Canadian auto industry’s future is hazy, Conference Board says

The Conference Board of Canada issued a report on prospects for the Canadian auto industry this week and it wasn’t the most cheerful of information releases.

Rather than interpreting it, I’ll just print it here, as it was received on Monday.

The motor vehicle manufacturing industry in Canada got good news in 2015, but the industry faces numerous medium- and long-term challenges, according to The Conference Board of Canada’s industry outlook.

Thanks to record sales in both Canada and the United States and a declining Canadian dollar, industry profits in 2015 are estimated to have surged by 79 per cent to almost $2.5 billion and the industry’s pre-tax profit margin reached 4 per cent – the highest since 2000.

However, the economic headwinds facing the Canadian economy are sufficient to ensure profits drop to $2 billion this year, and continue to decline steadily through 2020.
Highlights:

Both Canada and the United States posted record sales in 2015. Although Canadian sales are expected to plateau, U.S. demand is on the upswing.

Manufacturers are shifting car production to the southern United States and Mexico, and retooling Canadian plants for truck and crossover assembly.

The Trans-Pacific Partnership agreement is expected to pose challenges to Canadian vehicles and parts manufacturers.

“Despite the strong short-term results, the Canadian auto assembly industry is struggling to grow,” said Michael Burt, Director, Industrial Economic Trends.

“Over the next five years, no growth in production is expected in Canada.

“While the impact of the Trans-Pacific Partnership (the TPP) agreement is still somewhat uncertain, it is expected to heighten competition for Canadian assemblers and parts manufacturers.
“The agreement calls for the elimination of tariffs on imported Japanese vehicles within five years of ratification, leading to enhanced competition in the saturated Canadian market.

“Although Canadian producers have not traditionally exported a lot to Asian countries, the TPP will also increase their market access to member countries, creating new opportunities.”

For vehicle manufacturers, tariffs on Japanese vehicles are to be eliminated within five years of ratification. In contrast, U.S. tariffs on Japanese vehicles, although higher, would not be eliminated fully for 25 years.

Parts manufacturers currently operate under provisions that require vehicles to contain at least 62.5 per cent of their content from the three countries — Canada, Mexico or the U.S. Under the TPP, that share will drop to 45 per cent, 40 per cent or even 35 per cent, depending on the parts in question. These provisions increase the likelihood that more imported parts will make their way into North American supply chains.

Low petroleum prices are contributing to rising demand for trucks and crossover vehicles at the expense of passenger cars, which is a boost for Canadian-based assembly plants. Manufacturers are shifting car production to the southern United States and Mexico, and retooling Canadian plants for truck and crossover assembly, which produce higher profits per vehicle.

As a whole, however, Canada is continuing to lose out on auto sector investment to the southern U.S. and Mexico. Toyota is ending Corolla production in Canada and replacing it with the crossover RAV4.

Although its lifespan has been extended, the Consolidated Line at General Motors’ Oshawa Assembly is now slated to close in 2017 and no replacement model has been identified.

Labour negotiations in 2016 may play a key role in whether the Detroit Three automakers direct new models to Canadian plants.

U.S. loyalty study suggests

When you visit any sort of rally event, it becomes immediately evident that Subaru is the brand of choice for enthusiasts of that sort of motorsport and the fans’ passion for the brand is addictive. A new study out of the United States shows that owner loyalty for Subaru is in fact the best in the industry.

A survey of nearly 6.8 million households by data company Experian indicates that 67.7 per cent of Subaru owners will buy another Subaru when it comes time to shop. Ford came a close second at 67.5 per cent, while Toyota and General Motors weren’t far behind with 67.3 and 67.2 per cent respectively. FCA rounded out the top five a couple of points back at 65.5 per cent.

On the brand side of things, as opposed to manufacturers, things change up a bit. Subaru remains No. 1, while Ford remains in second, albeit with a slight drop to 66.7 percent. Mercedes-Benz pops up into third spot with 65.1 per cent loyalty while Toyota drops to fourth spot with 63.5 per cent. Kia jumps to fifth spot with 63.2 per cent, while not a single FCA brand appears in the top ten.

Things get really unpredictable when we look at which specific vehicle’s owners are the most loyal. Owners of the iconic Range Rover, long a favorite of the British gentry, are the most likely to replace their vehicle with a newer model of the same vehicle. Just under half of all Range Rover buyers, 48.2 percent have stayed with that model. The Mercedes-Benz S class comes second, followed by the Lincoln MKZ. Not quite a passenger vehicle per se, the Mercedes-Benz 2500 Sprinter Van comes fourth, while the Nissan Leaf electric car rounds out the top five.

Want your oil changed?

About 20 years ago, or so, I was sitting around brainstorming with a group of fellow car dealership employees, trying to figure out a way to make the auto maintenance industry more convenient for consumers.

Someone mentioned that he had seen an ad for a mobile oil change service while on vacation in Florida. We all agreed that it was a great idea, but that it would never work in a Toronto winter. Not one of us would want to work outside in the snow.

Early in 2015, a Toronto-based company called Kambio began offering mobile oil changes to consumers and medium-size fleets as a test. “Weather is definitely a huge factor and we have learned how to overcome that during our pre-launch days,” said CEO Peter Atam, who added:

“We learned a lot during this period.”

With beginnings in Toronto, Atam says that plans are for Kambio to expand nationally.

What makes Kambio unique in this market is that basic maintenance, which normally can be an inconvenience for motorists, can be done at your home or office. More than just oil changes, Kambio representatives can do small basic car repairs such as the replacement of light bulbs and wiper blades and perform tire rotations or even summer/winter tire swaps. The company can also provide storage for your off-season tires.

Unlike most fast-ube places, Kambio also provides a waterless car wash service. For more details or to book a service, visit kambio.ca.

Porsche issues specs,

• pricing for 718 Boxster

When Porsche announced that the next-generation Boxster would be powered by a four-cylinder engine and renamed the 718 Boxster — in a nod to the company’s 1950s-era racing success — casual observers might have thought this would reduce the car’s performance profile.

Nothing could be further from the truth, as Porsche has announced that the 718 will boast 35 more horsepower than the outgoing model.

The 718 Boxster will create 300 horsepower from its 2.0 Litre Turbo four cylinder engine, while the 2.5, also turbo-charged, in the 718 Boxster S churns out 350. Amazingly, both engines are said to achieve 13 per cent better fuel economy than the previous powerplants.

When the 2017 718 Boxster and Boxster S reach Canadian showrooms in late 2016, they will be priced from $63,900 and $78,000 respectively.

Toyota seeks designers for Dream Car Art Contest

Is your kid a car fanatic and an artist? If so, then take note of Toyota’s dream car art contest. The contest invites children up to 15 years of age to contribute any non-digital creation depicting their idea of the car of the future. The top three finishers in three age based categories will receive a 7″ 8GB tablet and the opportunity to represent Canada at the company’s global competition in Japan.

To learn how your your young innovator can enter, visit www.toyota.ca/toyota/en/dream_car_art_contest .

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