If there ever were “the good old days” when it was an easy business to sell, finance and service automobiles, those days are well in the rear-view mirror.
Delegates who attended the largest-ever Western Canadian Dealer Summit last month at the Banff Springs Hotel in Alberta, would have left scratching their heads at the pace of change and the fact that it’s coming from all directions.
Canadian auto dealer’s team was on site for all the conference sessions and all the networking and social events, where you really get to learn about what’s on the minds of dealers. The annual event, the largest ever held, is organized by the Motor Dealers Association of Alberta (MDA), the Saskatchewan Auto Dealer’s Association (SADA), and the New Car Dealers Association of BC (NCDA).
Organizers say more than 375 delegates were registered for the event, making it the largest to date. The event also features solid supplier support from key industry players who set up tabletop displays and sponsor various events over the course of the conference. Organizers say the trade-show portion sold out early, and is the largest representation for the event.
The event presented updates for dealers on the economy, a market outlook for automotive, the latest files their national association, CADA, is tackling in Ottawa, the future of marketing, OEM dealer relations, and other hot topics.
The opening keynote from John Chisholm, VP of Sales for Canada at DSMA, briefed dealers about the state of the North American mergers and acquisition business. Chisholm talked about the factors leading to mergers and acquisition activities, including the fact that the average age of a new car dealership owner in Canada is 71.3 years old.
The event presented updates for dealers on the economy, a market outlook for automotive, the latest files their national association, CADA, is tackling in Ottawa, the future of marketing, OEM dealer relations, and other hot topics.
He said many dealers don’t have a detailed succession plan and don’t start the process early enough, and then have to be reactive when the time comes when they decide to sell.
Erik Johnson, Vice-President and Senior Economist at BMO Economics, presented a market outlook, starting with an update on the outcome of the United States Presidential election. The upside for the Canadian economy is that generally the stronger the U.S. economy is, the better it is for Canada, since we are a large export country, said Johnson.
Johnson said there are some concerns that Canada could be negatively impacted by higher U.S. tariffs from the new U.S. administration. “The big inflation shock we all went through is mostly over,” said Johnson.
Todd Bourgon, CEO and Executive Director of the Motor Vehicle Retailers Ontario (MVRO) talked to dealers about the work his association is doing to recruit foreign-technicians to help the province’s dealerships fill their labour shortages.
Bourgon relayed his experience in recruiting skilled trades talent from the Philippines to help fill the gaps dealerships need. Bourgon and an expert team regularly visit the Philippines and vet and test the skills of foreign techs on site. He said there are 120 million people in the Philippines. The technician candidates there speak English, are well-trained, and have experience needed to hit the ground running when they arrive to work in Canadian dealerships.
Mike Mazgay, VP Automotive Partnerships with SiriusXM, presented data on car buying trends. As an example, he said 60 per cent are willing to wait 12 months for a vehicle, 60 per cent visit OEM or dealer websites, and 84 per cent use dealerships as part of their car buying journey.
Representatives from CADA’s Ottawa office, Huw Williams, Director of Public Affairs and Charles Bernard, Lead Economist, updated dealers on a wide range of political and economic issues.
Williams said polls show that Conservatives have about a 20 point gap over the Liberals, which will effectively wipe out the Liberal Party in the next election. Bernard said the Bloc Quebecois are likely to play a significant role in the next Parliament.
Williams said the Conservative party and their MPs and staffers are actively working in Ottawa getting ready to take power and implement their agenda, and have had historic fundraising levels. He said governments and other interest groups are waging a full on war on cars in Québec, where the government is mandating that no ICE vehicles, new or used, can be sold after 2035 in the province. Brian Kramer, EVP Cars Commerce, General Manager, Accu-Trade, kicked off on day two and presented on used car trends. Kramer said one big trend in the United States is that the large U.S. vehicle aggregators are acquiring more vehicles from consumers than ever before. For every 100 cars a dealer sells, there are only 43 trade-ins. Carvana, Carmax, Car Nation, Lithia are buying cars directly from consumers. They have a very frictionless, effortless process. “They are doing it in a very profitable manner,” he said.
Steve Greenfield, CEO of Automotive Ventures, gave a detailed overview of the market trends in automotive. “We are coming down to a more normalized environment post-COVID,” said Greenfield. “We will all look back and tell our grandchildren about how good the times were. We are getting back to normal.”
He said history will likely mean dealers will return to the same profitability of 2 per cent net profit after tax — a number that has held consistently for 45 years. Interestingly, he said the average salesperson in America sells 10 cars a month — that’s the same rate as in the 1950s.
Greenfield says he didn’t expect the direct sales model from OEMs to consumers will really materialize. “The franchise dealer model has been eerily defensible since its existence,” said Greenfield, adding the key to the business model is: “who owns the inventory risk?”
Niel Hiscox, President of Universus Media and Publisher of Canadian auto dealer, moderated a panel of western dealers discussing OEM and dealer relationships.
Ashley Wolfe, Dealer, Wolfe Automotive Group, runs six GM dealerships in Alberta and B.C. In her opening remarks, Wolfe said for the most part, dealers are aligned with the direction of GM. “Their top priority is to maintain that dealer relationships,” said Wolfe. “The direction on EVs has been clear. Whether you are for or against it at least you know where you are going.”
Jillisa Merrifield, Watrous Mainline Motor Products, a GM dealership in Saskatchewan, became a GM at 27 years old. “They have been open and transparent with us,” said Merrifield. “They are working with us every step of the way, it’s been easy for us so far.”
Andrea Backman, Dealer, Key West Ford / Downtown Kia EV Ctr in British Columbia said: “It’s always been our secret weapon, the relationship we have with the leaders in Canada.” She said she came to the industry in the 1990s when there was a lot of hostility. Now, anything dealers bring forward, they will get heard from the Canadian OEM leaders.
