TalkAuto 2024 Automotive Finance and Lending Panel (John Hiscock, SVP Auto Finance, Bank of Nova Scotia, Todd Phillips, Moderator, Universus Media, Chris Morrison, AVP, Sales & OEM Relationships, TD Bank, and Grant Simons, Co-Head RBC Automotive Finance – Canada, RBC)
Talk Auto, the annual conference that brings the auto industry ecosystem together, delivered another solid event yesterday at the Universal Event Space in Vaughan, Ont.
Organized by Canadian Black Book, the conference presents keynotes and panel sessions designed to share information that helps the industry get a better sense of trends.
Yolanda Biswah, President Canadian Black Book, kicked off the day by welcoming attendees and asserting that she was working hard to promote more women and inclusion in the industry. She introduced several new female members of her leadership team, signaling that she was actively leading the change.
Yolanda Biswah, President Canadian Black Book
Daniel Ross, Senior Manager, Industry Insights and Residual Value Strategy, provided a market update from Canadian Black Book. In terms of a macroeconomic update, he talked about some major variables impacting affordability concerns such as inflation, population growth, the currency exchange rate, and unemployment rates. “Affordability is really the issue at hand here,” said Ross.
Ross said there is a lot of interest in the used vehicle marketplace from the United States. Some of the more sought after vehicles from American buyers are impacting the forecasts for vehicle values. “We are really moving back in the right direction,” said Ross, asking whether the impact of slowing electrical vehicles sales would impact future sales.
The used supply in Canada is a horror story, said Ross. “We are having trouble getting the capacity we once had back into the used market.” He said prices are normalizing in the post-COVID period, with steep price declines the norm in most categories.
He said in Canada, we witnessed 13.4 per cent electric vehicle sales in the last quarter, the highest ever with plug-ins and zero-emission vehicles together. “Everyone is trying to figure out how to incorporate more plug-ins into their lineups,” said Ross. He predicted that gas vehicles will lose 35 per cent market share and battery electric vehicles will gain 35 per cent between 2024 and 2030.
Jessica Hinds, Director, Sovereign Group (Economics), Fitch Ratings
Jessica Hinds, Director of the Sovereign Group (Economist) from Fitch Ratings, delivered an update on the Canadian economic landscape. She said her firm expects a modest pickup in consumer spending, as higher debt service drags down spending growth.
“Business investment is expected to benefit from lower policy rates relatively quickly,” she said, adding she expected future drops in the Bank of Canada rate.
She said Canada’s economy is about 5 per cent bigger than it was at the end of 2019, but the pace of growth isn’t as fast as expected. In per capita terms, GDP has fallen consistently in Canada. She said although Canada avoided a recession, it has felt like one for many people due to higher inflation and slower economic growth. She said the Bank of Canada’s battle with inflation has been “all but won.”
Hinds said we have seen a rapid rise in immigration and the majority have been temporary residents. The new targets for temporary residents and other immigrants will see a decline in immigration levels in 2025 and 2026.
She said the unemployment rate has been rising steadily in Canada, and part of that can be attributed to higher arrivals of immigrants looking for work. But she said employers are also cutting back on hiring, which is impacting younger workers who face higher unemployment rates.
Rising costs of serving debts is at historically high levels, said Hinds. “Interest payments alone have risen to 9.3 of disposable income.”
David Adams, President, Global Automakers of Canada (GAC)
David Adams, President, Global Automakers of Canada (GAC), delivered a morning keynote where he reminded the attendees of the importance of having production inside Canada. “It’s important to recognize that this transition to EVs costs companies a lot of money,” said Adams, adding it’s difficult for legacy manufacturers to determine the best way to transition to EV vehicle production.
Adams said we are not seeing the same levels of production when we transition to EVs, so that impacts scale and costs if the markets don’t materialize as quickly as expected. He also said the average price of a new vehicle in Canada is $66,000 — up from $44,000 in 2019. The average used car price is now close to $36,000, compared to $19,000 in 2029.
One of the key barriers for consumers to adopt EVs is the $11,000-$14,000 price gap between an EV and an ICE vehicle. If you look at total ownership cost, then EVs might be a better bet. But when it comes to monthly payments, consumers can’t afford some of the higher ticket EVs on the market. Concerns remain regarding charging infrastructure that make consumers think twice before considering a full EV. Adams said the auto industry is committed to the transition to electrified vehicles, the only concern is the timing of the mandates. Canada has typically adopted the same emission and safety standards as the United States.
Adams said there are concerns about the falling EV purchase incentives, and the changes in policies for consumers such as income testing, that are dampening demand. “If we want to continue to see EVs grow we will have to have continued incentives in place,” said Adams.
In terms of what the political climate looks like, Adams said the United States will continue to be protectionist. He said “everything is related to China” and China represents an “existential” threat to the global EV industry.
Todd Phillips, Senior Editor of Canadian auto dealer, moderated an automotive finance and lending panel with leading banking execs who serve the Canadian auto retail industry. Panelists included: John Hiscock, Scotiabank’s President of Automotive Finance; Chris Morrison, Associate Vice-President of Eastern Canada Sales, National Accounts and OEM Partnerships at TD Auto Finance; and Grant Simons, who leads RBC’s National Automotive Finance Business.
The bankers talked about the challenges of vehicle affordability for consumers, and the changes they were seeing in their client portfolios with rising vehicle prices and higher debt levels. They also talked about the rising problems of fraud of all types that are impacting the industry. The bankers said they were actively training dealerships on fraud prevention, but that the issue is a serious one that requires coordinated action.
They also discussed ways the industry is adopting more digital tools and processes to try to create a faster and more seamless vehicle finance experience for dealers and consumers.
Darren Slind, Co-Founder and President, Clarify Group
Darren Slind, Co-Founder and President at Clarify Group, presented an overview on adapting hospitality techniques used by luxury hotels and other industries, and adapting them to automotive retail.
Slind presented research that showed brand loyalty is related to the customer experience people enjoy — or don’t enjoy — from the businesses they interact with. The key for big-ticket selling, he said, is understanding at the heart of every purchase is an emotional decision. He said the best salespeople see their consumers as people with dreams and aspirations, not just “the next up.”
“I am not suggesting hospitality is the answer, I am suggesting it is an answer,” said Slind, adding that when dealerships provide “a generous and friendly treatment of visitors and guests,” it should not only be a goal for the luxury brands, but mainstream ones as well.
Slind said that the “secret sauce” to a great guest experience at a luxury hotel is that they personalize the experience. The guest feels they are known and aren’t just a room number. “In the hotel industry they have developed a culture and modus operandi of understanding their guests and recording that information in the CRM. We don’t often see that in automotive retail,” but that is the big opportunity, he said.
Dealers need to always be “collecting dots” on their customers, so they can then “connect the dots” to provide a personalized experience.
Slind played some video clips from hospitality experts who talked about how to provide an elevated and personalized guest experience.
Digitizing the Consumer Experience Panel
In the digitizing the consumer experience panel, Mike Mazgay, VP of Automotive Partnerships and Dealer Operations at SiriusXM Canada, moderated a session featuring Andrew Lemoine, President of Autocorp.ai; Derek Sloan, President of Sym-Tech Dealer Services; Jonathan Tonge, Director of Product at AutoTrader; and Dan Park, CEO of Clutch.ca.
The panelists defined their vision of digital retailing. “From a consumer perspective you would never hear a consumer utter the term ‘digital retail’,” said Derek Sloan. “There are very few players in automotive doing full digital retailing from end to end. It’s very fragmented.”
Dan Park said at the end of the day dealers sell cars, which aren’t digitized, they are physical assets that need to be transported. “It’s really the extent to which you can automate a lot of the processes done by humans. It’s not like Netflix, where you can deliver the entire product digitally.”
Park said there are, however, a lot of tools that can be harnessed to digitize the experience.
Andrew Lemoine said the industry doesn’t really know what digital retailing is. “We are more in a virtual retail environment,” he said. “We need humans to facilitate the transition.”
Jonathan Tonge said consumers in the Auto Trader marketplace are doing extensive research, not just purchasing vehicles on their platform.
Sloan said there are too many companies, institutions, and finance institutions that are all doing their own thing. There will need to be more alignment between these companies to help dealers, and ultimately consumers.
The panelists talked about challenges like integration between platforms, data security, and the need for a more seamless journey.
Lemoine said the industry has very lackluster practices for protecting consumer data, such as routinely leaving photocopies of driver’s licenses on sales desks in dealerships.
Accelerate Auto Mentorship Panel
Edith Pencil, Director of Employee Services at Performance Auto Group, chaired the Accelerate Auto Mentorship Panel. The panel consisted of Marzena Mo of Nissan Canada and Siobhan McLaren-Hall of Hyundai Canada.
McLaren-Hall talked about joining the women’s mentorship program through Accelerate Auto after having come back from a maternity leave, and looking for some guidance on re-integrating and settling back into the workforce. McLaren-Hall said the mentorship program worked well since she had to prepare before meeting mentors, and that opened up key topics to explore.
Mo said she got involved with Accelerate Auto from its earliest days, and when they had a mentorship program she got involved to help mentor others. She said getting feedback from her mentor has been invaluable, with conversations that have helped boost her confidence and self-esteem.
Mo also said, as a mentor, you need to keep an open mind on what your mentee is bringing to the conversations. She said some key issues that are good to talk about are recurring issues that women face in the workforce. “Cater your advice to your mentee,” said Mo. “You can become your best self at work, and they can become their best self at work.”
