CADA Summit 2018 kicks off

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The 2018 CADA Summit kicked off with a detailed look at economic forces impacting Canada, and how it would impact the Canadian consumer. The annual gathering of dealers and industry leaders took place at the Metro Toronto Convention Centre on the eve of the opening of the Canadian International AutoShow.

“I am thrilled to welcome you here today to the 6th annual CADA Summit,” said CADA Chairman Peter MacDonald, opening the event. “As automobile dealers we are constantly dealing with change,” says MacDonald, adding that he hoped dealers would leave with new ideas on how to adapt.

MacDonald thanked the event’s exclusive sponsor, TD Auto Finance, and gave the stage to moderator Michael Hatch, the CADA’s Chief Economist.

Up first was Craig Alexander, Senior Vice-President and Chief Economist, Conference Board of Canada.

Alexander provided what he described as a “whirlwind global economic overview.” Global growth last year was good, and the fundamentals for the Canadian economy were strong, with growth at 3 per cent last year.

“One of the biggest risks is the renegotiation of NAFTA,” says Alexander. “NAFTA is incredibly important to Canada.”

He took issue with some of the public statements from other economists who said that losing NAFTA might not be that big a deal for Canada. He says they are understating the risks. One concern is that it could discourage foreign investment in Canada and could lead to trade wars in various sectors.

‘In our forecast, we assume that NAFTA stays in place,” says Alexander. “But trade negotiations are always hard to predict. But with this administration? Wow!” said Alexander, referring to the volatility of the Trump administration. “At some point I believe Trump will announce NAFTA is over and he’s ripping up the agreement,” says Alexander, but says that will likely be a negotiating tactic.

Alexander doesn’t expect energy prices to pick up as much as some might think. “The energy sector in Canada has adjusted to the reality of where commodity prices are,” he said.

Alexander says the recent pullback in the U.S. stock market was not unexpected given the “rip-roaring” gains in equities that wasn’t sustainable. “The world economy is going to have to adjust to rising interest rates.”

In terms of Canadian consumers, Alexander says that while rising household debt levels are a concern, the issue is the costs of servicing that debt. “What really matters is your debt servicing costs. More of your income will be paid to service the debt,” he said. “Consumers are going to adjust. The share of the population that is really at risk is about 8 per cent. It’s not the majority of Canadians.”

The CADA Summit is organized by the Canadian Automobile Dealers Association, and is supported by an exclusive sponsorship with TD Auto Finance.

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