Musings about the year ahead


Musings about the year ahead

As another year passes into the rear view mirror, now is the perfect time to look back at what shaped Canada’s auto industry in the past 12 months — and to speculate a little about what auto dealers should anticipate for 2016.

2015 marked another great sales year for Canadian dealerships. According to a recent DesRosiers Automotive Report, sales were up 2.9 per cent year-over-year as of November, marking the third consecutive year of record sales in Canada.

Time will tell if this positive trend will continue for 2016 as a weak labour market and the adverse effects of the collapse in oil prices on the Alberta economy have slowed sales in Canada.

On the plus side, 2016 is likely to be a banner year for Canadian automaker profits, thanks in large part to the Canadian dollar which continues to slump with no upward trajectory in sight. With more than 80 per cent of vehicles produced in Canada heading south, the weak dollar will translate to strong profits for the manufacturers.

Unlike dire predictions pre-election, it looks like a change in Ottawa may have had the reverse effect on Canadian consumer confidence. That’s good news for our nation’s auto dealers.

Continuing low interest rates have also helped to push consumer confidence to the highest level in recent memory. With sub-zero interest rates now being discussed beyond backroom whispers, 2016 is shaping up to be a stronger than initially anticipated year for Canada’s auto industry.

World politics will also become a factor in our industry over the coming months. As the 2015 United Nations Climate Change Conference in Paris has shown, environmental concerns and the responses of national and sub-national governments will also be very important going into the new year.

Time will tell if this positive trend will continue for 2016 as a weak labour market and the adverse effects of the collapse in oil prices on the Alberta economy have slowed sales in Canada.

Electric vehicle sales still represent a small fraction of total vehicle sales annually in our country. Roughly one in every 300 new vehicles are sold, but perhaps the more interesting number is the fact that that number has increased ten-fold since 2011.

As governments work to position themselves to be the most green, monetary and non-monetary incentives will likely become more commonplace across the country, forcing consumer demand for EVs.

With Canada and the U.S. still setting lofty emissions targets, and provinces such as British Columbia, Quebec and Ontario introducing government incentives to go green, EVs will start to play an even larger role as manufacturers work to accommodate tighter standards.

In our Association’s submission to the B.C. Climate Leadership Team, we strongly urged our provincial government to take an incentive-based approach instead of a mandated one that punishes consumers and business. It remains to be seen how far provincial governments will go on proposed Zero Emission Vehicle (ZEV) mandates.

To address the growing EV market, there is no doubt that GM’s Chevrolet Bolt will be one to watch following its first showing in production trim at the 2016 Consumer Electronics Show in Las Vegas. The Tesla Model 3, a more affordable version of the Model S, is expected to be revealed in March. Both vehicles address the “range anxiety” that keeps many from purchasing an EV by promising more than 300 kms per charge.

All in all, with predictions of rising sales, as well as top-notch technology filtering through the market faster than ever before, and governments continuing to drive EV sales growth, auto dealers can look forward to an exciting year in 2016.

The one thing I know for sure? It won’t be a boring year for our sector!

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