Canadian sales at the mid point of 2010

B Y

STRADAJ U LY 2 0 1 0

Canadian Sales Mid Point 2010

The BuzzSales are horrible a comeback is imminent.Its just around the corner…the comeback!

We said repeatedly that 2009 was not so bad,

and obvious we did not expect 2010 to be a

quantum leap from 2009.

Whoever believed and abided by the mantra

that 2009 was an horrible year, made

specific decisions and deployed relevant

tactics.

The ones concluding that 2009 was not so bad, while providing insight into the “new

normal” made decisions, and deployed tactics to evolve within a

new reality.

Sales NumbersEveryone presents numbers to burnish their

image.

More pundits are increasingly involved in

expressing opinions, and commenting on monthly

sales numbers.

Its becoming interesting and entertaining.

Yes…there are a myriad of nuances on how

numbers are presented, seen, perceived,

disseminated, compared, analyzed….it depicts different images

of the same results.

How does Strada Look at Numbers To acquire insight, and understanding, while

seeking simplicity.

The auto industry is competitive, always has

been, always will be.

The product is raced.

We see numbers from a competitive perspective.

We see numbers from a strategic / tactical

perspective.

We look at numbers to predict the next move,

the next trend, and outcome.

We see numbers to gain clarity in the Canadian

big picture.

What Do We See at the Mid Point?At the end of the 1st Quarter + 15%

End of 2nd Quarter + 9.1%What is the trend?

April and May were comparable to 2009, and

must have raised questions for some manufacturers.

There are 786 K new vehicles sold in Canada

which would indicate a year end total of 1.5 M it will be interesting to see how the

second half develops.

The Koreans are doing to the Japanese, what the

Japanese did to the domestics.

If a manufacturer loses sales in a recalibrated

market will they ever regain the sales.

For the first time in countless years, Ford is the

leader at the mid point.

KoreansOnly 2 manufacturers, that are joined at the hip, they are

both on an upward sales vector with appreciable momentum.

The economic downturn was advantageous to the

Koreans.

They offer good products with numerous standard features, at reasonable prices, for a compelling

value proposition.

The styling of their latest offerings is leading edge,

yes…the Korean understand that styling

sells.

If they want to sell additional units, they activate a

monthly program to further stimulate sales.

Thought: Who is losing sales to the Koreans?

JapaneseOne manufacturer (T) stepped on a “banana peel”

its understandable that their sales are lagging. Although their luxury division is doing well.

Another manufacturer (H) is an enigma, and inexorably

becoming a shadow of its former self. The luxury division is in the

same situation.

Another manufacturer (N) is holding its own, with their luxury division having an appreciable

increase in sales.

Still another (M) is also holding its own with an increase in sales.

The manufacturer (S) with dramatic sales increases is doing

well, while selling less vehicles than a German luxury

manufacturer.

The manufacturers with less sales volumes, one is slightly

behind last year, the other seems to have made a decision to

concentrate on their motorcycle business.

DomesticsFair to say that change has been the operative word, as

well as emerging from the brink of disaster for some.

We expected Ford to displace GM as the

sales leader in Canada, its now a done deal.

Chrysler has regained its “mojo”. These guys

know how to move iron when they want to.

GM is still mourning the loss of Pontiac, and leasing. We are still observing Cadillac.

These manufacturers offer good products, their

market share is increasing.

Thought: Who is losing market share to the

domestics?

GermansWith a robust upward sales vector while raising entry barriers

for the sweet spot of their market segment. Similar to the halcyon days of Detroit.

They have the entry level luxury market be it for cars or CUV’s almost

cornered .

To compete amongst themselves they are

fearless in putting “skin in the game” to augment their share of the entry

level and luxury market.

One manufacturer that is not in the luxury

segment, is doing well with some of its newer

models.

The one that deals primarily with sports cars is ahead, aided by new

models.

Dynamic PricingCanadians love “DEALS”

Be it the price, the financial package, the optics of exceptional value.

At the mid point some manufacturers have a

clearer understanding of satisfying the insatiable

craving for a “deal”.

Manufacturers have the technology/personnel/

resources to analyse any and every aspect of

individual models and markets across Canada.

They disseminate their monthly sales (previous

month), and their monthly promotions (coming month).

Dynamic pricing can easily alter the monthly sales

results + unsettle competitors.

It’s the reason we prefer to look at quarterly results.

Recalibrated MarketThe Canadian Market has been adjusting for

several months.

The manufacturers that acknowledged a

recalibration with a few exceptions are doing quite

well.

The manufacturers waiting for the 07 or 08 market to reappear are not doing as

well.

In a recalibrated market gaining new sales is the

preferred direction, losing sales is not an option.

Thought: If you lose sales to a competitor , when will you

regain the lost sales?

Thought: Would you rather sell 8 and make 90, than sell 10 and make 100…makes for a fascinating

PPT.

Transcend WinterMost of the Canadian market endures several

months of winter. Consumers seek to transcend winter conditions.

Manufacturers that have grasped “transcending

winter” by offering AWD vehicles with distinctive styling accompanied by

“dynamic pricing”…have market winners.

Turning a FWD platform into AWD is cost effective

repositioning / rebranding.

Transcending winter while being “green” is a win.

Transcending winter with a multi purpose utility vehicle

is another win.

Transcending winter with a genuine 4x4 truck is another

win.

Fuel economy is not a win.

Certified Pre OwnedManufacturers are measuring their CPO sales.

A trend that will continue while further enabling sales of new vehicles.

Consumers are responding

enthusiastically and positively to

manufacturer supported CPO programs.

Consumers perceive increased peace of mind

with a CPO vehicle.

Manufacturers and dealers love CPO

vehicles for a myriad of reasons/agendas/

strategies.

Yes…they are making money twice with the

same vehicle.

1- Marketing when new, 2-Remarketing when

used.

Compact Mid Size Sedans

Honda Civic……..26,905 Mazda 3………….26,383 Toyota Corolla…...24,873

From our perspective the Mazda 3 is the undisputed leader in this segment, both

the Civic and Corolla have less units this year than last year. While the

Mazda 3 has increased.

Fascinating to see how the second half will develop.

Sales results from: Automtive News

Ford Fusion………..11,109 Toyota Camry………7,915 Hyundai Sonata…….7,228 Honda Accord………7,058 Chevy Malibu……….6,969 Nissan Altima……….6,823 Mazda 6……………..3,014

Competitive segment, with good product offerings. The Sonata is ahead of the Accord. Why is the Mazda 6 so low?

The most popular is the Fusion, way ahead of all the others.

Some Numbers YTD June 2010

CUV/SUV Pick Ups

Ford Escape…………22,078 Honda CR-V…………13,542 Hyundai Santa Fe…...13,416 Toyota RAV4…………11,987 Chrysler Journey…….10,524 Chevy Equinox………..9,297

A very competitive segment, Hyundai is breathing down Honda’s neck in this

segment too.

There are other offerings and competitors in this segment.

Ford F Series……………46,610 Ram……………………...25,674 GMC Sierra……………...22,510 Chevy Silverado………...20,146

Pick up sales are through the roof compared to last year. Ford remains

the undisputed leader in this segment. Ram has come from last to second

place.

Canadians want pick ups and are financing them for increasingly longer

terms.

Some Numbers – 1YTD June 2010

Entry Luxury Luxury CUV/SUV

BMW 3 Series………….6,162 M-B C Class………...…4,376 Audi A4…………………2,642 Infiniti G…………………2,180 Buick LaCrosse………...1,695 Cadillac CTS……………1,643 Acura TL………………...1,351 Lexus IS………………....1,172

The numbers are revealing and self explanatory.

Lexus RX………………..3,736 M-B GLK………………...3,075 Acura MDX…………...…2,983 Buick Enclave……….…..2,207 BMW X5……………….…2,101 M-B M Class………….….1,827 BMW X3…………….……1,656 Acura RDX……………….1,579 Audi Q5…………………...1,508 Cadillac SRX……………..1,297

The vehicles are popular, its competitive.

Some Numbers – 2YTD June 2010

Pony Cars Did You Know?

Mustang…………….2,667 Camaro……………..2,643 Challenger………….2,022

Still a reminder of the Trans Am races of 40 years ago.

The strategy of offering and promoting the 6 cylinder engine is working.

SLS AMG……………….39 Lamborghini……………..36 Maserati………..………..79 Ferrari…………..………..50 Panamera……….….…..201 GT-R…………….…….…40 R8…………………….….57 Bentley…………….…….38

Some Numbers – 3YTD June 2010

The DealerWhere the auto industry meets/interfaces with

the customer. As the market recalibrates, dealers recalibrate.

There have been numerous dealer

recalibrations in Canada.

With altering sales results from the

manufacturers. The recalibration process

continues.

The values of the various franchises are in

a state of flux.

The product is more complex.

While the customers is increasingly more

demanding.

Our Thoughts

Last year (2009) was tumultuous generating “sea changes” in the automotive landscape, mind you the sales results were acceptable.

The sea changes provoked a dramatic recalibration of the Canadian automotive landscape, with the ensuing domino effect.

Historically the auto industry abhors a “vacuum”, which is instantly filled by competitive forces.

Some manufacturers created a vacuum, while other manufacturers immediately filled the vacuum. In 2010 there is no vacuum, its filled.

Sales are acceptable since what one lost (vacuum creator), another immediately gained (vacuum filler).

The ultimate winner is the consumer/customer.

Thank You