Canada: Car Brands With The Most And Least Loyal Customers

Last Updated: August 20 2019
Article by Crowe MacKay LLP

ECONOMISTS UPGRADE U.S.-CHINA TRADE CONFLICT TO ‘WAR’

The economic consensus is in: The U.S. and China are in a trade war. A year ago, the economists in a monthly survey by The Wall Street Journal were evenly split over whether to describe the situation in those terms. Of the 48 respondents, 24 said the U.S. was in a “trade war,” while the other 24 said they preferred other terms, such as “trade skirmish,” “trade tensions,” “trade battle” or “trade dispute.” But in the latest survey, conducted Aug. 2-6, 87% of respondents were good to go with “trade war.”

Source: The Wall Street Journal

AutoCanada REBRANDS U.S. STORES, TO SELL 4 AS PART OF TURNAROUND

AutoCanada has re branded its nine U.S. locations as the Leader Automotive Group under a turnaround plan that includes selling under performing stores, Canada's lone publicly traded dealership group said Thursday. AutoCanada, which in April 2018 acquired nine stores from the Grossinger Auto Group, said in a news release detailing second-quarter earnings that it also plans to sell four of its U.S. dealerships. It did not specify the locations. Tammy Darvish, who AutoCanada hired to lead the ailing U.S. stores in March, has created a restructuring plan focused on managing expenses, certain dealership initiatives and gross profit efforts at department levels. Darvish, on a Friday conference call with investors, said the efforts have included renegotiating vendor contracts and shifting compensation from fixed to performance-based.

AutoCanada Executive Chairman Paul Antony said the company hopes to turn the U.S. stores’ financial performance around under Darvish within six months. “We now know what we have there,” Antony said. “Our goal is over the next six months to make those stores at minimum break even and then start turning the corner to actual profitability.” Antony said the four U.S. stores up for sale are the weakest of its American dealerships and said it would become more difficult to achieve the company’s break-even goal without selling those locations. The U.S. stores have dragged down the company’s earnings and share price since the group acquired them in 2018. AutoCanada, which spent $135 million Canadian (US$105.6 million) on the 2018 acquisition of the U.S. stores, has said it has dealt with unexpected costs and has written down the value of the U.S. operations.

Net Loss

As a whole, AutoCanada reported a net loss in the quarter of $4.5 million (US$3.42 million), compared with a loss of $39.4 million (US$29.94 million) the previous quarter. The company also said the adoption of new reporting standards increased expenses, resulting in an unfavorable impact of $2.6 million (US$1.98 million) on the latest quarter's red ink. Revenue rose 7.4 per cent to $946 million (US$718.96 million) as total vehicles sold rose 4.3 per cent to 19,353. The number of new vehicles sold during the quarter fell 3.2 per cent to 12,104 units. Used-vehicle sales surged 20 per cent to 7,249 units. On a same-store basis, revenue rose 4.7 per cent to $741 million (US$563.16 million) and vehicle sales jumped 5.4 per cent to 15,535 units. F&I sales rose 6.4 per cent to $38.3 million (US$29.11 million). Parts, service and collision repair revenue climbed six per cent to $64.5 million (US$49.02 million).

Acquisition Strategy

AutoCanada said it sold a Hyundai store in Victoria, British Columbia, in June, followed by the sale of another Hyundai store in Calgary, Alberta, in July. The company said it “is not planning to sell any further Canadian dealerships at this time."

Antony said AutoCanada, which has expanded in recent years via acquisitions, would look at buying new stores when the company’s financial performance is in order.

"We still have a lot of wood to chop when it comes to operating the business,” he said. “What we’re very concerned about and what we’re focused on every day is getting our balance sheet square.

Once we do that and continue to operate our way into a good financial position, we’re looking forward to making acquisitions.”

Canadian Operations

AutoCanada reported net income of $12.8 million (US$9.73 million) at its Canadian operations during the second quarter, compared to a loss of $6 million (US$4.56 million) a year earlier.

The company attributed the gain in net income to its “Go-Forward Plan,” which it says has “improved the operational focus of the Canadian dealership network” while developing new profit centres, which include new special finance and wholesale divisions and long-term plans to sell more used vehicles. “At the end of Q2, we felt very, very good about the talent that we had, the new profit centres performance and contributions across all of our business lines,” AutoCanada President Michael Rawluk said on the call. “And we felt a great sense of momentum going forward. To put it anecdotally, we are just getting started.” Canadian revenue rose 6.4 per cent to $830 million (US$630.8 million) as the number of vehicles sold rose 5.3 per cent to 16,983. Total new-vehicle sales in Canada dipped 3.4 per cent to 10,559 units, as a decline in fleet vehicle sales offset a gain in retail sales. Meanwhile, used-vehicle sales increased 24 per cent to 6,424 unit.

Source: Automotive News

DAIMLER FACES UP TO 1 BILLION EURO DIESEL FINE: DER SPIEGEL

Prosecutors in Stuttgart, Germany are set to fine Mercedes-Benz parent Daimler between 800 million euros ($895 million) and 1 billion euros for diesel-related violations, German magazine Der Spiegel said in its online edition on Friday. German motor vehicle authority KBA had discovered cheating software fitted to Mercedes-Benz C-Class and E-Class vehicles and ordered the carmaker to recall 280,000 vehicles, Spiegel said. A fine of up to 5,000 euros per vehicle is being considered by the Stuttgart prosecutor, the magazine said. A spokesman for the prosecutor’s office said the investigation was ongoing and would not be concluded before year-end.

Daimler declined to comment while the investigation was under way.

In May 2017, German prosecutors searched Daimler offices as part of a fraud inquiry related to possible manipulation of exhaust gas after-treatment in diesel cars. Daimler also faces regulatory scrutiny by United States authorities. In February 2016 the U.S. Environmental Protection Agency asked Mercedes-Benz to explain emissions levels in some of its diesel cars.

Prosecutors in Germany have used administrative orders to impose fines on Volkswagen, Audi and Porsche, blaming senior management for oversight lapses which allowed emissions cheating to take place. In May, Stuttgart prosecutors fined Porsche 535 million euros and supplier Bosch 90 million euros, while prosecutors in Braunschweig fined VW 1 billion euros and Munich prosecutors imposed an 800 million euros fine against Audi.

Source: Reuters

AUTOMAKERS TRIM PRODUCTION AS MARKET WEAKENS

– But Hope to Avoid Wholesale Cuts of a Decade Ago

Automakers are facing what is only the second down market since the end of the Great Recession and the record sales that followed. How far down demand will go this time is a matter of debate, with analysts and planners warning that could depend on how the Trump administration handles disputes with China and other trade partners. Industry officials, including General Motors CEO Mary Barra, say they learned critical lessons during the last recession and hope to be more proactive this time around, adjusting production early to stay in line with market demand while avoiding the sort of budget-busting incentives that devastated industry balance sheets a decade ago.

Source: CNBC

GM, VOLKSWAGEN SAY GOODBYE TO HYBRID VEHICLES

Auto makers for two decades have leaned on hybrid vehicles to help them comply with regulations on fuel consumption and give customers greener options in the showroom. Now, two of the world’s largest car manufacturers say they see no future for them in their U.S. lineups. General Motors Co. and Volkswagen AG are shifting the bulk of their future investment into fully electric cars, seeing hybrids, which save fuel by combining a gasoline engine with an electric motor, as only a stopgap to ultimately meeting tougher tailpipe-emissions requirements, particularly in China and Europe.

Source: The Wall Street Journal

YOUNGER BUYERS STILL WANT THE DEALERSHIP

A vast majority of vehicle shoppers still want the dealership involved in the buying process, and it doesn't appear that is changing with younger buyers. That's according to a study by Urban Science in conjunction with Harris Poll that surveyed some 2,000 shoppers and about 200 dealers in February. The results included some surprises, especially for dealers, said Randy Berlin, global director of dealer services at Urban Science. Berlin recalled speaking to Automotive News 20 years ago when he was a Lincoln-Mercury Internet programs manager. Back then, vehicle shoppers were getting wise to the Web and spending more time on consumer and independent review sites than on automaker sites.

Source: Automotive News

CAR BRANDS WITH THE MOST AND LEAST LOYAL CUSTOMERS

It seems like it should be simple for car companies to maintain customer loyalty – if they make good cars, people should keep buying them. Often, drivers find a car they like and, when the time comes to replace it, they stick with the same company.

Yet this is not always the case. Consumers may want to try something new, or they may have had a bad experience with their current car and opt for something completely different. Some companies have found the key to ensuring that most of their customers come back, while others can only retain a fraction of their previous buyers.

To determine the car brands with the most and least loyal customers, 24/7 Wall St. reviewed J.D. Power data on the share of drivers who bought or leased the same brand of vehicle as their previous one over the past year.

 Least Loyal    Most Loyal Owners
 Rank Manufacturer  Rank  Manufacturer 
 10 Volvo

 10  Hyundai
 9  Infiniti  9 Nissan 
 8  Mitsubishi  8 Lexus 
 7  Mini  7 Chevrolet 
 6  Buick  6 Kia 
 5  Jaguar  5 Ford 
 4  Dodge  4 Ram 
 3  Fiat  3 Honda 
 2  Chrysler  2 Toyota 
 1 (Least)  Smart  1 (Most) Subaru 

Source: USA Today

MERCEDES NEW MODEL – THE AA CLASS IS INTRODUCED

In case you missed this announcement, below is a link to the video.

https://vimeo.com/254035263

Source: Vimeo

RISE OF ELECTRIC CARS THREATENS TO DRAIN GERMAN GROWTH

Germany—Concern is rising in Europe’s automobile heartland about the economic impact of the industry’s move to electric vehicles from gasoline-powered cars. Officials and executives in Germany fear the country’s big car companies and rich ecosystem of suppliers and service providers are insufficiently prepared for the transition, and that their leadership may not be assured in an electric-car world, threatening jobs, tax revenue and even growth.

Source: The Wall Street Journal

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