Canadian Sales - 2013

Canadian Sales - 2013 Strada iQ January 2014

What a Year 1.74 M The first quarter of 2013 (down 2%) gave no indication of such a strong year. Finally in the 2nd quarter everyone throttled up to move iron in a convincing fashion. Fascinating results when the auto industry gets aggressive.

Nuke the Market With all manufacturers firing on all cylinders. They “nuke” the market with tempting offers. The Canadian consumer

loves to get nuked with tempting offers.

Cheap Credit Its no secret that subsidized loans and leases make vehicles affordable. While the customer presumably assumes the “value” risk with ever longer loan terms.

Trade Deficiencies Who cares. Cheap loans, imaginative financing, facilitates dealing with trade in deficiencies. Enabled by the financial service providers. Subsidized by the manufacturers.

Longer Terms Terms are inexorably getting longer to arrive at an appealing monthly payment. Roll over the trade deficiency, the taxes, no down payment, extend the term.

Lower the Rate

Close the sale with the

Lengthen the Term

To stay in the budget

subsidized monthly payment.

The Risk Customers use the subsidized low interest loans to continually roll over the trade in risk to a new vehicle. Manufacturers and financial service providers assist customers to roll over the risk.

Manufacturers actively assist customers to roll over the used vehicle risk.

Manufacturers assume the residual risk in a lease, and assist customers to roll over the risk in a loan.

Moves Iron New Product

Subsidized Rates

To record sales never seen for many years. How can you move so much iron?

Popularity of Pick Ups

Abbreviated Ownership Cycle

Higher Inventories

Nuke and churn the market.

Tempt the opportunistic buyer. Keep dealer inventories high.

It all works.

It moves a ton of iron. Why did it take so long to execute?

CPO When you move so much iron with such tempting offers. The balancing act tilts against Certified Pre Owned, and recent model year used vehicles.

Especially for manufacturers with established CPO programs.

CPO is the Canary in the coal mine…

The Months in 2013 Our Thoughts 

January: (-2%) No sales management from 2012, Audi huge blink at -26%

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February: (-3%) Testing the market, is this reality…scary stuff.

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March: (-0.5%) The Japanese and Koreans are napping, - 2% for the quarter.

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April: (+8%) After an alarming 1st quarter, everyone throttles up.

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May: (+5%) Lets keep it up, to get a strong quarter

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June: (+1%) A breather, lets asses the positions, up 2% YTD some relief.

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July: (+10%) Flat out in the summer, Ford blinked at -10%

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August: (+6%) More flat out who else will blink, BMW a huge blink at -15%

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September: (+4%) Keep it up for a strong quarter, BMW blinks again at -12%, Mazda blinks at -16%, Kia has been “winking” all summer.

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October: (+7%) Momentum, and intense competition, Acura blinks at -18%, Kia now blinks at -12%

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November: (+6%) Flat out to generate more blinks, Acura blinks again -5%

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December: (+4%) Strong finish with some selected “sales management” by a few.

Blink For the second year, every manufacturer going into the 3rd quarter seeks opportunistic sales. For one to acquire opportunistic sales, another must blink.

Get aggressive to gain an advantage

Levers to create blinks: Product Programs

Uncover weak spots in the competition, to create blinks.

Inventory Tactics

Some Numbers 2013

Compact

Mid Size Sedans

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Honda Civic……..64,063

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Jetta……………….30,413

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Hyundai Elantra…57,760

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Ford Fusion… …..20,145

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Toyota Corolla……44,449

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Toyota Camry……..18,245

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Mazda 3……...….40,466

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Honda Accord.........17,165

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Hyundai Sonata..…14,519

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Chrysler 200…..…..11,666

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Nissan Altima…..….10,488

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Chevy Malibu…….….6,834

As expected the Civic remains on top, followed by a strong performance for the Elantra and Corolla

The Jetta remains ahead, the Camry and Accord continue to trade paint. 

All Figures from Automotive News

Agreed…Jetta is a success story.

Some Numbers – 1 2013

CUV/SUV

Pick Up

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Ford Escape……….45,141

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Ford F Series….……

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Honda CR-V……….34,481

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Ram…………….………63,218

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Toyota RAV4……….33,156

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GMC Sierra……….. …35,229

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Hyundai Santa Fe…29,220

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Chevy Silverado…….…29,088

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Chrysler Journey…..27,745

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Chevy Equinox….....19,819

The Escape ahead, while the Japanese trade paint, and Hyundai keeps the leaders focused no to blink.

96,931

Up by 13% in 2013, dramatically better than the overall market. Its an enduring love affair with big vehicles.

Some Numbers – 2 2013

Entry Luxury

Luxury SUV/CUV

BMW 3 Series………12,507

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Lexus RX…………………7,789

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M-B C Class……..…9,356

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Audi Q5……………………7,547

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Audi A4………......…5,956

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Acura MDX…….….…....…6,114

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Cadillac ATS…………3,256

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Acura RDX……………..….6,112

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Infiniti G/Q50…......…3,048

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M-B GLK…………..….……5,979

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Lexus IS…….………..2,579

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BMW X3…………....…..…5,658

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Acura TL…………..…2,374

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M-B M Class………….…..4,804 BMW X5…………………..4,704

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Lincoln MKZ………….1,625

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Cadillac CTS……….….997

Cadillac SRX…… ........…3,765

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Buick Enclave…….……...3,286

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Lincoln MKX………..…....3,238

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What else is new 3 Series ahead, ATS beat the G/Q50 combo, with IS nosing out the TL. CTS will be interesting next year.

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Infiniti J/QX60………......…3,191

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BMW X1……………..……2,910

Shuffling of positions, very competitive segment.

Some Numbers – 3 2013

Pony Cars

Did You Know

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Mustang…………….5,054

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SLS AMG……..…....….67

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Camaro……………..2,167

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Lamborghini…..………..46

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Challenger………….1,514

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Maserati………..….….214

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Ferrari………….….…..214

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Panamera…..…….…..328

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GT-R………………..…125

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R8…………….……..….111

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Bentley…………..…….147

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Volt…………..….……..931

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Leaf…………..…….….470

George Follmer (Mustang) probably got bored by the lack of competition.

Shorter Ownership As terms get longer to arrive at a monthly payment that fits the budget. The ownership cycle is abbreviating. With 40% considering, and almost 10% actively shopping for a new vehicle within 24 months.

Longer terms and shorter ownership cycle

Manufacturers in 2013 Our Thoughts 

Audi: (+2%) Good performance especially the Q5

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Acura: (+10%) On the strength of the ILX – MDX – RDX

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BMW: (+1%) After a few blinks still in front of the MerBimAu race

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Chrysler: (+6%) Still # 2…Dart – Grand Cherokee and…Ram huge numbers

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Ford: (+2%) # 1 in 2013, although felt the competition

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GM: (+3%) Its still not right at GM, gave in to the Japanese, and Ram.

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Honda: (+10%) The Civic at # 1 and strong gains by Accord.

Manufacturers in 2013 - 1 Our Thoughts 

Hyundai: (+1%) Modest increase, strong numbers by Elantra and Santa Fe

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Infiniti: (+11%) Improved with Q50 and QX60

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Jaguar: (+96%) Finally a gain after a challenging 2012

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Kia: (-7%) Begs the question “What is going on?”

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Land Rover: (+20%) Again the Evoque and Sport…strong

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Lexus: (+5%) Steady increase with ES – IS and the RX as usual

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Mazda: (+0%) Again this year the CX5 saves the day

Manufacturers in 2013 - 2 Our Thoughts 

Mercedes-Benz: (+5%) Lost # 1 to BMW, B Class – GLK saved the day

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Mini: (-4%) Niche / Specialty cars are fickle.

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Mitsubishi: (+7%) Hovering around with only 2 models

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Nissan: (+11%) Gaining with the Pathfinder.

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Porsche: (+22%) Boxster, Cayman, Cayenne, with a glimmer from the 911.

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smart: (-6%) Sliding again in 2013

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Subaru: (+19%) What can you say Wow XV Crosstrek, Forrester

Manufacturers in 2013 - 3 Our Thoughts 

Suzuki: (-43%) Closing the shop.

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Toyota: (+1%) In the game with strategic gains.

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Volkswagen: (+6%) Maintained strong momentum with Jetta and Tiguan

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Volvo: (-16%) What can you say?  

Sales in Canada were up 4% for the year.

The Japanese solidified their positions, especially Honda and Toyota.  

Hyundai held its position, while Kia gave some ground. GM persists in leaving pockets of vacuum filled by other. 

A record breaking 2013. 

Epic competition.

Success The Canadian market is hyper competitive, been like that for years. Success hinges on having your competition blink.

Discretion is essential especially with a myriad of social platforms, and pundits.

In a hyper competitive market

Why would your competition tell you everything they know?

Sustainable? Can the value of auto loans continue to rise in 2014? What do you think? Do you think anyone has the answer?

“There remain pockets of ebullient household credit growth – most notably, the value of car loans is rising at an eye-watering 18% per year (Exhibit 15).” From Canada Economic Compass.

Our Thoughts On 2014 

Lower value of the Canadian dollar will impact some manufacturers and strategies?

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Will the level of financing, programs, subsidies persist?

As usual new models/product will provide an advantage.

Will the Canadian consumer continue to remain bullish and optimistic to acquire additional debt especially during the second half of 2014?

Astute manufacturers contrary to 2013 will be hyper aggressive during the first quarter of 2014.

Thank You