Canadian Sales - 2013

Canadian Sales - 2013

Strada iQ

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

Nuke the Market

With all manufacturers firing on all cylinders. They

“nuke”

with tempting offers. The Canadian consumer

loves to get nuked

Cheap Credit

Its no secret that

subsidized

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

service providers. Subsidized by the

Longer Terms

Terms are inexorably getting longer to arrive at

an

appealing

Roll over the trade deficiency, the taxes, no

down payment, extend the term.

Close the sale with the

subsidized monthly

payment

Lower the Rate

Lengthen the Term

The Risk

Customers use the subsidized low interest loans to continually roll over the

trade in risk

a new vehicle. Manufacturers and

financial service providers assist

customers to roll over the risk.

Manufacturers assume the residual risk in a

lease, and assist customers to roll over the

risk in a loan.

Manufacturers actively assist

customers to roll over the

Moves Iron

To

record sales

much iron? Nuke and churn the

market.

Tempt the opportunistic buyer.

Keep dealer inventories high. It all works.

New

Product

_Subsidized

Rates

Popularity of

Pick Ups

Abbreviated

Ownership

Cycle

It moves a ton of iron.

Why did it take so long to execute?

Higher Inventories

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 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%

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

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

 April: (+8%) After an alarming 1st _{quarter, everyone throttles up.}  May: (+5%) Lets keep it up, to get a strong quarter

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

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

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

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

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

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

Blink

For the

second year

into the 3rd _{quarter seeks}

opportunistic

Product Programs Inventory Tactics

Get aggressive

to gain an

advantage

Uncover weak spots in the

competition, to create blinks.

Some Numbers

2013

Compact

Mid Size Sedans

 Honda Civic……..64,063  Hyundai Elantra…57,760  Toyota Corolla……44,449

 Mazda 3……...….40,466

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

the Elantra and Corolla

 All Figures from Automotive News

 Jetta……….30,413  Ford Fusion… …..20,145  Toyota Camry……..18,245  Honda Accord...17,165  Hyundai Sonata..…14,519  Chrysler 200…..…..11,666  Nissan Altima…..….10,488  Chevy Malibu…….….6,834

The Jetta remains ahead, the Camry and Accord continue to trade paint. Agreed…Jetta is a success story.

Some Numbers – 1

2013

CUV/SUV

Pick Up

The Escape ahead, while the Japanese trade paint, and Hyundai keeps the

leaders focused no to blink.

 Ford F Series….…… 96,931

 Ram……….………63,218

 GMC Sierra……….. …35,229  Chevy Silverado…….…29,088

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  M-B C Class……..…9,356  Audi A4………...…5,956  Cadillac ATS…………3,256  Infiniti G/Q50…...…3,048  Lexus IS…….………..2,579  Acura TL…………..…2,374  Lincoln MKZ………….1,625  Cadillac CTS……….….997

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.

 Lexus RX………7,789  Audi Q5………7,547  Acura MDX…….….…....…6,114  Acura RDX………..….6,112  M-B GLK…………..….……5,979  BMW X3…………....…..…5,658  M-B M Class………….…..4,804  BMW X5………..4,704  Cadillac SRX…… ...…3,765  Buick Enclave…….……...3,286  Lincoln MKX………..…....3,238  Infiniti J/QX60………...…3,191  BMW X1………..……2,910

Some Numbers – 3

2013

Pony Cars

Did You Know



Mustang……….5,054



Camaro………..2,167



Challenger………….1,514

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

 SLS AMG……..…....….67  Lamborghini…..………..46  Maserati………..….….214  Ferrari………….….…..214  Panamera…..…….…..328  GT-R………..…125  R8……….……..….111  Bentley…………..…….147  Volt…………..….……..931  Leaf…………..…….….470

Shorter Ownership

As terms get

longer

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

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

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

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

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

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

Manufacturers in 2013 - 1

Our Thoughts

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

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

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

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

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

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

Manufacturers in 2013 - 2

Our Thoughts

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

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

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

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

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

 smart: (-6%) Sliding again in 2013

Manufacturers in 2013 - 3

Our Thoughts

 Suzuki: (-43%) Closing the shop.

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

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

 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.

Success

The Canadian market is

hyper competitive

Success hinges on having your competition

blink

Discretion

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

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

Our Thoughts

On 2014

 Will the level of financing, programs, subsidies persist?

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

 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.