A dealer’s perspective on the year ahead

AutoCanada executive shares his insights on used car market

To kick off the shiny new year of 2012, I wanted to get some observations from an industry leader and I had to look no further than Canada’s largest public dealer group AutoCanada.
As president of AutoCanada, Tom Orysiuk 
oversees the operations of one our country’s leading retail vehicle sales and service groups, with 24 franchised dealerships in British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova Scotia. In 2010, the franchised automobile dealerships sold approximately 24,000 vehicles, including new vehicle sales in the following brands: Chrysler, Jeep, Dodge, Nissan, Infiniti, Hyundai, Mitsubishi, Subaru, Volkswagen and Fiat.

With this kind of perspective, Orysiuk is able to provide a broad range of insight into the automobile business in Canada and it was immediately clear to me that he is extremely proud of AutoCanada’s development over the past several years. Orysiuk has been with AutoCanada since late 2005, when he took on the role of executive vice president and chief financial officer. He arrived with a wealth of experience as a CFO in a number of organizations, building on a solid foundation in financial management gained during his time with Liquor Stores Income Fund, Manulife Financial, KPMG and Touche Ross & Company. Orysiuk was appointed president of AutoCanada in January of 2011.

More of a focus on used vehicles

Our discussion began with some reflection on something that is a key focus for AutoCanada, and that is the belief that many consumers do not have an understanding of, or appreciation for, the investment that franchise dealers have made (and will continue to make) in the used vehicle business.

According to Orysiuk: “The industry has come a long way and franchise dealerships now embrace used vehicle sales and, as a result, are really beginning to invest in ways that will make them successful.” Providing some examples, he noted that his organization was proactively engaging in better education for consumers, training for his dealership staff, and enhanced disclosure in advertising.

“For many consumers in the used vehicle market, there is a significant value proposition when dealing with a franchise store because of the typically higher level of reconditioning as well as the quality of the safety inspection and disclosure,” says Orysiuk. In his mind, if franchise dealers are able to leverage and promote these strengths to consumers, the gains they have made in the used vehicle business over the past few years can certainly be enhanced going forward.

Challenge sourcing vehicles

While Orysiuk is confident his dealerships are well positioned to service the used vehicle segment, he did note that his group has been preparing for what he sees as a challenging sourcing environment starting in 2012. He believes that there will be some constraints in traditional inventory sources and his stores have been working to improve trade-in processes. “If we are able to improve upon the processes we have in place we will be in a great position to win more trades,” he says.

The AutoCanada stores have worked to get staff trained in appraising and inspecting vehicles to drive towards giving the consumer a fair price for their unit. Once the unit has been taken in, the focus then shifts to moving it through the next steps as efficiently as possible. This includes the capture of all relevant vehicle details and a thorough reconditioning. Good information gathered at this stage ultimately benefits the retail process where such details are used to engage potential buyers via online advertising. He stresses the importance of this work since very few used cars are the same and this unique nature demands that dealers get the information on each one correct.

The processes that are being implemented at AutoCanada dealerships ultimately support a more effective advertising model. He says the trend is clearly towards more disclosure for the benefit of the shopper and a significant effort is being expended to differentiate each unit. He wants his dealerships to be on top of the trends and he sees tools like video and unit-specific comments becoming more prevalent all the time. However, he is quick to point out that different markets require different approaches and he encourages his stores to experiment and go with what works for them.

In terms of challenges for the year ahead, he says managing change is key. “There is a tendency to change things more frequently than necessary in order to try new things and the result is that many good ideas don’t get fully implemented so they can reach their potential.” He is particularly focused on monitoring the costs and returns on various elements of advertising and then sharing that information across all 24 dealerships.

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Canadian auto dealer