The Ontario Dealer - Volume 6 Issue 4

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YOUR CONNECTION TO ONTARIO’S USED CAR INDUSTRY

THE ONTARIO UCDA

VOLUME 6, ISSUE 4

THE OFFICIAL MAGAZINE OF THE USED CAR DEALERS ASSOCIATION OF ONTARIO

> INSIDE: WORKING WITH

LENDERS /28

PLUS DEALER PROFILE: Bayview Auto Sales /24

THE AUTOMOTIVE AFTERMARKET /39 FALL 2018

THEONTARIODEALER.COM


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THE ONTARIO UCDA

IN THIS ISSUE

VOLUME 6, ISSUE 3

Fall 2018 USED CAR DEALERS ASSOCIATION OF ONTARIO 230 Norseman Street, Toronto, ON M8Z 2R4 Tel: 416.231.2600 Toll Free: 1.800.268.2598 web@ucda.org

FEATURED STORIES Vehicle History Reporter By Matt Mcdonald

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ucda.org Publication Mail Agreement #41890516

Wholesale Market Analysis By Chris Chase

ONTARIO DEALER is published by Laservision Graphics Ltd. four times a year.

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130 Industry Street, Unit 36, North York, ON M6M 5G3

Working with Lenders by Lori Straus

EDITOR Gina Monaco Tel: 1.647.344.9300 or 1.289.456.4617 gina@ontariodealer.com

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ADVERTISING SALES

The Automotive Aftermarket

Terry Coster Direct: 416.360.0797 Office: 647.344.9300

by David Miller

PHOTOGRAPHY

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05 07 09 11 14 16 23 24 32 35 43 44

The Driver’s Seat Warren Barnard

Editor’s Note Gina Monaco

Member’s Corner Bob Pierce

The Law Matters Jim Hamilton

Trends Chris Chase

Tech Talk Angela West

2018 OMVIC Engagement Series Dealer Profile Rhonda Payne

The Common Lawyer Justin M. Jakublak

Budgeting & Forecasting Lori Starus

Remarketing Services Offers Old Car Detective Bill Sherk

DESIGN ThrillhouseStudios.com

CONTRIBUTORS Chris Chase, Matt Mcdonald, Rhonda Payne, Bill Sherk, Lori Straus, Angela West, David Miller. If you are interested in having your personal opinion heard, contact the editor at gina@ontariodealer.com

The publisher of The Ontario Dealer reserves the right to turn down any advertising or content submitted to it. The Used Car Dealers Association of Ontario and the publisher accept no responsibility for claims or statements made by advertisers in this publication or by the independent authors of articles appearing in this publication. All statements and opinions appearing in this publication are those of the writers themselves and are not to be construed as reflecting the position or endorsement of the Used Car Dealers Association of Ontario or the publisher.

VOLUME 6, ISSUE 4 | 3


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THE DRIVER’S SEAT Free Trade Survives! The threat of U.S. tariffs on passenger vehicles built in Canada for export to the States is now removed (unless that number reaches 2.6 million units exported per year). That would be 20% higher than the highest vehicle export level Canada has ever seen in 1999 and a figure not likely to be seen again soon, if ever.

By Warren Barnard, Executive Director, UCDA

DID YOU HEAR THE WHOOSHING SOUND

late in the evening of September 30th? That was the sound of Canada’s auto sector breathing a collective sigh of relief that a new free trade agreement with the United States and Mexico had been reached in principle. The official announcement took place on October 1st. It followed an acrimonious negotiation that lasted well over a year. If ratified by the legislatures of each country, it will become binding and will replace the North American Free Trade Agreement (NAFTA). Unfortunately, the negotiators couldn’t come up with a similarly catchy name, so the agreement will be known as the United States, Mexico, Canada Agreement (USMCA for short). Not sure how we’re supposed to pronounce that! But not nearly as easy to say as the two syllable NAFTA, which rolled nicely off the tongue.

While most of the media attention, as usual, focused on new vehicles, the removal of the tariff threat will help to keep in place the lucrative used vehicle export market that many Ontario dealers have come to depend on. It should also help maintain higher wholesale prices at auctions, as U.S. dealers continue to tap into a rich source of vehicles, especially light trucks. The retail market for both new and used vehicles clearly suffered during the period of economic uncertainty created by free trade doubts. The news of the trade agreement should be positive, but it remains to be seen how this will be reflected in sales volumes and prices as we head into the last quarter of the year. As we’ve seen, change in today’s industry can come quickly and without warning! One thing you can be sure of ... you'll find lots of interesting articles and features in this and every issue of THE ONTARIO

Annual Fleet/Lease/Rental market Trends The Aftermarket market. In Canada, the automotive aftermarket is a $16.7 billion industry that employs more than 410,000 people. Don’t overlook this market. It can benefit your business in several strategic ways.

Budgeting & Forecasting Working with your lender. With credit availability improving and lenders making more auto loans, dealers with the strongest partnerships with their lenders have a competitive edge. Top ways to develop and nurture lender relationships.

CarProof becomes Carfax Canada Bayview Auto Sales Long-time UCDA member in Belleville is the featured dealer in this issue. As always, you can reach me at w.barnard@ ucda.org with your comments and suggestions about the magazine. As we enter into the final weeks of what has at times been a challenging year in the used vehicle industry, I want to wish everyone a joyous and safe upcoming Holiday Season and let’s hope for a good year in the industry in 2019! ■

DEALER:

VOLUME 6, ISSUE 4 | 5


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EDITOR’S NOTE Changes coming to The Ontario Dealer

By Gina Monaco, Editor

WE ARE ALL BREATHING A SIGH of

relief, as you’ll read throughout these pages, over the new NAFTA (USMCA). While there are some major changes that will affect the auto industry, it’s not as dire as the U.S. President was touting. There are also some major changes coming to The Ontario Dealer. Over the past year we have updated our magazine, modernized it with a new look and a full redesign. Soon, you’ll see a similar change on our website. We are in the middle of totally revamping our website to be more attractive, relevant and engaging to our readers, with total interactivity. There are a lot of reasons to get a new website and update our old one. Interactivity is one major reason. The

new website will feature a searchable magazine that is responsive to tablet and mobile devices. The website will look fresh and current, and will better reflect the industry. New content will be uploaded regularly, in addition to the regular magazine, making us responsive to changes in the industry. We’ll also be able to make announcements immediately and respond to our readership and stakeholders. Nearly 70% of customers shop or conduct research online – we plan to be one of those resources. Our new site will attract and keep readers, not only used car dealers and industry partners, but consumers who may be shopping for a used vehicle. We’ll also be integrating a new social media marketing plan to get the word out about The Ontario Dealer and you. We hope to develop a loyal following

through newsletters, blogs and social posts. Our blog will help you get your message in front of your target audience faster than print ads or snail mail brochures. Plus, social icons linking to Facebook, Twitter and Instagram will help make sharing information easier. We hope to cater to a whole new generation of tech-savvy users who are also potential buyers of used cars. For our used car dealers and for our advertisers, a new website means more exposure for you and your products and services. Six out of ten consumers expect brands to provide online content about their business on some form of digital property, and more than half head straight to the brand’s website for product information. We are excited about this new venture. Stay tuned. ■

VOLUME 6, ISSUE 4 | 7


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MEMBER’S CORNER The Importance of Ongoing Training According to OMVIC, 100,000 people have taken the certification course over the last 20 years. However, as I wrote in my last Ontario Dealer column, 15,000 registered managers and sales people have not taken a course or refresher since 2010 (when the new MVDA changed everything about the industry).

By Bob Pierce Member Services Director

IT IS HARD TO DISPUTE that Ontario’s car industry, which has 101,000 employees, 60,000 of whom are directly or indirectly associated with the sale of motor vehicles and 29,000 of whom are registered salespeople, would benefit from educational upgrading, a web-based refresher training and formal certification.

Motor vehicle service technicians and financial people need accreditation or certification to stay current and employed. Technicians, for example, need yearly upgrades to be able to continue do their jobs. In the sales department, newcomers (owners, managers and sales people) currently need to be certified only when they enter the industry, for the first time, and then never again.

I frequently take calls from members with the same story: "I have been audited by OMVIC and they have issued an invitation to participate in the disciplinary process set out in the MVDA." Always the same stuff … selling over advertised price, failure to disclose any one of the 20 mandatory disclosures required by the MVDA or employing unregistered salespeople. I recently had a conversation with a couple of OMVIC folks and I expressed an opinion that I sincerely believe … "I don’t believe that anyone registered in this business went to work today to deliberately make up a non-compliant advertisement, they didn’t deliberately let their registration lapse, nor did they deliberately intend to hide a material fact (a disclosure).” In virtually every case of noncompliance that I hear about, after speaking with the dealer and the managers, it turns out that it was a lack of process, lack of knowledge or just plain laziness in checking the deal package for the required information staring them right in the face.

It all comes down to a lack of training…..yes even eight years after a total rewrite of the MVDA. They simply didn’t know. So what do we do? In December, 2017, the UCDA, OMVIC and Wye Management conducted a pilot three day Managers Course including a module on Key Elements of the MVDA. The course included an opportunity to re-write and become re-certified under the MVDA. No consequences for failing, just a re-test if the person wants it. As the name of the course suggests, it is directed at the middle manager. The course is a comprehensive Managers Course focusing on Management, Processes, and the MVDA. It is not just about regulation, it is about managing the New Car Department and the Used Car Department, in a regulated industry. The course is intended to improve the knowledge of the middle manager and get the right processes in place so that day to day dealers can stop the bleeding and get off the OMVIC discipline roller coaster. We hope to offer the course right across Ontario, but it ALL depends on the reception from the industry. So far the reaction has been very positive….I will keep you posted. ■

VOLUME 6, ISSUE 4 | 9


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THE LAW MATTERS Small Claims Court Suing?

Settlement conference

You have to file a “statement of claim”. It costs $75 to file a claim.

Settlement conferences are bargaining sessions conducted by judges. The date is set after the Defence is filed. It’s an opportunity for parties to sit down with a neutral third party and attempt to settle.

Use correct names. Write your story in a clear, concise and chronological order and attach all relevant documents. Once filed, you (Plaintiff) have to serve it on the Defendant(s). The best way to serve a Claim is personally. If personal service cannot be affected, there are alternatives. Ask the Court Clerk or read the guides.

By Jim Hamilton Legal Services Director

WHEN DISPUTES CAN’T BE RESOLVED THROUGH NEGOTIATION OR MEDIATION , Ontario Small Claims Court

can be a last resort. These Courts deal with claims under $25,000. Most used vehicle disputes fall well below that.

Small Claims Court is faster, less expensive and less formal than higher courts, but still requires a significant investment of time. If you do have to go to Court, the following may be of interest … if not … CONGRATULATIONS!

Once served, the court office will need an affidavit confirming who was served and how. A court officer can take your oath. Being sued? Read the Claim carefully. If you disagree with it, you should file a Defence. Generally, you have 20 days after receiving a claim to file. It costs $40. You must serve your defence on the Plaintiff and then file an affidavit with the Court to prove you’ve done so. When preparing your Defence: • Explain why you dispute the Claim in a clear, concise and chronological manner

Where to start?

• Do not dispute things which you do not disagree with

http://www.attorneygeneral.jus.gov.on.ca/ english/courts/scc/

• Make sure correct parties are named in the Claim

This is an excellent website. You will find how-to guides and forms which can be filled out in “word” format or you can visit your local Court.

• See if the Plaintiff is claiming an amount that could be reduced. A Plaintiff must do what they can to reduce damages as much as possible after suffering the initial loss • Attach documents on which you will rely.

Even if the dispute is not settled, the conference is useful. You can ask questions, find out what evidence your opponent will rely on at trial and what a judge thinks of the strength of the parties’ positions. Trial Be respectful. Dress neatly, rise when the judge enters or leaves. Address the judge as “Your Honour”. When the trial begins, the Plaintiff and his or her witnesses testify first. The Defendant and his or her witnesses present their evidence next. After a witness has completed their direct testimony, the opposing party can question the witness (“cross examination”). The parties can then give a summation. This is the last opportunity to convince the judge to rule in your favour. The judge will often give his or her decision immediately. In more complex cases, the decision may be given in writing some days or weeks after trial. Final Thoughts Just because you go to court does not mean you will win and, even if you do, it does not mean you will be happy! Given the time and aggravation, court is a blunt sword and best avoided whenever possible. ■

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VEHICLE HISTORY REPORTER By Matt McDonald

CARPROOF REBRANDING AS CARFAX CANADA

CARPROOF HAS LONG BEEN RECOGNIZED as Canada’s top provider

of used vehicle history reports and valuations, having been a major presence in the Canadian automotive industry since 2000. In October, the popular vehicle reporting service was officially rebranded as CARFAX Canada. The CARFAX brand is an even more well known vehicle reporting service available throughout North America. Here’s everything you need to know about CARPROOF, CARFAX Canada, and the recent rebranding. A rebranding in name only The changes are being touted as being a rebranding in name only according to Shawn Vording, the company’s Vice President of Automotive Sales, who

12 | THE ONTARIO DEALER

says “we want our customers to know that this is a change in name only.” The rebranding appears to have been motivated by a decision to expand the used vehicle history and valuation services to a wider audience, and to continue growing the organization. Officials at CARPROOF are confident that the quality and level of services that have been offered to customers throughout the years will remain consistent and that customers will not experience any interruptions. This message has been stressed by the company in order to put longtime clients at ease and ensure a smooth transition. According to Vording, customers will continue to receive


VEHICLE HISTORY REPORTER | MATT MCDONALD The importance of used vehicle information reports

the high levels of service that they have come to associate with the CARPROOF brand. “Our partners will still receive the comprehensive history and valuation information they have come to expect from CARPROOF. This decision was driven by our commitment to continuous growth and will allow us to provide better products and services to a greater audience,” says Vording. Users of CARPROOF and CARFAX will continue to see both brand names being used in the coming months until the transition has been completed, but the data being offered to customers will not change - according to the company, it will improve over time. The newly renamed service will continue to offer in-depth historical information on accidents, collision damage details, lien status, registration, recalls, and service records to new and longtime customers. A rebranding three years in the making The CARPROOF rebranding should come as no surprise to those familiar with the brand. In December 2015, the company was acquired by IHS Inc. (now known as IHS Markit) for an estimated $650 million. Prior to this, IHS Inc. had purchased both CARFAX Inc. and its parent company R.L. Polk & Company in July 2013 for $1.4 billion. Polk has been a provider of marketing solutions and automotive data throughout North America and Europe since 1870, having completed its acquisition of Carfax in 1999.

Used vehicles can bring with them a number of surprises, especially when the details about their past use (or abuse) and ownership are not known to the new owners or prospective buyers.

These acquisitions have made IHS Markit one of the largest providers of automotive information in North America, rebranding the exclusivelyCanadian CARPROOF as the more widely recognized CARFAX name. With CARPROOF officially becoming CARFAX Canada, the Canadian used vehicle history reporting company adopts what is quite possibly an even more trusted brand name. CARFAX has existed in North America since 1984, bringing experience and consistently high levels of service to customers. In April 2018, the company announced that its database had reached more than 20 billion records from over 112,000 domestic and international sources, making it officially the world’s largest provider of vehicle history data. With the rebranding from CARPROOF to CARFAX Canada, the company will have access to these billions of vehicle history records, allowing for more detailed reports and improved services for all clients.

While obtaining a vehicle information report may be seen as an extra expense to some buyers, they are more than worth the money for anybody concerned about a history of collisions and subsequent repairs, theft, liens, and odometer rollbacks.

"CARFAX has existed in North America since 1984, bringing experience and consistently high levels of service to customers. " These services aren’t just for consumers. Used vehicle information reports are also widely used by dealers, lenders and auto insurers, manufacturers, and law enforcement agencies throughout the country to help make better informed decisions. All of these variables can have a tremendous effect on the value of a vehicle, and on a buyer or dealer’s desire to purchase or sell the vehicle for these reasons, used vehicle history report providers like CARPROOF and now CARFAX Canada are invaluable. CARPROOF customers who have further questions about the transition to CARFAX Canada are encouraged to contact Shawn Vording, Vice President of Automotive Sales, at svording@ carfax.ca, or by telephone at 1-866-8358612, ext. 2966. ■

VOLUME 6, ISSUE 4 | 13


TRENDS | CHRIS CHASE

TRENDS By Chris Chase

ONTARIO PREMIER DOUG FORD

announced in late September that his government is scrapping the province's Drive Clean light-duty vehicle emissionstesting regime in April 2019. It's an ignominious end to a program that has been credited with keeping hundreds of tonnes of airborne pollutants out of the province's air by encouraging drivers to either fix their older vehicles' faulty emissions-control systems or trade up to a newer vehicle. In a press release about its decision to end Drive Clean, the Ontario government said that at the program's inception in 1999, about 16 per cent of cars tested failed the test, but by 2017 that number had fallen to just 5 per cent. But while Drive Clean no doubt played a significant role in cleaning up our environment in its first few years, a 2014 Ontario Auditor General’s report said

14 | THE ONTARIO DEALER

that in 2011, around 18,000 vehicles were not fully repaired, because owners of cars that failed were "not required to incur any repair costs if the ... estimate exceeds $450." The Auditor General also found that "more than 75 per cent of the reduction in vehicle emissions since the Drive Clean program's inception is actually due to ... tighter manufacturing standards on emissions-control technologies." While hybrid and electric vehicles are the most obvious contributors to a reduction in smog-forming car emissions, car manufacturers have not been quiet about their efforts to reduce harmful exhaust emissions in more traditional combustion-powered cars and light trucks. Among the more high-profile efforts in that regard came from Mazda and


TRENDS | CHRIS CHASE exhaust systems since the 1970s. Its basic concept has changed little in the intervening years: engine exhaust flows through a canister lined with precious metals that convert the car's pollutants into less-harmful substances.

its SkyActiv engines, first used in the 2012 Mazda3 and 2013 CX-5 crossover and later added to the rest of the brand's vehicles. According to Wards Auto, which named the first SkyActiv motors to its 10 Best Engines ranking in 2012, Mazda achieved a reduction in fuel consumption and exhaust emissions by combining direct fuel injection (a technology still relatively new in gas engines at that time) with a higher compression ratio, a special exhaust manifold design and a reprogrammed variable valve-timing system. Without getting too technical, a higher compression ratio allows the engine to burn fuel more efficiently. Meanwhile, the direct injection and variable valvetiming systems counteract the major downside of high compression -- excess heat -- which can generate enginedamaging knock if it's not mitigated. Mazda said that its SkyActiv 2.0L four-cylinder engine -- which is still in production -- consumes 15 per cent less fuel than the 2.0L it replaced and, consequently, emits fewer pollutants.

To be classified under the PZEV designation, a vehicle's engine and fuel system must incorporate a number of characteristics to help reduce not only exhaust pollutants, but also evaporative emissions that occur when the vapour from unburned gasoline is allowed to escape into the atmosphere. When Subaru began offering its PZEV engines in Canada in 2010, it claimed that cars fitted with the optional engines were 90 per cent cleaner-running than the rest of its vehicle range.

Now, most of Subaru's nonturbocharged engines are PZEVfriendly, as is every Mazda6 sold since 2014 and every Honda Civic since 2016. Part of the PZEV puzzle is the catalytic converter, a component that has been a staple of modern vehicle

To meet California's PZEV requirements, an engine must place the catalyst closer to the engine so that it warms up more quickly: the converter doesn't work until it becomes super-heated by the exhaust, so the closer it is to the engine, the sooner it starts doing its job and the more time the car spends running as cleanly as possible. That brings us back to that Ontario Auditor General's report, which found that in 2010, a faulty catalytic converter was the "most commonly diagnosed cause of excessive emissions," and yet was only repaired in about one-third of all cars that failed a Drive Clean test. At its introduction, Drive Clean was a necessary product of its time, but as the years passed, the creative efforts of automakers to comply with evertightening emissions regulations made the testing program redundant. Your customers may no longer need to have their vehicles' exhaust emissions tested, but they can rest assured that with good maintenance, the car or truck you sell them will run cleanly for many years to come, thanks to advances in engine and emissionscontrol technology. ■

Two years before Mazda's first SkyActiv engine hit the marketplace, Subaru was one of the first automakers to bring partial zero-emissions vehicle (PZEV) engine technology to cars sold outside of California. The California Air Resources Board (CARB) created the PZEV light-duty vehicle emissions category in 1998, and it still exists today.

VOLUME 6, ISSUE 4 | 15


TECH TALK

By Angela West

HERE’S THE LATEST ON WHAT’S HAPPENING IN AUTOMOTIVE GADGETS AND APPS. 2018 has been a banner year for aftermarket automotive technology that your customers can enjoy after purchasing a used vehicle. Here’s the latest on what’s happening in the world of automotive gadgets, apps, and accessories. Make your older vehicle feel new again With the automotive technology industry being revolutionized almost every single year, it’s natural that your old car starts to feel even older. One of the latest automotive technological revolutions comes in the form of smart entertainment services like Apple CarPlay and Android Auto, which have become increasingly popular in newer vehicles, with little to no options for drivers of other vehicles. Luckily for drivers of older vehicles, the Kenwood Excelon DMX905S looks to change all that and make your vehicle feel new again. The Kenwood Excelon DMX905S is a well-designed infotainment system

16 | THE ONTARIO DEALER

that bridges the technological gap for drivers of used or older vehicles. It’s compatible with a variety of vehicle models, and is outfitted with a number of easy-to-navigate software solutions, including its own native software, Apple CarPlay, and Android Auto, as well as a number of other apps like Waze, Spotify, SiriusXM, and Bluetooth support. The Kenwood Excelon DMX905S is an all-inone solution that works well, looks great, can make your vehicle feel brand new again, and is probably the cheapest way for drivers of older vehicles to use Apple CarPlay or Android Auto without buying a brand new vehicle. For more information, check them out at www.kenwood.com. An affordable low-light dashcam solution A dashcam in your vehicle can present a wide variety of benefits for drivers, no matter where you’re located or what you’re driving. With dashboard cameras, drivers no longer have to worry about proving who is at fault in the event of a serious car accident, instead having instant access to a video account of what transpired. Dashcams are also extremely useful in reporting undisciplined drivers, can prevent fraud and insurance scammers, and are great for recording outings on the open road. Having a dashcam has become commonplace in recent years, especially with the emergence of high-quality, lowcost products like the TaoTronics TTCD06 that make buying and installing dashcams a no-brainer.

The TaoTronics TT-CD06 dashcam is the perfect model for budgetconscious drivers who are looking to take advantage of this proactive technology. The TT-CD06 records in full high definition 2K and 1080p, boasts a viewing angle of 160 degrees, and records straight to a microSD card (one of which is included with the camera), making it an affordable competitor to more expensive dashcam alternatives. While the TaoTronics TT-CD06 lacks a GPS tracker for speed and location tracking, it comes with easy-to-install suction and adhesive mounts, a long power cable and a two-port 12V lighter adapter, allowing drivers to charge their devices while the dashboard camera is actively recording. Perhaps most impressively, the TaoTronics dashcam can capture crystal-clear low-light videos, a useful feature that many other budget dashcams lack. To learn more about the TaoTronics TTCD06 dashcam, visit www.taotronics.com.


TECH TALK | ANGELA WEST Enjoy your favourite tunes with this affordable wireless FM transmitter

Music can turn any normal road trip into an interactive experience and a far more memorable trip - unfortunately, vehicles without access to a modern car stereo are left with access to a severely limited musical library. With smartphones quickly leaving the 3.5mm headphone or AUX-in jack behind, your options as the driver of an older vehicle are becoming even more limited - especially without features like Bluetooth. While a number of solutions to this common problem have popped up over the years, many products have failed to deliver an affordable and consistent solution to the issue. Fret not - the Titita Wireless FM Transmitter gives drivers of older vehicles the power of Bluetooth and other features for less than $20. Despite boasting such a low price tag, the Titita Wireless FM Transmitter looks and feels like a much more expensive FM transmitter. The transmitter is compatible with a wide number of devices, including the iPhone X, the Samsung S9, and many other iOS and Android smartphones. The device even features two USB inputs, letting drivers charge their devices while they enjoy their favourite music on long stretches of road. Aside from music, drivers can also use the high-quality microphone found on the transmitter to easily make and receive phone calls.

no matter where they are in the vehicle or what they’re doing. ATHENA is activated upon leaving the vehicle, sending custom alerts and notifications to the user’s smartphone through SMS, email, and telephone, even sending a realtime photograph.

always ever-present in every parents and pet owners mind, and has caused a number of easily avoidable tragedies. Under the right circumstances, the interior of a vehicle can rise by more than 4°C in just an hour, with 80% of the rise in temperature happening within the first 30 minutes. Children and pets are left in vehicles accidentally, and the busy parents or owners are none the wiser, leaving them behind without even realizing what they’ve done. ATHENA by Eve is a new product that looks to help drivers identify when they’ve left a child or pet in the car so that corrective actions can be taken quickly, and to prevent any further unnecessary tragedies. This groundbreaking new automotive gadget uses in-cabin multi-sensor technology that can detect young children or pets quickly and accurately,

If a user does not respond within a specific time period, ATHENA alerts your emergency contacts, and can be customized to alert emergency services. Featuring a long-lasting battery, sleek design, and easy-to-use interface, ATHENA by Eve is a groundbreaking and potentially life-saving automotive gadget designed to help you and your loved ones respond effectively to a worst-case scenario. For more information about ATHENA by Eve, check them out at www.eve-v.com. Effortlessly backup with confidence with this easy-to-install backup cam Drivers of newer cars have a distinct advantage over those driving older vehicles - the built in backup camera that makes backing up safely and confidently a breeze. All drivers should be able to back up effortlessly, knowing what’s behind their vehicle and that there are no surprises waiting for them to back into - this is where aftermarket backup cameras come in handy. A number of solutions have been released over the years, with easyto-install wireless backup cams like the Nonda Zus Smart Backup Car Camera

The Titita Wireless FM Transmitter can be found at www.amazon.ca. Never leave your child or pet alone in the car again The subject of leaving children and pets alone in vehicles under the hot sun without water or fresh air is

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TECH TALK | ANGELA WEST becoming more common, bridging the gap between new and old vehicles.

HD, giving you a clear picture of what is behind you.

The Zus Smart Backup Car Camera easily installs right onto the bottom of your vehicle’s license plate without any drilling or wiring required. Once it’s attached to your vehicle, your smartphone and the official Zus app act as your screen using Bluetooth pairing, cutting out the need for installing a dedicated backup camera screen. The Smart Backup Car Camera has a wide angle view of 170-degrees for a safer backup experience, and images broadcast to your phone in clear 720p

For more information on the Nonda Zus Smart Backup Car Camera, visit www.nonda.co.

ZUS

Smart Backup Car Camera

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18 | THE ONTARIO DEALER

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WHOLESALE MARKET ANALYSIS By Chris Chase

USMCA CANADA'S CAR MANUFACTURING INDUSTRY breathed a collective

sigh of relief in early October when Canada signed on to a trilateral trade agreement with the United States and Mexico in which Canadian-built cars exported to the U.S. would not be subject to a 25 per cent tariff.

With the vast majority of Canada's car manufacturing and parts production facilities located in Ontario, the question of tariffs was weighing heavily on the future of Ontario's economy, and had the potential to significantly disrupt the province's wholesale used-car market. While Canada signing on to the trade deal known as USMCA (or United States-Mexico-Canada Agreement) is good news, Ontario's auto industry isn't home free yet. The agreement will need to be ratified by the U.S. Congress, and with the Democratic party hoping to take control of the House of Representatives in

November's mid-term elections, the deal could be scuttled if the Democrats are successful and they feel the deal is not in the United States' best interests. "I think everyone in the industry, no matter what their role is, would like to see some certainty," said Brian Murphy, Vice-President of Research and Editorial at Canadian Black Book. "The countries' auto industries have been so intertwined that it's hard to pull them apart, because you can have parts that are made in Canada, shipped to the U.S., and put in a car that's shipped here and vice-versa. It's so complex."

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WHOLESALE MARKET ANALYSIS | CHRIS CHASE In the lead-up to USMCA being finalized, one fear was that the U.S. would impose tariffs on Canadianmade cars and Canada would reciprocate, driving up new-vehicle prices across North America and having a knock-on effect in the usedvehicle marketplace. As usual, other close ties between the Canadian and American economies are having an effect on the wholesale values of used vehicles. As of early October, the Canadian dollar was trading between USD $0.77 and USD $0.78, which Murphy said is low enough to encourage U.S. dealers to come to Ontario to buy used vehicles to export south. He said the flow of Canadian cars to American usedcar lots doesn't tend to slow significantly until the Canadian dollar is well over USD $0.80. The added demand created by those U.S. dealers has its usual effect of driving up used-vehicle wholesale prices, but Murphy said that trend would go away if the United States also imposed duties on used vehicles entering the country. "Then those cars wouldn't have a place to go in the U.S., and there would be more supply here and used-car prices

would fall here, initially," he said. "And then they could actually go up again, because if the consumer can no longer afford the new vehicle of their dreams, they may be able to buy a two-yearold one that's already landed here and doesn't have any duties." Canada's steel and aluminum producers fared less well in the USMCA, as Canadian Foreign Affairs Minister Chrystia Freeland was unable to get the U.S. to drop its recently added tariffs on steel and aluminum made in this country. In early June, the U.S. imposed 25 and 10 per cent duties on those materials, a move that prompted the Canadian federal government to strike back with its own tariffs on U.S.-made bourbon and home appliances, among other products. "It's best to be anticipating what impact there might be from that," said Tom Kontos, Executive Vice President and Chief Economist at ADESA Analytical Services. "As far as aluminum and steel, the impact I'm seeing is on scrap-metal prices on the salvage auction side of the business, and not really creating any price impact on used cars that I can gather," he said. "It's playing a role in what a wrecked

car will fetch in the market, because scrap metal is worth more." However, Kontos said because usedcar prices are "always some sort of fraction of a new-car price," any change to the price of a new vehicle will affect values on the pre-owned marketplace. Just as new-vehicle incentives lower the value of a used car, by raising the price of a new car "through tariffs, whether directly on the vehicle or the materials used to build (it), you're going to make used-car values higher too, and you may also shift some demand away from new cars and into used cars. That's the dynamic," he said. "To what degree it's actually happening, I would say right now it's minimal, but it's something to be mindful of as these discussions continue. Hopefully … we get all that squared away without tariffs and things that monkey up the works." The USMCA is not all good news, but it is positive enough to keep the Canadian economy strong. That's good on the surface, but it's one of the factors the Bank of Canada uses to decide when to increase its key lending rate, a tactic designed to keep inflation in check. A year ago, the central bank's rate was at 1 per cent, but has now risen to 1.75 per cent. Most analysts expect the Bank of Canada to make more upward adjustments in 2019.

" ...any change to the price of a new vehicle will affect values on the pre-owned marketplace." While economists suggest homeowners will feel those interest rate hikes most acutely, there will also be some effect on the cost of auto

20 | THE ONTARIO DEALER


WHOLESALE MARKET ANALYSIS | CHRIS CHASE financing, particularly for subprime buyers and anyone stretching their budget to get more car than they need. "For the most part, there aren't too many people who can buy a car for cash, so it really affects everyone," said Black Book's Brian Murphy. "On the new-car side, I think it can affect almost every aspect of it, like what make and model you buy and which trim you choose. If you're looking at a full-size truck, do you try to save a bit of money by buying a smaller truck? It drives substitution behaviour in consumers." Murphy said a higher interest rate can have a more pronounced effect in the used-car market, because buyers don't benefit from the financing deals frequently offered by new-car dealers. Any increase in the Bank of Canada rate gets passed along right to the consumer, some of whom may chooose to buy a vehicle other than the model they had in mind, to save money. Robert Karwel, Senior Manager of the J.D. Power Canada Power Information Network, said those interest-rate hikes will force automakers to curtail financing-rate deals in new-car showrooms, causing payments to go up. In fact, according to his recent research, the number of new-car loans financed between zero and 0.9 per cent is at 34 per cent so far in 2018, down from 45 per cent for all of 2016. While that might not be enough of a shift to encourage large numbers of buyers to move from new to used vehicles, more expensive newcar loans could exert some upward pressure on used-car values.

PERCENT INCREASE IN LEASING 25.4%

2015

31% 2018

"Hopefully people’s incomes are rising in such a way that they're able to afford the higher interest payments," said Kontos. "But all things staying equal, if you raise interest rates, you're going to discourage some level at the margin of people buying cars and houses and other things that involve installment loan financing. It can hurt."

"...a higher interest rate can have a more pronounced effect in the used-car market" "On total volume, it's hard to say," said Murphy. "It could cause people to postpone a purchase, but if you're in the situation where you need to buy a car, you might just choose to spend less money. Over the long term, it's definitely going to cause a shift because we've had close to free money for a number of years and people have gotten quite used to that." Those are a few of the new potential twists in the wholesale used-vehicle market, but there are also a couple of older storylines that continue to play out, one of which is the continuing rise in popularity of leasing on the new-car side.

Through the first half of 2018, leasing accounted for nearly 31 per cent of new-vehicle sales, up from 25.4 per cent in 2015. More leases means more lease returns -- Karwel says those will add up to nearly 329,000 in 2018 and will top 381,000 in 2020 -- and, as a result, more vehicles for used-car dealers and their customers to choose from. Many of those off-lease vehicles will end up in franchise dealers' inventories as certified pre-owned models, which is another segment of the used market that Kontos said is still strong in Canada. "That's a middle ground that didn't exist before, so I know that's got a lot of upside in Canada for more growth," he said. "That may be one of the factors that's helping the market stay strong: Consumers have become more aware of that as an option." Last year's record of 2 million new vehicles sold is still fresh in the minds of auto-industry insiders and analysts, as is the possibility the market could surpass that mark again in 2018. "The way we're going now, we're down by less than 1 per cent," said Murphy. "Some people in the industry say that means things aren't going well, but that's really amazing: it's up 4 per cent from 2016

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WHOLESALE MARKET ANALYSIS | CHRIS CHASE and 8 per cent from 2015. That's really good in Canada, which is essentially a mature market where volumes should be quite stable. The math suggests 2 million is quite possible this year, but probably just by a few vehicles." As far as when strong new-car sales could translate into an increase in used-vehicle supply and a notable decrease in wholesale values, Kontos said he's not sure when that might happen. "I'm kind of being a little vague these days because I used to expect it," he said. "I had talked about a softening used-car market as early as 2017, and that never really materialized, and it hasn't materialized to any appreciable degree so far this year in Canada." Part of that can be attributed to many Canadians going to longer financing terms in the wake of the recession, which has offset the influx of lease returns, to some extent. Kontos has also observed a recent change where those off-lease cars end up. While they have historically gone back into the hands of the manufacturer's finance division and been sent to auction, companies like ADESA will now often put them up for bids online instead, which prevents an oversupply of used vehicles.

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"Effectively, those cars don't make it down to the auction, (but it's) in that competitive bidding process where prices are being set," he said. "All of the other channels are a little more fixed-price based, so the guidebooks pick up their values based on what happens in the auction lane. So if the car never makes it down there, it's not really showing up as a piece of data for the guidebooks." Despite his apprehension in predicting when wholesale values might soften, Kontos said that with the Canadian new-car sales record behind us, the change should become evident within the next two years. "There's still ample volume for Canadian dealers to buy to stock their used-car lots and generate good profits," said Kontos. "It's a little later than I expected, but that's good. It's good to be prepared for the worst." ■

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MEET THE CEO AND REGISTRAR OMVIC CEO AND REGISTRAR, John Carmichael, along with

OMVIC Communication and Education staff hit the road in a province-wide Registrant Engagement Series beginning on September 17, 2018. With stops in 10 cities the series allowed registrants to meet OMVIC leadership and staff, have questions answered, provide insights and share ideas. There’s one session left on Tuesday, November 20, in Windsor at the Hampton Inn & Suites. Bring your questions, feedback, and insights on issues of importance to you! In response to feedback from last year’s Information Sessions, this year’s newly-branded Engagement Series was more interactive to facilitate even greater discussion.

CEO and Registrar at those city’s respective wholesale auctions. In each session, John Carmichael discussed emerging issues and shared information and ideas on topics of interest or concern to the industry. OMVIC’s Education Team were on hand to present an educational component focusing on advertising, disclosure, and best practices to assist with compliance.

New locations were added bringing the number of stops to 10, from 6 last year. In conjunction with the sessions scheduled in Registrants who attend will be entered into a draw to win a Sudbury and Ottawa, registrants had the opportunity to share $175 gas card. ■ a coffee and conversation with John Carmichael, OMVIC’s

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VOLUME 6, ISSUE 4 | 23


DEALER PROFILE Bayview Auto Sales By Rhonda Payne A Meat and Potatoes Kind of Dealership A LITTLE NORTH OF HIGHWAY 401 , at the midpoint

between Toronto and Ottawa, is second-generation used car dealership Bayview Auto Sales in Belleville. While not exactly a small town, at close to 70,000 people, Belleville is no bustling metropolis either. The interesting thing is that people from those two big cities – both about two hours away in opposite directions – know all about Bayview and often make the drive to purchase their next car.

More than half a century ago, Basil Easterbrook started Bayview Auto Sales where he revealed the business of used car buying, selling and wholesaling to his son Justin. As the decades passed, Basil recognized it was time to step back and decided to sell the dealership. According to Bayview's General Manager,, continued on next page

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Bayview Auto Sales Butch Douglas, Justin agreed to buy the dealership from his dad, knowing he could take the family business to the next level. “[Basil] made him pay for the business fair and square. It was a used car dealership on a lot smaller scale than it is today. Justin went full steam ahead,” says Butch. While Justin was working on the purchasing deal, he approached his friend Butch who had grown tired of the demands of running his own business. Butch was working at all hours of the day and night, even on holidays. “He told me I’d make a good salesman, I’ve never looked back. I love it. It’s fun,” Butch notes, adding he’s been with Bayview Auto Sales for more than 14 years. Basil, like a lot of entrepreneurs, hasn’t given up working just yet. Butch says that at age 94, Basil comes to work every day and helps with jobs like scrapping cars. He watches the day-to-day operations and recognizes the changes that have come to the used car industry over the past decades. His son has certainly approached the business from a more aggressive standpoint in order to make it grow and thrive in this modern marketplace. “Justin wanted to take it to a different level. It’s a whole different way of buying,” says Butch. “The industry changed and Justin is one of the best buyers in the country. It’s almost like he’s got a photographic memory when it comes to cars, prices, kilometers, gas, oil, gold, silver. He knows that stuff. When a lot of people aren’t buying cars, he’s buying them all. He studies the market 24 hours a day, seven days a week. The reason [the cars] sell is because he buys the right product at the right price.” Justin’s strategy involves buying cars Cathy O’Donnell, Controller

26 | THE ONTARIO DEALER

generally not more than four years old, with low kilometers and a price that allows for a bit of a margin for Bayview and an attractive price for the customer. Cars are purchased, brought to the lot, then they go through the on-site garage for a 90-point safety inspection and any necessary repairs. Cars then spend some time in the lot’s own detail shop for cleaning, waxing and buffing, then it’s over to the picture bay for a close-up for future buyers to fall in love with. “It’s all one big machine,” says Butch. “It all must work in perfect harmony. If it doesn’t, it’s a nightmare.” What makes for that harmony, as opposed to the nightmare, is the 90-person staff at Bayview Auto Sales involved in all facets of the business. This includes 14 salespeople, 6 finance people, 4 in the call centre, 12 mechanics and their support team of 6 (including managers), close to 10 in the body shop, more than 20 in the detailing shop, 20 in administration, 2 lot people and drivers make up the balance. Most live within an hour of the dealership. “When we hire salesmen, we look for people who aren’t salesmen,” Butch notes. “We got most of our salespeople from Lowes, Home Depot or retired business people that know how to be polite and not offend people. I say it’s low-key. That’s the key. People who know how to talk to people and treat them [right].” Salespeople at Bayview talk to customers about what they actually need in a car, what they expect from it as well as budget.

The team will help younger customers understand credit and financing and the dealership works with 8 or 9 banks to provide customer financing. “It’s like fatherhood,” says Butch of helping people rebuild their credit and helping younger customers see the benefit of not maxing out their credit and possibly over-extending themselves to purchase a vehicle that looks sharp but may not be the best fit. There are more than 500 cars on the Bayview lot at any given time for those customers to choose from, making for a large and busy dealership. In fact, there are two golf carts on site to help customers get to the farthest corners of the lot, if necessary, to find their next vehicle. Bayview sells about 2,500 cars a year retail and about 2,500 a year wholesale. The wholesale side of the business is a bi-product of trade-ins. “All our trade-ins that come in, they have to go somewhere,” Butch explains. “Eblock auction. Other dealers bid on them and buy them. They’re not what we sell. Too old, too many kilometers, rusty. Age is a big factor.” Selection is part of what brings customers to Bayview. Obviously with 500 vehicles in stock, there’s plenty for a buyer to look at when they drop by. “You come to our lot, you can buy Ford, Chev, Chrysler, they are all on the lot,”


DEALER PROFILE | RHONDA PAYNE are generally due to the dealership’s constant growth.

Bayview's General Manager, Butch Douglas Butch says. “It’s a much better selection of products all under one roof. You name it, every brand is here. The main business is the regular vehicle, but we do get the odd cool thing in. We’re basically a big dealership, but we’re meat and potatoes, like small town.” This big dealership that feels like a small town car lot reaches people through a number of advertising methods, but primarily on the internet. Bayview uses the UCDA's site ... Ontariocars.ca, Car Gurus, Auto Trader, their own site and radio ads in addition to printed flyers. There is no dickering here. The price is posted in the window in big print along with the kilometers so customers know exactly what they are getting and don’t have to play the haggling game. “You have to put your best foot forward with the internet. People shop so much on the internet now, for the lowest price and the lowest kilometers. Everybody gets the same pricing. The margins are very minimal. There’s no pressure. It’s a real family environment,” says Butch. “Some places jump all over you when you get there. We’re not like that. We’re here if you need us. I call it a meat and potatoes dealership. There’s no hidden agendas here.” Butch explains that people know what they are looking for, so they do a lot of browsing online, then will travel from Ottawa, Toronto, or beyond, for the car they want. “They didn’t drive here because it’s overpriced,” he jokes. “When you come in here, it’s fun. It’s a fun place to buy a car.” If there’s interest via online channels, the potential customer can ask questions online or call the dealership’s call centre. Once they’ve decided they want to see a car, they can book a meeting with a sales person, but if they are afraid of missing out on what might be the perfect car for their needs they need to make a deposit to hold

it. Even without a deposit, if that car sells, Bayview is set up to make it work. “The one thing that makes us successful is that we have more than one,” Butch notes. “There’s more to choose from at the same pricing.” Plus Bayview guarantees the car will be in good shape, something that’s possible with the 10-bay garage on the lot and mechanics with specialties in different auto manufacturer vehicles. If the car is still under factory warranty, Bayview will even take it to the dealer for the customer.

Supporting the community comes naturally to the Bayview team. One program that is a natural fit is carcrushing through nearby Woodbeck Auto Parts where money from the cars is donated to the local hospital. Not every trade-in is saleable, so the program is a great way to benefit a local charity and dispose of vehicles. “We donate one or two cars a month,” notes Butch. “We get other dealers involved in participating. You donate [the cars] and you get a tax receipt so it helps.” Bayview is also involved with Pedal for Hope – the Peterborough chapter of Cops for Cancer.

“It’s a two-week thing. They go to all the schools and kids shave their heads to raise “For 10 years, we have stood behind money for cancer,” he says. “They leave everything,” Butch says. “We fix everything. from here every day, we take care of all We take care of every customer. You have their stuff.” to, to be in this business. That’s the goal. We want repeat customers. That’s why Bayview also supports minor sports by we sell so many. I need repeat business buying dasher boards at the local arenas. because we are in such a small town. There are too many teams to sponsor, so You’ve got to take care of them.” instead the dealership buys boards to fund the arenas where the minor hockey Customers also continue their relationship teams play. with Bayview by bringing their cars in for ongoing maintenance, detailing and body There’s always a lot going on at Bayview work long after the purchase is concluded. Auto Sales. Despite the hum of activity and constant flow of vehicles this Butch says Justin will continue to grow is a big dealership with a meat and the business and is looking to add another potatoes foundation. ■ dealership in Ontario. “You’ve got to keep going in this business,” he notes. “If you stop, it’s over.” True to being a “meat and potatoes” dealership, Bayview Auto Sales holds customer appreciation BBQ days and participates in a number of community events and fundraisers. “The year-end party is in November,” Butch says. “We all get prime rib and it’s nice. It gets everybody here together all under the same roof and their spouses can see [who they work with].” Butch explains that turnover is minor and newcomers on the Bayview team

VOLUME 6, ISSUE 4 | 27


WORKING WITH LENDERS By Lori Straus

WHERE WOULD DEALERS be without

lenders to help put keys in customers’ hands? Possibly out of business. Lenders help you sell cars.

We’ve interviewed several companies in the loan business (see their profiles in the sidebar) to give you advice on how to best work with your lenders. It might mean crossing a few more t’s and dotting a few more i’s, or taking a little extra time to work on an application, but that can also mean increased sales for you and your dealership and a better overall experience for your customers. Because interviews can elicit a variety of answers, the companies' responses to our questions have been organized

28 | THE ONTARIO DEALER

to help you find the answers you most urgently need. How can dealers build strong relationships with their lenders? RouteOne: Often, dealers want to maintain relationships with as many finance sources as they can – the thought is more options for approvals. This plan might work, but it might be more effective to focus on a few key finance sources and develop a good working relationship with the rep who will take into account the dealer’s typical customer profile. iA Auto: The starting point would be for the dealer to understand that it is a working relationship, to look at your lender as a partner in the process,

and to realize that when the lender reps come to visit your store, the main goal is to help you find a loan for your customer and that’s what they get excited to do. Dealertrack: Being the first lender to review the deal is seen as important. Lenders will look at credit inquiries to see how many lenders reviewed the application before them. This tells the lender whether they are the first or the fourth choice. Waiting for the decision and discussing that decision with the lender before sending it to a second lender will go a long way in strengthening the relationship. Rifco: When it comes to improving the dealer/lender relationship, it helps to book a consistent amount of


WORKING WITH LENDERS | LORI STRAUS

business with each lender. In doing so, it allows the dealer to remain current and knowledgeable about lender practices, thus providing a broad range of finance options for their clients. What can dealers do to work with their lender reps effectively? Rifco: It’s about understanding the value of establishing and maintaining a healthy lender/dealer relationship. This goes beyond just a single application or getting that next approval. It’s about the big picture. When stakeholders play these respective positions with commitment and a level of mutual understanding, everyone wins. RouteOne: Review results with the finance source. Have measures in place to actively monitor and report on decisions. The best relationships are those where both parties grow – ensuring both sides are aware of results and keep working towards a common goal. Ask for reporting from the lender or the portal provider to evaluate results more closely. iA Auto: Rely on your lender rep. A lot of lenders have lender reps and their only job is to build relationships, so as a dealer, if you’re not sure what a lender’s criteria are, any lender rep will sit down with you and offer you tips on how to meet and clear stipulations, what’s nice to have compared to must have, their various criteria, how to read a credit report, etc. Canada Drives: It’s very important to have more open communication from

the start of the business relationship. The more communication you can have at the start the stronger the relationship will be long term. It’s also essential to ask more questions at the start and get to know your account manager better. How can dealers work with lenders to better serve the car buyer? RouteOne: Learn and train with the finance source: ask your rep where the finance source stands on the credit spectrum. If the finance source is superprime or buys AAA paper, sending them a credit challenged customer will likely result in frustration on both sides if the deal is declined. iA Auto: Take the time to sit down with a lender rep and understand how your lender works, what the credit policies, guidelines, and sweet spots are. The lending world today is highly competitive and all lenders have a specific customer profile and a specific piece of the market they’re trying to deal with. The better the dealer understands that, the more cars they’ll be able to sell. Dealertrack: Understanding a consumer’s credit history ahead of submitting the credit application to the lender will help all parties involved in the transaction. When pulling a credit bureau report, the dealer will have a better opportunity to match a consumer to the right lender, based on credit history. Access to the credit bureau will also help dealers to have more informed conversations with the lender when it comes to credit decisions.

Canada Drives: All lenders are a bit different in what they require so it goes back to having strong communication at the start. This means getting to know the lenders requirements so that you know exactly what each lender is looking for, which should hopefully speed up the process [of applying for credit]. Rifco: Time is money, and dealers want to be involved in a lending process that is efficient, effective and supports their bottom line. However, there are times when clarification is needed upon submission of an application. When looking to expedite the lending process, it is important to ensure that all the information on a consumer credit application is complete, consistent and accurate. This includes personal information, employment details and financial data. By ensuring accuracy and accountability in these areas, we can improve adjudication and funding timelines. How can a dealer untangle the web of lender guidelines? iA Auto: Because there are so many lenders in today’s market, especially if you’re using a portal, it’s easy to go into the portal, send things off, and hope something comes back. But it can get frustrating if you don’t pay attention to the lender guidelines. If the dealer is trying to make sure they get paid as fast as possible so they have access to the cash to put it back into the business, knowing their lender’s guidelines

VOLUME 6, ISSUE 4 | 29


WORKING WITH LENDERS | LORI STRAUS would be very helpful. Canada Drives: A big challenge is also understanding all the nuances between each lender. Dealers may call their rep asking for things that are impossible or that go against the lender guidelines. Knowing the program that the lender uses will help strengthen the relationship with reps, and business will flow much more smoothly between the dealership and the lender. Lenders and dealers have a common goal: to find the right loan for a customer. So, how can dealers help that process along? iA Auto: If the dealer takes the time to learn the lender’s guidelines, the better the chance that the customer will have a good experience through the entire process, from buying and financing the car to getting phone calls and communications from the lender. If the customer doesn’t know what to expect in the process, and the process isn’t good, it can lead to a poor experience for the customer. The more the customer knows about the dealer process and the long-term process of having that loan for 5-6 years, the better their chances of coming back to the dealer for the next car. And that all starts with a closer

partnership with your lender. Canada Drives: One of the biggest things is to create a bond between yourself and the lender. Don't simply contact them when you're trying to get deals booked, also contact them to say “hi,” or send them a meme, or share a joke. Like any business relationship, it's forged on more than just the actual process. RouteOne: To protect both parties – the consumer and the dealership – the dealership needs to be transparent and clearly define the purchase agreement and how the finance option works. Since the research portion of the customer journey has

shifted out of the dealership, when a consumer is in the dealership, take time to explain things and confirm the details of the vehicle, finance or lease terms, along with any ancillary products to protect the consumer. Rifco: Our front-line workers and dealers are really on the same team; however, they do have different roles and positions that they play. As a dealer, you can get the most out of your lender experience first and foremost when you ensure that all paperwork being submitted is accurate and in accordance with lender requirements. This allows for open and transparent

Let us help your dealership with:

30 | THE ONTARIO DEALER


WORKING WITH LENDERS | LORI STRAUS dialogue, based on factual information and a common goal. Dealertrack: There are instances where dealers can resolve issues themselves without needing to phone a rep. Each dealership is assigned a Dealer Information Owner (DIO), the DIO has full administration rights to the portal and can reset passwords, add new users, and add permissions to existing users. Sometimes it’s faster to ask the DIO to address the concern than it is to call the customer service team. A few other tips iA Auto: The dealer is the eyes and ears of the lender, so it’s not that they’re just partnering on the loans, they do work as the lender, so it’s important to understand how the partnership fits in until the dealer gets paid. The dealer acts as the lending agent until the loan contract is complete, so that’s why it’s important for the dealer to know about the whole process, how interest rates and terms work. RouteOne: Take a proactive approach with customers. Don’t wait to be asked the questions, answer them first. Proactively take the time to just confirm things. The consumer may be knowledgeable about the vehicle buying process, but it would be helpful if there’s a proactive approach on behalf of the dealer to just getting to any of the information from their own experiences that they can pass on to the customer to ensure they cover all their bases. ■

THESE ARE THE COMPANIES WE INTERVIEWED, IN ALPHABETICAL ORDER. CANADA DRIVES has been around since 2010 and helps customers of all financial backgrounds connect with a dealer partner who can provide them with appropriate approval options. According to their website, they’ve processed over a million applications and are partnered with over 350 dealers across the country. Questions were answered by Shannon Friesen, VP of Dealer Services.

DEALERTRACK is a lending portal owned by Cox Automotive, which has over 25 brands globally, including Autotrader, Manheim International, and vAuto. The large number of products Cox owns allows for integration and end-to-end workflows. The company will soon be releasing a digital contracting workflow. Questions were answered by Maria Soklis, President of Cox Automotive Canada.

IA AUTO FINANCE is a wholly owned subsidiary of iA Financial Group. It offers a six-tier finance program that serves everyone from near-prime to sub-prime through dealers across Canada. According to their website, they offer credit decisions in as little as five minutes and a complete review of all funding documents in as little as 30. Questions were answered by Brendan Dineen, VP Sales & Marketing.

RIFCO NATIONAL AUTO FINANCE offers lending services in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and the Atlantic provinces. They’ve been in operation since 2002 and specialize in only auto financing. Questions were answered by Demetris Barnes, Manager, Dealer Partner Development.

ROUTEONE provides technology that helps dealers and finance sources sell and finance vehicles and that gives dealers access to over 1,500 financial sources and 170+ dealership service providers. They’ve been around since 2002. Questions were answered by Angelo Simone, Sales Director.

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THE COMMON LAWYER Marijuana is now legal – Is the sky going to fall? over, the legalization of marijuana and what it means to their business. As with most changes in the law, preparation is key. My clients and I have been working with my law Partner, Sheryl Johnson, to update internal policies and to ensure preparedness for the legislative changes.

By Justin M. Jakubiak and Sheryl Johnson This article is being completed in the final days before the legalization of recreational marijuana. On October 17, 2018 Bill C-45, the Cannabis Act, and its regulations took effect. BUSINESS OWNERS ACROSS CANADA are

discussing, and in some cases fretting

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Under the Cannabis Act, Canadians are entitled to possess and share up to 30 grams of legal dried marijuana. What does this mean to employers, particularly car dealerships and other employers in the auto industry who have employees frequently driving vehicles (and their customers' vehicles) throughout a workday? Should the legalization of marijuana be causing you to lose sleep at night? Various studies concerning the legalization of marijuana in the American States of Colorado, Washington and Oregon to assess whether rising marijuana use is causing an increase in car accidents provide some insight into the issues we may

see in Canada. One such study was conducted by the Insurance Institute for Highway Safety (IIHS) to analyze insurance claims for automotive collisions filed between January 2012 and October 2016 in states that had recently legalized marijuana, versus claims in similar neighbouring states that hadn't. The IIHS researchers found that during this timeframe, collision claim frequencies in the states that had legalized marijuana were about 3 percent higher. Another study published in the American Journal of Public Health (AJPH) found: (i) no increase in car accident fatalities in Colorado and Washington after legalization occurred, relative to similar states, based on its analysis of federal data on fatal car accidents from 2009 to 2015; and (ii) no significant association between recreational marijuana legalization in Washington and Colorado and


subsequent changes in car accident fatality rates in the first 3 years after recreational marijuana legalization. A third study by the U.S. National Institute on Drug Abuse agency cautioned that directly linking marijuana with car accidents can be difficult because marijuana is often used while drinking alcohol, which alters statistical results. In short, there is no clear evidence which has established that the legalization of recreational marijuana in and of itself will lead to more collisions. What does legalisation mean to employers? Do employers need to reinvent the wheel when it comes to workplace rules, policies and procedures? The clear answer is "no". The same rules generally apply and will apply post-October 17, 2018 as they always have in relation to intoxicants in the workplace. That is, nothing has really changed concerning workplace intoxication. That being said, societal norms driving such changes have. What hasn't changed:

it one could result in a breach of an employer's duty to accommodate. • Smoking in the workplace is still prohibited. Smoke-free laws apply to smoking marijuana in the same way they do to smoking regular cigarettes, whether the marijuana is prescribed or recreational. • Smoking marijuana where tobacco smoking is not permitted is still illegal. • Drug and alcohol testing during the employment relationship that has no demonstrated relationship to job safety and performance still violates employees’ privacy and human rights.

• Employers are still entitled to expect that their employees will not be intoxicated on the job. To this end employers can still prohibit the use of intoxicants at work (i.e., alcohol, prescription medications, marijuana and all other intoxicants) that could pose a hazard or undermine an employee's ability to meet or maintain acceptable performance standards. The right to use marijuana will never override the right to maintain a safe workplace environment.

• Random testing for any kind of impairment during employment is prohibited except on a case-by-case basis where reasonable cause is established.

• Employers as a general rule are still prohibited from pre-employment testing or screening of applicants for drug or alcohol use or impairment.

These include where there is a health and safety concern and the employee works in a safety sensitive position, upon an employee's return to work after a substantial absence due to an addiction problem where the employee poses a potential danger to themselves or their co-workers if intoxicated at work, and where the employer has reasonable grounds to believe that the

• Zero-tolerance policies as a general rule still violate employees' human rights as sobriety will not likely be provable as a genuine occupational requirement for most positions; and to improperly make

• There are still a very limited number of fact specific circumstances where reasonable cause can be established to permit an employer to engage in drug testing and/or to discipline an employee for impairment at work.

employee is intoxicated at work and poses a potential danger to themselves, their co-workers or others.

"Smoking marijuana where tobacco is not permitted is still illegal." Reasonable cause in such circumstances may be gleaned from physical indicators such as slurred speech, erratic or abnormal behavior, bloodshot or watery eyes, identifiable odours, a deterioration in judgment, attention, concentration, comprehension or reaction time, drowsiness, a loss of motor co-ordination or control, and/ or involvement in a serious workplace accident or "near-miss" incident. The difficulty is there is no consensus on the signs or indicators of marijuana impairment. What needs to change: Workplace rules, policies and programs should be updated to ensure that employers are in line with the latest legislated changes as well as the evolving societal norms that are driving them. The latter is important to take into consideration where an employer wishes to attract and retain valuable employees. Particularly, employers should: • Not implement workplace policies that equate use with abuse. While recreational use of marijuana is not

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THE COMMON LAWYER protected under Canadian human rights legislation as it does not constitute a disability, assumed abuse, addiction or treating recreational drug and alcohol use as a perceived disability that impairs employees' ability to perform their essential duties will expose employers to liability where previously there was none. • Update anti-intoxicant policies to include a definition of "impairment” that covers marijuana use and that establishes clear expectations on: (i) what and where is acceptable and unacceptable use of intoxicants; (ii) the consequences for noncompliance; and (iii) the duty on employees to: (a) disclose any use of an intoxicant in the workplace; and (b) provide supporting medical documentation confirming need to take prescription medication that may cause impairment while at work. Such expectations should be reflected in the employer's workplace policies and complaint procedures.

every reasonable precaution to ensure the safety of their workplaces; and (ii) prohibit impairment on the job, including by applying progressive discipline up to termination for just cause without notice or payment in lieu, subject to accommodation considerations on such grounds as breaches of employer policies, the Cannabis Act and its regulations, the Smoke Free Ontario Act and the Occupational Health and Safety Act.

permit workers to smoke marijuana or tobacco in the workplace or otherwise in public in violation of the Smoke Free Ontario Act or Ontario's regulations under the Cannabis Act.

• Update codes of conduct and expense policies as to whether limited use of recreational marijuana is permissible and/or reimbursable if consumed during work-related social events or networking functions.

To date, many benefit plans do not cover prescription marijuana.

• Update smoking policies to underscore that just because recreational marijuana is legal this doesn't suddenly

Additionally, where the organization is one with high risk factors for alcohol and drug addictions, employers should assess its benefits coverage to consider including rehabilitation programs, employee assistance programs and other wellness and support programs. In conclusion, the coming year will require dealers throughout Canada to take time to understand the legislated changes and the societal norms driving them - along with their workplace implications.

• Update health and safety policies and related training so that supervisors and co-workers are trained on identifying behavioural symptoms of both: (i) problematic use and dependence on marijuana; and (ii) intoxication, in order to prevent health issues as well as workplace accidents. • Continue to make it clear that they continue to have the right to: (i) take

Working with your HR and legal advisors will assist your dealership and staff in staying on top of the latest trends impacting the workplace environment and its overall safety and comfort. ■

photosbypierce.com 130 Industry St., Unit 36, North York, ON M6M 5G3 e info@photosbypierce.com www.photosbypierce.com

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Employers will also need to consider whether it is appropriate to update their health benefits and wellness plans to cover medical marijuana to align with current employee and societal expectations.


BUDGETING AND FORECASTING By Lori Straus

BUDGETING FOR YOUR BIG EXPANSION EXPANDING INVENTORY can be a nerve-

wracking, hand-rubbing experience: You know you could make more money if you had more cars to sell, but you also know there’s a chance your gamble won’t work. A worst-case scenario might be one in which you have to lay-off employees because your money is tied up in inventory you can’t move.

But there are steps you can take to mitigate the risk, and we’ll cover some of them here. How Do You Forecast? An increase in inventory may mean more than just more cars. Do you need another building to display them in? Is your property the right size or do you need to buy more? You may need to invest in capital, and here’s where things can get rocky before you even have the cars on the lot. A study conducted by Southeastern Oklahoma State University several years ago investigated the processes

small, rural businesses go through when deciding on capital expenditures. This study did an initial survey of 281 members of the Durant, Oklahoma Chamber of Commerce. After limiting the study to rural firms with fewer than 250 employees, the researchers had a sample size of 67. Of those, 33 were in service and 26 in retail; 36 were private corporations; and 35 of them had been in business for over 20 years. The researchers surveyed the remaining 67 firms about how they planned for capital budgeting decisions, and their findings highlight where the first hints of

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BUDGETING AND FORECASTING | LORI STRAUS failure in fulfilling a plan can appear: the lack of an established plan. For example, 71% of the sample firms didn’t have a written business plan, and almost 66% of them made capital budgeting decisions based solely on managerial judgment or the romanticized notion of “gut instinct.” Certainly no planning method has a guarantee of success. If it did, we’d all be using it. However, these results show a deeper concern: “When questioned about why sophisticated techniques are not used,” the researchers wrote, “more than 19% of respondents were not familiar with the techniques; another 19% did not believe using the techniques would affect profits, and 28% did not have the staff, time, or experience.” It’s hard to make use of stronger budgeting techniques that can more accurately assess your risk when you don’t know how to use them or don’t have the staff to help you with it. For the few in this study who did use a formal budgeting technique, the payback method was preferred, and less than 10% of the sample firms used several discounted cash flow techniques. The payback method is the most commonly used tool to calculate the rate of return on an investment, according to the Harvard Business Review. Basically, you look at the cost of your investment, how much money you think your investment is going to bring you. Then you calculate how long it’ll take for the amount brought in by the investment to be repaid. It’s a simple calculation that can be very motivating if it works in your favour. However, the HBR cautions, it doesn’t include all factors that can affect your actual return on investment. For example, how much interest on that invested money are you paying until it’s all paid back? In addition, the value of $1 depreciates with time, so the amount you invested at the beginning will not be worth the same amount at the end of your payback period. It’s far beyond the scope of this article (and my expertise as a writer) to discuss the various budgeting processes available to you: that’s a question for your accountant. However, you may want to consider more formal capital budgeting techniques if your expansion requires an investment in capital to pull it off.

ONLINE SEARCH MAY NOT BE A SUBSTITUTE FOR VISITING USED CAR DEALERS As you begin to sell your new inventory, you’ll likely fold your marketing campaign into your normal marketing processes. However, a few online marketing rules may not be as is generally assumed. A study published in the Journal of Retailing a few years ago found a surprising result: that an online search isn’t always a substitute for visiting dealerships. To build their study, researchers first interviewed 4 used-car buyers, 3 OEM dealers, and 1 independent dealer. They tested a pilot survey on 12 respondents and, following any feedback, based their full study on 239 surveys, which were collected at repair shops. (They chose repairs shops in the hopes this would decrease OEM/independent bias, and dealership/ individual bias, since car owners using repair shops will have bought their car from either dealership, or from an individual.) The study was conducted in the U.S. The results show that for used cars, dealer websites complement dealer visits, i.e., they add information the consumer then takes with them as they visit dealers for used cars. This stands in contrast to consumers in the market for a new car and those who research used cars through resale sites. In these cases, online research still acts as a substitute for visiting dealerships. Their second finding provides some further food for thought: word-of-mouth increased the likelihood that potential customers would search for used cars on dealer lots. However, word-of-mouth advertising is negatively associated with visiting dealer websites, i.e., if potential buyers heard good things about a dealership and they were in the market for a used car, they’re less likely to visit your website but more likely to visit you directly. “This implies that dealers need to generate website traffic by employing social media marketing tools and generating positive publicity through blogs of opinion leaders. Dealers should emphasize high standards of customer service to get positive word-of-mouth,” the researchers advise.

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CHAT SERVICES | |ANGELA WEST BUDGETING AND FORECASTING LORI STRAUS

In addition to the above results, the researchers found that their survey respondents who purchased from dealers (as opposed to individuals) fell into two general categories: younger buyers who used the web more and word-of-mouth less and earn a high wage, and older consumers who base their purchases on dealer visits, print, and word-of-mouth and have a lower wage. The researchers explain that buyers who earn more have less time to shop, which leads to their searching dealer websites and making fewer visits to dealers directly. They also tend to buy from new car dealers or individuals. However, if the car they desire is in a higher price range, they’ll buy from a dealer (the study doesn’t specify whether new or used in this situation). This appears to be a preference that has existed for at least two decades, according to previous research cited in the study. In contrast, and this is not a surprise, older consumers are relatively less experienced with online shopping and therefore prefer their traditional sources. However, as cohorts age, this tendency will disappear. “They will be more Internet savvy, which suggests that dealers should continue to maintain a robust online presence,” the study says. To help consumers who rely on online search, the researchers suggest providing information about the cars, e.g., inspection and maintenance, online reviews, and recommendations. An up-to-date website, with current inventory only, is helpful. In addition, offering incentives or online specials may encourage consumers using resale websites to purchase from you and not individuals. You can argue that the data is several years old and therefore out of touch with today’s reality. However, the assumption that buyers visit dealers less because of online researching has been around for a long time now. Consider comparing your own data with the results of this study to see if the results apply to your dealership.

Plan Your Expansion More inventory doesn’t automatically mean more money. As exciting as it can be to see all that inventory rolling in, you need to make sure you have the capacity to handle it all. So ask yourself the following questions before moving forward. 1. Do you have the physical space? Amin Tejani, VP of Operations at Weins Canada, a multi-site, multi-franchise company that also runs its own pre-owned centre, says, “You can have a strategy to get vehicles, but do you have room to do it?” You need enough space to hold your inventory and also to service and recondition your acquired vehicles. Next, you need space for the cosmetic side of selling, e.g., detailing, paintwork maybe, taking pictures of the cars. “So, do you have the infrastructure in place to do it? It’s great to get all these vehicles, but if you can’t get them through, you’re not going to turn them and they’re going to depreciate very quickly,” he says. 2. Have you brought your current staff on board with your plans? Tejani advises that you get everybody onboard for the journey. “Talk about it before,” he says, “making sure that everybody understands what you’d like to do and has been brought into your plan. Make them part of it so that everyone can be up to the challenge and share in the success.” If you’d don’t onboard everyone involved with the initiative, Tejani says they may get overwhelmed. “You can’t just push the new numbers on people.” 3. Can your current inspection/reconditioning process handle the increase? Tejani says that a proper reconditioning process is usually missed when dealers consider a swift expansion: “If they’ve expanded really quickly, it’s important not to take shortcuts. Each vehicle has to stand on its own and stand tall on the front line, so if you’re rushing through on things, you’re not going to give the car its due justice.” And it likely goes without saying: if it takes you longer to properly inspect and recondition the cars because your facilities can’t

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BUDGETING AND FORECASTING | LORI STRAUS handle the overload, then you’ll delay getting that car to market.

• the maximum limit per vehicle is still adequate for your coverage

4. Are you really sure you’ve got a market for your expanded inventory?

• the new average/maximum unit count to determine if your inventory limit under the expiring policy is adequate

Ashley Karr, Senior Director of B2B Marketing at CarGurus, says that dealers sometimes overlook researching the consumer market before they even decide which vehicles to include in their inventory expansion. “Without this knowledge,” she says, “the price you paid at auction or your spend on advertising for a certain vehicle won’t matter if it’s not in demand among current shoppers. Identifying a valuable resource for this kind of consumer insight can save you tens of thousands of dollars during an inventory expansion.” 5. Is it a good time to even buy more inventory? This may not need mentioning, but you do need to consider it when planning your expansion: Be mindful of seasonality. Tejani explains that buying late in the year can be problematic. “If you have the ability to ride it out, you can buy cheaper at this time but there’s less buyers,” he says. 6. How will expanded inventory affect your marketing budget? “If you’ve added new makes or models to the existing inventory,” says Karr, “you’ll need to consider costs of any inventorybased campaigns. For example, if you’re running robust SEM/PPC inventory-based campaigns with a unique campaign for each vehicle type, your costs on SEM would increase.” (SEM=search engine marketing; PPC=pay per click advertising) Remember to Check Your Insurance Philomena Comerford, President and CEO of Baird MacGregor Insurance Brokers, advises you to check to see if:

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• you have increases in the number of employees and/or dealer plates compared to the previous year • the limits for building and equipment stated in the policy reflect current replacement cost values She advises that you talk to your broker if you feel anything needs to be changed. In addition, ask your broker about insuring your inventory to value to avoid a coinsurance penalty in the event of a claim, and also inform them of any lien holders (e.g., AFC, Nextgear) that need to be added. And, of course, if you’re moving to accommodate your expansion, let your broker know and provide them with the necessary information to adjust your policy as needed. Marketing to Move Your New Inventory Once you’ve acquired more inventory, you may find yourself in a bit of a bind: you’ll need to advertise more, but your money is currently tied up in your new inventory, which you need to sell to raise revenue and pay for advertising. Karr suggests that inventory-based campaigns can be carried out efficiently

by grouping together similar vehicles, e.g., perhaps you have several vehicles of one make/model that differ by colour or by year. “In a limited resource environment,” she says, “dealers should prioritize advertising on the inventory that they need to move quickly, and on the vehicles that will give them the biggest return on investment.”

"If you don’t onboard everyone involved with the initiative... they may get overwhelmed. " But you can focus on both ends of the spectrum, she says: new inventory that you can move fast and that has a higher gross potential, and older inventory you’ve had to reduce in price. She explains, “This will ensure that dealers are able to reinvest their advertising dollars quickly into the rest of their inventory.” And lastly, don’t forget to make use of online tools to show you what ads did and didn’t work, says Karr. “Once you’ve done that you can focus your ad budget where you know you’ve been effective, and trim ad spend where you haven’t been generating a strong ROI.” ■


THE AUTOMOTIVE AFTERMARKET By David Miller

WHY THE AFTERMARKET SHOULD NEVER BE AN AFTERTHOUGHT

THE AUTOMOTIVE AFTERMARKET

is big business around the world. In Canada, it's a $21.63-billion industry that employs over 400,000 people encompassing all repairs or treatments needed after a new or used car leaves the dealer lot. This industry accounts for parts manufacturers and distributors, automotive suppliers, affiliated distributor networks, online retailers and various intermediaries. The aftermarket's growth has been spearheaded by major improvements in vehicle construction and safety. According to a 2017 study by DesRosiers Automotive Consultants, more than 40 per cent of vehicles on the road today are 10 years or older with an average current age of 9.71, and that average only increases in the United States. Each year those numbers keep climbing, making vehicle reliability the catalyst in assisting aftermarket maintenance to soar despite a decrease in crash rates due to enhanced safety technologies.

A large group of aftermarket employees come from the dealership or OEM side of things, but many others fall in the independent aftermarket from part stores such as Midas, Canadian Tire, individual repair or tire shops, and accessory store retailers. It all contributes to the Canadian economy, but the question remains, how can dealers get more of that pie? We hope to tackle that issue with some more understanding of the aftermarket industry as a whole. But first we need to separate the aftermarket, as it comes in two forms: replacement parts and accessories. They both contribute to aftermarket sales, but are vastly different, especially to consumers who don't wish to come in for the former. The latter is a whole different ballgame that has them all giddy to spruce up their latest sports car or pickup truck through enhancements to design, performance,

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THE AUTOMOTIVE AFTERMARKET | DAVID MILLER or comfort features. We will cover them both in separate sections.

good if acceptable parts are being used to service your vehicle.

Understanding the replacement parts industry

To this point, Balinsky virtually sells nothing but OEM pads or rotors.

Replacement parts are not on the lips of many automakers, and that's how they want it. Dealers, on the other hand, do most of their business, or at least make most of their profits, in this secondary arena filled with collisions, performance issues, as well as electrical and software updates. It's no coincidence that individual sales goals are set up to reach a certain profit level.

“Toyota offers up a second and third line brake pad now and when you look at the overall cost between automaker and jobber parts, there's no point to sell anything but OEMs. For example, a Corolla pad is around $90, and yes I can buy an off-shore brake pad for $30, but is it worth it at my level to do that without being able to give a warranty? When the difference used to be $250 versus $40 – it made sense. That's not the case any longer.”

But there's also a third section to this equation and that's the customer. On most occasions, they would rather not come in. Who really wants to go to the shop to repair their car, especially when it's not under warranty? In these situations, nobody is in a good mood, yet many still come in rather than go to an independent shop. Trust is typically a factor at the dealership level and in these repair or maintenance situations, consumers may be wary of buying something they don't really need. Heck, they're wary of even entering a dealership. But with the advent of online sales – it's clearly evident that dealers need to start focusing on the aftermarket and build trust back with customers in order to help one another in a positive, trustworthy and long-term rewarding relationship. “I’ve always felt that when someone is in for service they are making a grudge purchase at best, so ameliorating this feeling is critical,” explains auto industry analyst Dennis DesRosiers. “Work done on time, taking time to explain what needs to be repaired and why, fair price not necessarily low price, doing the work correctly the first time since if they don’t want to be there the first time they certainly don’t want to come back a second time for the same problem.” DesRosiers sums it up well, but that's easier said than done when talking aftermarket automotive parts. Repairs

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are unexpected purchases and those situations can weigh on consumers, and potentially force them to ask for generic parts at an independent shop. Alan Balinsky, general manager, Red Hill Toyota, believes in a thorough inspection of each vehicle, including its service history before servicing. “Once we touch it, we're responsible. This obligates us to investigate what's been done to each vehicle before it arrives at our dealership for maintenance. If something were to go wrong, we could be libel for it. ” Balinsky has dealt with that exact situation in the past and always errs on the side of caution. “I'm not going to put one new caliper on one side, replace one brake pad, or put on a mismatching tire,” adds Balinsky. “As professionals, we should strive towards great service and what's best in the long-run for our customers. It has nothing to do with added profits.” Generic parts are readily available, but have started to fade away thanks to OEMs selling their own items at a reasonable price. The aftermarket may be big business for dealers, but it's definitely contributed to the bottom line for automakers. They also have another advantage for vehicles under warranty, as those contracts are only

With cost levels down, OEM parts are a win-win for dealers and automakers. It's a natural relationship, at least it should be, where dealers work with automakers to encourage continuous business through various target campaigns. However, as the vehicles serviced get older, fewer and fewer OEM parts are readily available. This leaves a gap in the industry where independent aftermarket retailers can fill the void, and more importantly, prove there's a need for both parties.

“As professionals, we should strive towards great service and what's best in the long-run for our customers. It has nothing to do with added profits.” The major benefactor to all this competition is the end consumer. They will be the ones to benefit through a choice in parts, price, and it all depends on the product they're after.


THE AUTOMOTIVE AFTERMARKET | DAVID MILLER Derek Johnston, founder and automotive engineer, Johnston Research & Performance Inc. (JRP) resides in the non-dealer world and feels the aftermarket is big business, but it can be even bigger. “We work with dealers across the country, but I thoroughly believe we could add $100-$500 profit on every vehicle sold given the opportunity. The average customer would happily be willing to add this to their expenses. But alas, it truly is not that easy to accomplish, although we do quite a bit with some.” Johnston cites automaker parts being one of the common cruxes behind this lost revenue. “Every year, an OEM attempts to replicate what the aftermarket does in an effort to sweep all the dollars from the industry.” Regardless of which aftermarket camp you reside in: dealership, professional parts stores, or independents, there's a place for all of them as they cater to different clientele. Competition also creates deals, so the consumer wins on price and selection. The mysterious online world and new technologies Canadian automotive aftermarket numbers are staggering, but that's nothing compared to its $723-billion global projection by 2020. As access to parts around the world become more convenient, every company within the aftermarket needs to put together a strategy on how to maximize its global connections and be part of this growth.

As quickly as dealerships and repair shops have access to these global parts, so do individual consumers. Online sales are the biggest trend in an ever-changing marketplace with many sales lost to online retailers such as Amazon and eBay Motors. These online shops may be able to offer lower prices, but that comes with shipping and handling costs, wait times, and without anyone who's capable of installing the parts. “Online can be great and dealers could work that more into their dealerships, especially for older vehicles,” adds Balinsky. “It's starting to grow and things will get sorted out, but in some cases you're forced to pay shipping and handling when it's not needed. There's no way of getting around outrageous same day shipping costs.” With that being said, online is where the projections lie to the tune of $10-billion in 2018 for the U.S. market according to a Hedges & Company survey, and that's to the chagrin of brick and mortar aftermarket sellers. It's not as drastic in Canada, but there's no denying its rise along with other disruptors such as ride sharing programs and autonomous vehicles. In addition, repair shops have to contend with current semi-autonomous technology and pure electrics. These vehicles are fitted with numerous sensors, Lidar, cameras, software updates, and alternative powertrains that can be very complex and require plenty of training. “There's a lot more training, calls and online videos here at Red Hill Toyota,” explains Balinsky. “It's just a more

complicated system and that can become an issue for some. For example, a car delivery used to take 30 minutes and now it can take up to 2.5 hours.” These dramatic changes are constantly reshaping the aftermarket industry. According to McKinsey & Company, growth rates will come from diagnostics and services that are linked to the new age of digitized vehicles. Education and understanding these new technologies take up time and resources, and if the shops aren't prepared for this computer age shift or are trying to catch-up too late, they may eventually be left behind. Aftermarket accessories Replacement parts all add to the bottom line, but it's not big business for many dealers, especially when working with OEM parts. The same cannot be said for aftermarket accessories where the potential for large profit margins is there for the taking, and in many cases, bring in more money for the dealer than the actual vehicle purchase.

“When it comes to the accessory aftermarket, that's where it can make a big difference,” explains Balinsky. “We have accessory dealership targets both internally and from the OEM itself. It's not a small number, and in the end, it drives up sales.” All of Balinsky's showroom vehicles have added Toyota accessories. “Whether it's a bug deflector, bodysize molding, trunk protector, cargo liner, running boards, or WeatherTech style winter mats – we got it. There's a

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THE AUTOMOTIVE AFTERMARKET | DAVID MILLER lot of money for dealers to make when done right.” And doing it right may be offering consumers both OEM and aftermarket parts. Consumers look for choice, and that along with price is what's currently driving online sales. If dealerships were able to bring in a large variety of products or at least offerings in a catalogue or website, more profit could be had. In the end, OEM parts don't cover everything and dealerships should be taking full advantage of all situations. Through dealership installation, consumers get a professional working on their vehicle, a warranty in most cases, and a place to go back to if something wasn't done correctly. Dealerships also have the advantage of clients constantly coming back in for service or purchase, so you might as well show them the latest accessories. Perhaps waving an installation fee if they're already doing an oil change or maintenance check may do the trick. It can all be summed up by the old adage, “if you don't ask, you'll never know.” Dealers need to be asking or making their clients aware of the new accessories, deals, or products on-hand. Technology and connectivity is everchanging and making life easier for drivers and passengers and a new accessory two years into owning the car, might make driving easier, safer, or more fun.

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Incentivizing the workforce will assist in aftermarket accessories being top of mind. Before putting incentives in place, each employee needs to be fully trained in sales to effectively assist consumers. The last thing you want are your clients feeling uneasy about coming in for service fearing they will be overrun by pushy salespeople. Dealerships must stay cognizant of offering aftermarket accessories in a subtle, more helpful way catered to individual customer needs. Having them on display or in a catalogue as they wait to be serviced could be a good plan; while your more chatty clients may like to hear what's on offer. The key is getting to know your individual customer and how they like to be treated. Another way of letting clients know about deals would be staying in touch via email. Even if dealers only generate five per cent new business from that, it still five per cent more than they had, and that can only increase with time. Conclusion Whether its replacement parts or accessories, the aftermarket should never be overlooked by the dealer. Both scenarios help the bottom line, and that's why you're in business in the first place. The market is currently going through some changes with digital and online disruptors, and that's something all members of the aftermarket will need to work with in order to succeed. It's not just something to navigate around.

In the next five years, dealers need to be more cognizant of the online world and work to connect with their clients in that way. In addition, online parts should be available on dealer websites where they can be ordered and a service time arranged. Software updates and applications are already becoming a part of a vehicle's service and those service calls could potentially be handled by tech companies if automakers neglect training their employees. For now, dealers need to be on top of all current trends, as well as traditional servicing, to the best of their abilities. We don't know what the future holds, but a dealer willing to quickly adapt will earn dividends in the long run. ■


REMARKETING SERVICES OFFERS MANHEIM CANADA, ALONG WITH FORD REMARKETING SERVICES, is offering “retail ready” vehicles during their

regular Tuesday sales at the Manheim Toronto auction.

The vehicles are premium cars, trucks and SUVs that have undergone a full mechanical inspection and reconditioning process ensuring each one will meet and/or exceed provincial safety guidelines. They are late model, low mileage vehicles that are guaranteed to be ready for sale the moment the purchase is made. Key benefits of the program called FORD FRONTLINE READY INCLUDE:

• Hand selected premium vehicles • Valid Provincial Safety Certificate (where applicable) • Mechanical inspection by a licensed technician • Road tested for proper operation of engine and drivetrain • Ramp inspection for accident repair/structural damage • Claims-free CARFAX Canada report “By working with Ford Remarketing Services to offer retailready vehicles at our Manheim Toronto location and then at Manheim Montreal later in the quarter, we’re facilitating a program that gives our clients an additional opportunity to purchase select Ford vehicles with confidence,” said Jack Sulymka, Director, Commercial Accounts and Operations, Manheim Canada. ■

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THE OLD CAR DETECTIVE 1939 MERCURY CONVERTIBLE LIKE NEW AGAIN

ON SATURDAY, AUGUST 11, over 1300 classic cars and trucks were on display at the annual show in Bothwell, Ontario, hosted by Old Autos newspaper. The highlight of the show for me was seeing a restored 1939 Mercury convertible owned by Jim and Carol Lucier from nearby Blenheim.

Jim bought this car unrestored many years ago from car collector John Legue, now deceased, who lived near Blenheim. It was faded light blue and complete but had been off the road for a long time. It now has a sparkling white finish which Jim painted himself. The tan top and interior were installed by a shop in Belle River.

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By Bill Sherk

The car is all original except for the flipper wheel discs and shaved trunk lid which places the rear license plate on the driver’s side of the rear bumper. When my older brother John and I were in high school in the late 1950s, we frequently drove along Hwy. 3 and through the town of Shedden, the Rhubarb Capital of Ontario. Parked between two buildings on the north side of the main street was a faded light blue 1939 Mercury convertible with the top up and no license plate. We saw it several times as we drove by, but unfortunately never took the time to stop and inquire about it. Then it disappeared. The car that Jim Lucier bought from John Legue was light blue, and


John Legue lived only 40 miles from Shedden. There is an excellent chance that Jim’s 1939 Mercury convertible is the same car my brother and I saw sixty years earlier. Henry Ford purchased the Lincoln Motor Company in 1922 from its founder, Henry Leland, who introduced the Lincoln in 1920 and named it after his boyhood hero, President Abraham Lincoln. For the next seventeen years, a huge price gap existed between Ford and Lincoln. By 1938, the price gap was $500 between the Ford Deluxe and Lincoln Zephyr. 1939 Mercury

new car because Mercury was the Roman god of swiftness.

The Ford Motor Company finally entered the medium-price field in the fall of 1938 with the arrival of the 1939 Mercury.

The 1939 Mercury had a wheelbase of 116 inches, four inches longer than a Ford, and none of the Mercury body panels were interchangeable with Ford. It was definitely a new car!

The new Mercury had a flathead V8 with 239 cubic inches and 95 horsepower while the ’39 Ford had 221 cubic inches and 85 hp. The extra horsepower inspired the name for the

Four body styles were available with the 1939 Mercury: a 2-door coupe with full back seat, a 2-door sedan, a 4-door sedan, and a 2-door convertible with full back seat. New

for the Ford Motor Company cars in 1939 were hydraulic brakes throughout the entire line. The gearshift lever was on the floor but moved up to the steering column in 1940. The new 1939 Mercury was a sales success with over 65,000 sold in its first year. The last Mercury was built in 2011. I’m always looking for stories. Email billtsherk@sympatico.ca. ■

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SCHOOL SUPPLY DRIVE MAKING A DIFFERENCE NEXTGEAR CAPITAL CANADA (NGC) , along with parent company Cox Automotive Canada, launched its first ever "Ready … Set … School!" campaign this past summer in partnership with the Boys and Girls Clubs of Peel.

The company-wide school supply drive, which aims to ensure local children are set up for success in time for the school year ahead, saw NGC surpass its goal by three times the company’s intended target. “For students living in poverty, the right school supplies are often a luxury instead of a necessity,” said Jerome

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Dwight, National Vice President, NextGear Capital Canada. “Social responsibility and ethical practices are vital to our success, and our team members wanted to positively contribute to the community we work in. I think their donations really showed that.” Not all Canadian children have access to the supplies they need for success in the classroom. And poverty, regardless of level, has been linked to reduced academic achievement. Students who face this sort of difficulty come to school every day without the proper tools they need for success; as

a result, they are often behind their peers physically, socially, emotionally and even cognitively. “Back to school shopping can put a very real financial strain on families,” said Emma Pye, Project Manager Lead for NextGear Capital Canada. “Education is an important social concern, and this Ready … Set … School! initiative gave us all an opportunity to positively impact the lives of others through a simple act of donating school supplies.” The Ready … Set … School! campaign will wrap up this month with all donations supporting the Boys and Girls Clubs of Peel. ■


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