interview with Canadian auto dealer. “I think it’s important for business to be looking beyond COVID and understanding those forces that are underneath the surface that have been acting all along. And I think that’s where the volatility is coming from.”

Poloz said there were several stressed sectors that are still being impacted, which is a situation that will likely linger for a long time.

This also means that there will be an elevated unemployment rate that will remain for a period of time while the economy adjusts to our new, post-pandemic conditions.

Increases in debt are nothing new and have been around for a couple of decades. Poloz said it is one of the most important vulnerabilities of our financial system and the economy itself, but that consumers have been saving their money during the pandemic — thanks to federal programs and a lack of places to spend money.

“People pay down their debts, they put money in their savings account,” said Poloz. “So most economists believe that there’s pent up demand and there’s money available for us to have a pretty good recovery in 2021.”

However, he also notes that there may still be a risk of a behaviour change, where consumers decide to continue saving more money — precautionary saving, as he calls it — in case a similar situation occurs again.

On the topic of uncertainty, David Frum, a respected analyst and frequent contributor to U.S. news networks, offered some more optimistic news.

Frum, who plans to discuss Canada-U.S. relations during his online presentation for the CADA Summit, said there is no doubt that we have entered a period of turbulence and uncertainty unlike any other transition in America. This is the obvious news, but there is light at the end of the tunnel.

The January Capitol riots have now come and gone, and Joe Biden has been sworn in as the 46th president of the United States. Frum said former President Donald Trump sabotaged Biden every way he could, although Democrats clinched enough votes to secure the U.S. House and Senate.

There was, eventually, a peaceful transfer of power, which could lead to a normalization of Canada-U.S. relations with Biden as president. In fact, Frum said there was no question about it.

“It will be more normal, more predictable — not to say trouble-free,” said Frum. “I mean, Canada’s best relations are like a super, highly sprung automobile. If there’s any bumps, you feel it because there’s just so much at stake; the relationship needs to be excellent and anything less than excellent becomes a problem.”

Frum said there are always problems, but that there will be people of goodwill on both sides of the border and the process of solving problems will go back to normal. The most important thing in the Canada-U.S. relationship, he said, is the question of: can the Biden administration get the global world trading system back on track — back to normal?

“This is an integrated world, and it’s not enough for trade to move well North and South across the border,” said Frum. “Best to move well across the planet.”

Canadian auto dealer also interviewed Jeremy Gutsche, CEO of Trend Hunter and a New York Times best-selling author. Much of his work centres around the idea that people have more potential within their grasp than they realize, especially around success, but that there are certain “traps of success” that uniquely block them from realizing their full potential.

Gutsche is an entrepreneur at heart, and an author who wrote his first bestseller in 2008 about exploiting chaos. The book is about how periods of chaos create opportunity, which he said garnered a lot of attention from brands, billionaires and CEOs. He worked with them on how to think in times of chaos.

“What I study is how your success, the fact that you’ve got a great dealership —it’s been generating money and working out so well, and (you’re) connecting with your community and pushing out great automobiles,” said Gutsche. “That success causes a series of particular traps, which cause us to cling to the status quo.”

Gutsche used the metaphor of the hunter versus the farmer to explain the concept: that humans have been hunting for more than a million years, but 10,000 years ago when they planted the first seed, it pre-wired us to repeat and optimize whatever led to the previous year’s harvest.

For successful people, he said there are a series of traps that have caused them to miss out on new opportunities. And for anyone with an entrepreneurial spirit, “you don’t want those traps kicking in,” said Gutsche.

Working through these issues is something he plans to tackle during the online CADA Summit in February.

The event is sponsored exclusively by TD Auto Finance.

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However, the real story — as DAC puts it — was Ontario’s new light vehicle sales decline, which was significant.

“Ontario saw its new light vehicle sales decimated in 2020,” said Andrew King, Managing Partner at DAC. Sales in Canada’s largest province declined by more than 23% or more than 190,000 units. “Alone, Ontario accounted for more than half of the total Canadian sales drop in 2020.”

In comparison, Quebec, British Columbia and Alberta all “outperformed” Ontario with sales declines of 17.5%, 18.0% and 16.9% respectively. Among the smaller market provinces, Prince Edward Island and Saskatchewan, both experienced relative strength with declines of 13.6% and 13.3%, respectively.

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The suite includes the company’s newly-developed e-Commerce functionality, so it should come as no surprise that the dealer support program aims to help more dealers go digital. Monthly software fees for the AutoVerify suite will be waived for all new customers, while existing customers will receive the new e-commerce functionality with no added monthly software fees.

“We want the industry to know that at AutoVerify, we have their backs. Things are changing fast,” said Marty Meadows, Co-founder and President of Automotive at AutoVerify. “(Car buyers) want to complete as much of the purchase from home as possible. Dealers are telling us they know it’s time to go digital.”

Meadows said dealers need tools to help them do that, but that they do not want to pay for multiple vendors for multiple tools. AutoVerify’s digital retailing suite, described by Meadows as a “one-stop shop,” offers three main functionalities: merchandising, research and e-commerce. However, it can also be configured based on a dealer’s needs.

The new e-commerce functionality is a post-COVID e-commerce solution that allows dealers to meet their customer at whatever point they are in the vehicle purchasing process, and then support them. This can be done by uncovering their credit rating, calculating their payment options, applying for financing, and making no-obligation purchase offers.

“This is a wild time for every industry, ours included,” said Meadows. “Pre-COVID, some dealers were making the choice to go digital. Post-COVID, it’s no longer a choice. We’re here to help dealers make this shift with as little disruption as possible.”

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A top executive team to steer the company has also been established to help steer the company, along with nine dedicated committees covering company-wide performance and strategy, according to a news release.

“This highly competitive, committed and well-balanced team will leverage its combined skills and diverse backgrounds to guide Stellantis to become a great company,” said CEO Carlos Tavares.

The nine committees are the Strategy Council, Business Review, Global Program Committee, Industrial Committee, Allocations Committee, Region Committee, Brand Committee, Styling Review, and Brand Review.

Stellantis was officially launched on Jan. 19, 2021, and includes 400,000 employees who will design, develop, manufacture, distribute and sell vehicles and mobility solutions around the world.

“It is no coincidence that Stellantis is born precisely when our world requires a new kind of automotive company that will champion clean and intelligent solutions to provide freedom of movement for all,” said company Chairman John Elkann, who leads the 11-member Board of Directors.

The company’s global scale and reach should provide them with the resources to invest in state-of-the-art technologies and broaden their customer appeal. Elkann said their greatest competitive advantage is the geographic and cultural diversity of the people working at Stellantis.

“It is they, with their energy, their knowhow and their constant commitment who make Stellantis what it is today,” said Elkann. “And it is they who day-by-day will build an even greater company for this new era of mobility.”

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The project garnered $274,054 in funding from the federal government, and $228,356 from the provincial government in B.C. The project will see approximately 40 dual-port, level-2, electric vehicle charging stations installed at 10 community centres, recreation centres and pools across the city.

“Canada is focused on building the infrastructure needed for the trillion-dollar clean economy,” said McKenna, adding that “As Canadians move to cleaner vehicles, our economy will grow, we will create more good jobs, attract investment, manufacture next generation vehicles, and create clean technology solutions here at home.”

The goal of expanding the charging network aims to address gaps in the current network and boost access to clean energy transportation options. The project is also expected to create employment opportunities and strengthen the local economy.

Other notable figures that attended the announcement include Randeep Sarai, Member of Parliament for Surrey Centre; George Heyman, B.C. Minister of Environment and Climate Change Strategy; Bruce Ralston, B.C. Minister of Energy, Mines and Low Carbon Innovation; and Doug McCallum, Mayor of Surrey.

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FordDirect is a joint venture between the Ford Motor Company and its franchise dealers. The company announced the appointment in January, noting that VanDyke has more than 12 years of experience in leading Ford and Lincoln brand positioning around the globe.

“His passion for the digital auto retailing business is clear. His experience around the world shepherding the Ford and Lincoln brands, along with his knowledge of FordDirect following two terms as a board member, will serve him well as CEO,” said Mike Pallotta, President of Pallotta Ford Lincoln in Wooster, Ohio.

The expectation is that VanDyke will continue the positive momentum FordDirect has made in its digital transformation. Pallotta said the Board’s mission is to help Ford and Lincoln dealers sell and service more cars and trucks. “Matt is the best person to lead this team in continuing that work,” he said.

VanDyke most recently held the position of Director of Marketing for Ford Motor Company. Prior to that, he was Vice President of Marketing for Ford of Europe, where he oversaw the Fiesta and Focus vehicle launches. He also led the piloting of several digital and retail consumer experiences, the rollout of new Ford websites, and the development and introduction of e-commerce solutions. VanDyke also served on the FordDirect Board for over five years.

“I know the power of the Ford and Lincoln brands, and it is no secret that our Ford and Lincoln dealers across the country are crucial in connecting those brands with interested consumers,” said VanDyke. “It is an honour to work with the FordDirect team to continue building our dealer relationships with the outstanding digital connections we can provide.

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The largest decreases in the car segment came from sports cars (-0.51% or $95), followed by sub-compact cars (-0.46% or $32), and near luxury cars with a decrease of -0.45% ($87). For trucks, the largest decrease was the sub-compact luxury crossover category (-1.09% or $189), while the largest increase was full-size pickup trucks at a gain of 0.37% ($101).

U.S. wholesale used vehicle prices were also down, with cars falling 0.70% and trucks down 0.33%. It is also worth noting that the Canadian dollar closed the year at $0.7854 — nearly reaching the two-year high set on Dec. 17, 2020. It would be better for the demand for Canadian exports of used vehicles to the U.S. if the dollar did not continue its progressive strengthening. However, CBB said that with 2020 now gone, there is reason to look ahead to 2021 “with a refreshed sense of optimism.”

“Admittedly, some of the same trends that doggedly weighted the industry down in 2020 persist, however the path to resolve the crisis is now clearly marked,” said CBB. “It revolves around the recovery to the health of the world, followed by economic rebuilding. The vaccination rollout, not only here in Canada but globally, is the key to the restoration of businesses and the lives of so many.”

CBB expects two key trends to chart the course for 2021, which will be important for supply and demand. “On the supply side, we foresee intermittent interruptions to vehicle assembly and parts production worldwide,” said CBB, adding that the issue should persist until there has been more immunization and the health of the people involved in making cars and parts has improved.

On demand, CBB said consumer confidence and the level that they perceive as safe to leave their home and shop for a new or used vehicle is also important. “Currently, with various restrictions nationally, as well as leaders encouraging Canadians to stay home, this is not expected to set the stage for a strong start to retail sales for 2021,” said CBB.

On the plus side, consumer confidence has climbed since news of the vaccine was released, with the Bloomberg-Nanos Index showing confidence up five percentage points in the past four weeks. That is certainly better than stagnation or a decline.

Read the full report.

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The firm published a whitepaper (68 Technology Trends That Will Shape 2021) that identified 37 trends that will shape the technology market, and 31 that are unlikely to “move the needle” over the next year. One of those trends is about EVs and how 2021 is projected to kickstart a decade of growth towards its adoption.

“This transition from niche to mainstream will be built on the introduction of low-cost EV models that satisfy the typical mileage requirements at an acceptable price point,” said James Hodgson, Smart Mobility & Automotive Principal Analyst at ABI Research.

EV owners are shifting from environmentally conscious and “enthusiastic technology first-adopters” to a more typical automotive consumer, which means automakers will need to come up with more innovative approaches to the life cycle management of these vehicles.

“Smart charging technologies, support for occasional Direct Current (DC) fast charging, and battery management will be critical in supporting mainstream consumers in their transition from ICEs to EV ownership,” said Hodgson.

One of the things that are unlikely to “move the needle” is that new vehicle shipments will not return to business as usual this year. According to Hodgson, 2020 gave way to reduced new vehicle sales resulting from the crisis and subsequent lockdowns on an “already faltering automotive market,” which in turn led to a disruption in supply chains and deprived the sector of its typical physical retail environment.

But many OEMs experienced a return to growth in Q3 last year thanks to an offset in consumer demand from the first half of 2020, which arrived during the summer period when many governments lifted restrictions and allowed dealerships to reopen partially or fully.

“Moving into 2021, however, the automotive industry should not expect a return to the new vehicle sales volumes of recent years,” said Hodgson. “The market size is expected to remain subdued until 2024 given the prospect of repeated lockdowns, long-term remote working, and a bleak macroeconomic outlook.”

Dealers can download the full report here.

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The sale of these vehicles on a global level in 2019 was valued at 1.4 million units and is projected to reach 58 million units by 2030, expanding at a CAGR of 40.3 per cent from 2020-2030.

“The growth of the automotive vehicles market is attributed to the rising number of benefits offered by unmanned vehicle as compared to traditional vehicles such as reduced road-crash risk, enhanced safety and security, elimination in driver wages, secured mobility for disabled individuals and non-drivers, and increased comfort and flexibility offered by seamless operative systems,” said Research and Markets.

But the elevated cost of components, high software and hardware maintenance updates, and increasing cyber threats and attacks around hacking the operating systems are expected to impact the market.

Balancing that out are more investments from regulators in digitization, the adoption of advanced infrastructures in smart cities, a high usage of smart gadgets and smart automotive, the overall technological evolution, a higher standard of living, and boosting per capita income — all of which are creating growth opportunities for the market.

North America was a dominant player in the global autonomous vehicle market in 2019 — a trend that Research and Markets expects to continue until at least 2030. This comes thanks to a high adoption of self-driving vehicles in the region, well-established OEM infrastructures, the presence of key manufacturers, stringent traffic regulations, the adoption of advanced technologies, and more.

However, the Asia Pacific market is expected to gain traction during the same period, while the European market is anticipated to expand at a considerable CAGR due to growing consumer preferences for driverless vehicles and increasing adoption of advanced technological products.

Some of the major players in the global market include Daimler AG, General Motors, Ford Motor Company, Volkswagen Group, Tesla, Renault-Nissan-Mitsubishi alliance, Groupe SA, Volvo-Autoliv-Ericsson-Zenuity alliance, AB Volvo, Toyota Motor Corporation, and BMW AG

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Their data shows the average down payment for a new vehicle jumped to $4,734 in the fourth quarter of 2020, compared to $4,458 in the third quarter and $4,329 a year earlier. Financing on average was also up for new vehicles, reaching $35,373 in Q4 compared to $34,692 in Q3, and $33,525 a year earlier. Monthly payments have also increased.

“Consumers historically lean toward purchasing pricey luxury cars, trucks and SUVs during the holiday season, which is partially why we’re seeing this lift,” said Jessica Caldwell, Executive Director of Insights at Edmunds. “But we’re also just seeing a broader trend of consumers gravitating toward bigger purchases during the pandemic.”

December helped boost downpayment figures compared to Q3, with the last month of 2020 representing the highest average monthly payment of the year for financed purchases, at $587. It was also the highest average down payment of the year at $4,876.

Caldwell said the data may seem off when considering unemployment levels and tough financial conditions, but that consumers who are buying new vehicles amid the crisis “are clearly on the other side of the economic divide.”

“They’re likely qualifying for the lowest promotional rates and feeling secure enough to put down more money to get the bigger vehicles and features that they want,” said Caldwell.

“We’re seeing more consumers who typically would fit the bill as new-car shoppers turning their focus on the used car market thanks to a good supply of near-new, off-lease vehicles hitting the market,” said Caldwell.

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A new book featuring more than a hundred marketing tips for automotive retailers is being offered in ebook form prior to its initial print release next year, according to Nicolas Delorme, President of Interforce Marketing.

The marketing agency works with car dealerships in Canada, France, and areas in the United States, offering three categories of marketing services/solutions: digital marketing, relationship marketing, and event marketing.

In an interview with Canadian auto dealer, Delorme explained why the book —123 Marketing Tips for Dealers During COVID-19 — can be useful for dealers, many of whom have attended countless virtual events this year on similar topics, but may find the book a quick and easy resource to browse through.

“You may know a lot, have heard a lot, but if you want a general overview (of something), what do we do? We do research, and that takes a long time,” said Delorme. “In this book, we have everything. Or perhaps ‘everything’ is a big word, but we really have a lot of content and it’s organized by theme.”

This includes websites, digital marketing, relationship marketing, branding, and more. Delorme said there are 12 themes, and each theme features tips and advice. With the tips there are also illustrations and suggestions to ensure there is something concrete or applicable for dealers to consider and implement in their store.

“There are even company names that are listed (in the book),” said Delorme. “So the point isn’t just to sell advice, it’s also to take action. And it’s a book that helps dealers take action on new things, because you can know a lot of things, but then if you don’t take action it doesn’t matter.”

Delorme said the book also allows dealership employees to understand where their strong and less strong suits are by adjusting or creating a marketing plan and analyze their priorities. The index portion of the book also includes a table to help employees create their own marketing plan.

“What am I doing that I should not do anymore? What am I doing that works and that I should be doing more of? What should I do differently? Or what should I start doing?” said Delorme. “There are tools to help dealers create their own plan.”

At that point, he said dealers can choose to put their marketing plan in place themselves, delegate it to someone in the dealership (a specific department lead perhaps), or outsource it. Overall, the plan should help dealers better structure their marketing goals and plans, particularly amid COVID-19.

The print version of the book will be available in Q1 of 2021 via amazon.ca, and will be priced at $97.

To download a copy of the e-book, which is available for a limited amount of time, dealers can click here and use the promo code CADebookpromo.

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