Canadian auto sales in 2013 were strong, reaching 1.74 million vehicles sold. The year started slowly in the first quarter but accelerated in the second quarter as manufacturers aggressively promoted sales. Low interest rates and longer financing terms made vehicles more affordable but also increased risk for manufacturers and lenders. Some manufacturers like BMW, Mazda, and Kia struggled at times, while others like Honda performed well led by the Civic. Pickup truck sales remained very strong. Overall it was a record-breaking year for the Canadian auto market due to aggressive promotions and financing from manufacturers. Uncertainty remains over whether these sales tactics can be sustained in 2014.

1. Canadian Sales - 2013
Strada iQ
January 2014

2. What a Year
1.74 M
The first quarter of 2013
(down 2%) gave no
indication of such a
strong year.
Finally in the 2nd quarter
everyone throttled up to
move iron in a convincing
fashion.
Fascinating results when
the auto industry gets
aggressive.

3. Nuke the Market
With all manufacturers
firing on all cylinders.
They “nuke” the market
with tempting offers.
The Canadian consumer
loves to get nuked
with tempting offers.

4. Cheap Credit
Its no secret that
subsidized loans and
leases make vehicles
affordable.
While the customer
presumably assumes the
“value” risk with ever
longer loan terms.

5. Trade Deficiencies
Who cares.
Cheap loans, imaginative
financing, facilitates
dealing with trade in
deficiencies.
Enabled by the financial
service providers.
Subsidized by the
manufacturers.

6. Longer Terms
Terms are inexorably
getting longer to arrive at
an appealing monthly
payment.
Roll over the trade
deficiency, the taxes, no
down payment, extend
the term.
Lower the Rate
Close the sale with the
Lengthen the Term
To stay in the budget
subsidized monthly
payment.

7. The Risk
Customers use the
subsidized low interest
loans to continually roll
over the trade in risk to
a new vehicle.
Manufacturers and
financial service
providers assist
customers to roll over the
risk.
Manufacturers actively assist
customers to roll over the
used vehicle risk.
Manufacturers assume
the residual risk in a
lease, and assist
customers to roll over the
risk in a loan.

8. Moves Iron
New
Product
Subsidized
Rates
To record sales never
seen for many years.
How can you move so
much iron?
Popularity of
Pick Ups
Abbreviated
Ownership
Cycle
Higher Inventories
Nuke and churn the
market.
Tempt the opportunistic
buyer.
Keep dealer inventories
high.
It all works.
It moves a ton of iron.
Why did it take so long to execute?

9. CPO
When you move so much
iron with such tempting
offers.
The balancing act tilts
against Certified Pre
Owned, and recent model
year used vehicles.
Especially for
manufacturers with
established CPO
programs.
CPO is the Canary in the coal
mine…

10. The Months in 2013
Our Thoughts

January: (-2%) No sales management from 2012, Audi huge blink at -26%

February: (-3%) Testing the market, is this reality…scary stuff.

March: (-0.5%) The Japanese and Koreans are napping, - 2% for the quarter.

April: (+8%) After an alarming 1st quarter, everyone throttles up.

May: (+5%) Lets keep it up, to get a strong quarter

June: (+1%) A breather, lets asses the positions, up 2% YTD some relief.

July: (+10%) Flat out in the summer, Ford blinked at -10%

August: (+6%) More flat out who else will blink, BMW a huge blink at -15%

September: (+4%) Keep it up for a strong quarter, BMW blinks again at -12%, Mazda
blinks at -16%, Kia has been “winking” all summer.

October: (+7%) Momentum, and intense competition, Acura blinks at -18%, Kia now
blinks at -12%

November: (+6%) Flat out to generate more blinks, Acura blinks again -5%

December: (+4%) Strong finish with some selected “sales management” by a few.

11. Blink
For the second year,
every manufacturer going
into the 3rd quarter seeks
opportunistic sales.
For one to acquire
opportunistic sales,
another must blink.
Get aggressive
to gain an
advantage
Levers to create blinks:
Product
Programs
Uncover weak spots in the
competition, to create blinks.
Inventory
Tactics

12. Some Numbers
2013
Compact
Mid Size Sedans

Honda Civic……..64,063

Jetta……………….30,413

Hyundai Elantra…57,760

Ford Fusion… …..20,145

Toyota Corolla……44,449

Toyota Camry……..18,245

Mazda 3……...….40,466

Honda Accord.........17,165

Hyundai Sonata..…14,519

Chrysler 200…..…..11,666

Nissan Altima…..….10,488

Chevy Malibu…….….6,834
As expected the Civic remains on top,
followed by a strong performance for
the Elantra and Corolla
The Jetta remains ahead, the Camry and
Accord continue to trade paint.

All Figures from Automotive News
Agreed…Jetta is a success story.

13. Some Numbers – 1
2013
CUV/SUV
Pick Up

Ford Escape……….45,141

Ford F Series…..……122,325

Honda CR-V……….34,481

Ram…………….………80,248

Toyota RAV4……….33,156

GMC Sierra……….. …46,908

Hyundai Santa Fe…29,220

Chevy Silverado…….…37,490

Chrysler Journey…..27,745

Chevy Equinox….....19,819
The Escape ahead, while the Japanese
trade paint, and Hyundai keeps the
leaders focused no to blink.
Up by 13% in 2013, dramatically better
than the overall market.
Its an enduring love affair with big
vehicles.

14. Some Numbers – 2
2013
Entry Luxury
Luxury SUV/CUV
BMW 3 Series………12,507

Lexus RX…………………7,789

M-B C Class……..…9,356

Audi Q5……………………7,547

Audi A4………......…5,956

Acura MDX…….….…....…6,114

Cadillac ATS…………3,256

Acura RDX……………..….6,112

Infiniti G/Q50…......…3,048

M-B GLK…………..….……5,979

Lexus IS…….………..2,579

BMW X3…………....…..…5,658

Acura TL…………..…2,374

M-B M Class………….…..4,804
BMW X5…………………..4,704

Lincoln MKZ………….1,625


Cadillac CTS……….….997
Cadillac SRX…… ........…3,765


Buick Enclave…….……...3,286

Lincoln MKX………..…....3,238

What else is new 3 Series ahead, ATS beat the
G/Q50 combo, with IS nosing out the TL.
CTS will be interesting next year.

Infiniti J/QX60………......…3,191

BMW X1……………..……2,910
Shuffling of positions, very competitive segment.

15. Some Numbers – 3
2013
Pony Cars
Did You Know

Mustang…………….5,054

SLS AMG……..…....….67

Camaro……………..2,167

Lamborghini…..………..46

Challenger………….1,514

Maserati………..….….214

Ferrari………….….…..214

Panamera…..…….…..328

GT-R………………..…125

R8…………….……..….111

Bentley…………..…….147

Volt…………..….……..931

Leaf…………..…….….470
George Follmer (Mustang) probably got
bored by the lack of competition.

16. Shorter Ownership
As terms get longer to
arrive at a monthly
payment that fits the
budget.
The ownership cycle is
abbreviating.
With 40% considering,
and almost 10% actively
shopping for a new
vehicle within 24
months.
Longer terms and shorter
ownership cycle

17. Manufacturers in 2013
Our Thoughts

Audi: (+2%) Good performance especially the Q5

Acura: (+10%) On the strength of the ILX – MDX – RDX

BMW: (+1%) After a few blinks still in front of the MerBimAu race

Chrysler: (+6%) Still # 2…Dart – Grand Cherokee and…Ram huge numbers

Ford: (+2%) # 1 in 2013, although felt the competition

GM: (+3%) Its still not right at GM, gave in to the Japanese, and Ram.

Honda: (+10%) The Civic at # 1 and strong gains by Accord.

18. Manufacturers in 2013 - 1
Our Thoughts

Hyundai: (+1%) Modest increase, strong numbers by Elantra and Santa Fe

Infiniti: (+11%) Improved with Q50 and QX60

Jaguar: (+96%) Finally a gain after a challenging 2012

Kia: (-7%) Begs the question “What is going on?”

Land Rover: (+20%) Again the Evoque and Sport…strong

Lexus: (+5%) Steady increase with ES – IS and the RX as usual

Mazda: (+0%) Again this year the CX5 saves the day

19. Manufacturers in 2013 - 2
Our Thoughts

Mercedes-Benz: (+5%) Lost # 1 to BMW, B Class – GLK saved the day

Mini: (-4%) Niche / Specialty cars are fickle.

Mitsubishi: (+7%) Hovering around with only 2 models

Nissan: (+11%) Gaining with the Pathfinder.

Porsche: (+22%) Boxster, Cayman, Cayenne, with a glimmer from the 911.

smart: (-6%) Sliding again in 2013

Subaru: (+19%) What can you say Wow XV Crosstrek, Forrester

20. Manufacturers in 2013 - 3
Our Thoughts

Suzuki: (-43%) Closing the shop.

Toyota: (+1%) In the game with strategic gains.

Volkswagen: (+6%) Maintained strong momentum with Jetta and Tiguan

Volvo: (-16%) What can you say?


Sales in Canada were up 4% for the year.
The Japanese solidified their positions, especially Honda and Toyota.


Hyundai held its position, while Kia gave some ground.
GM persists in leaving pockets of vacuum filled by other.

A record breaking 2013.

Epic competition.

21. Success
The Canadian market is
hyper competitive,
been like that for years.
Success hinges on
having your competition
blink.
Discretion is essential
especially with a myriad
of social platforms, and
pundits.
In a hyper
competitive
market
Why would your
competition tell
you everything
they know?

22. Sustainable?
Can the value of auto
loans continue to rise in
2014?
What do you think?
Do you think anyone has
the answer?
“There remain pockets of ebullient
household credit growth – most notably,
the value of car loans
is rising at an eye-watering 18% per
year (Exhibit 15).” From Canada Economic
Compass.

23. Our Thoughts
On 2014

Lower value of the Canadian dollar will impact some manufacturers and strategies?




Will the level of financing, programs, subsidies persist?
As usual new models/product will provide an advantage.
Will the Canadian consumer continue to remain bullish and optimistic to acquire
additional debt especially during the second half of 2014?
Astute manufacturers contrary to 2013 will be hyper aggressive during the first quarter
of 2014.
Thank You