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Posts Tagged ‘Automotive Forecasts’

DesRosiers Automotive Reports – January Observations‏

In Beauty, book reviews, Business, cars, Creative Writing, Culture, Education, Entertainment, Environment, Events, Health, Living, Media Writing, Movie Reviews, Music, Pets, Radio Podcasts, Restaurant Reviews, Sports, Technology, travel, Video Work, Writing (all kinds) on February 7, 2013 at 3:00 AM

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Dennis Desrosiers Thoughts for the Day

In Beauty, Business, cars, Contact Information, Creative Writing, Culture, Education, Entertainment, Environment, Events, Living, Media Writing, Opinion, Technology, Writing (all kinds) on January 6, 2010 at 8:34 PM

Dennis Desrosiers – January 6, 2010

By Dennis Desrosiers

Attached are sales for 2000 to 2009 for passenger cars versus light trucks and for the D-3 nameplates versus the import nameplates although I don’t know why we analysts break out the D-3 from the import nameplates anymore. The three of them are radically different especially after the last 12 months of crisis. Each also is very different from a structural point of view and position and performance in the market. But none the less this is still how the industry looks at things so I’ll also do it this way. I will promise to send you through an analysis by brand in the next day or two that doesn’t have this problem so bear with me.

With the exception of this past year ( 2009 ) the split between passenger cars and light truck sales in Canada was relatively constant at roughly 55 percent passenger car and 45 percent light truck. There as a slight bias toward more light truck share as the decade progressed but it wasn’t until 2009 that light trucks actually took a noticeable market share from passenger cars. In 2009 light truck share grew to 48.8 percent. At the beginning of the decade, most would have forecast light trucks to significantly outperform passenger cars. It never happened. This actually is quite surprising in that the whole fuel efficiency debate centred around the notion ( at least in Government eyes ) of car good .. truck bad. This notion is wrong but is the overwhelming perception of many who write about this industry. But much higher energy prices and a Government machine biased against light trucks ( especially SUV’s ) one would have expected a huge upswing in passenger car sales as energy prices soared and our Governments pushed the fuel efficiency button. In fact, the opposite happened. Canada ended up through the decade with a growth in light truck share. This shows how wrong some of the fundamental notions that evolve about our industry can be. In actual fact the notion of … car good – truck bad .. is highly flawed. There are many light trucks that are more fuel efficient than passenger cars. Indeed if you take out the commercial use light truck which because of their use have no choice but to have more powerful engines then the difference in fuel economy between light trucks and passenger cars is very slight. And that is one of the reasons that consumers bought so many of them.

Another insight from this mix of sales is the power of the consumer. Governments can foist their views onto the consumer all they want but at the end of the day the consumer is much more powerful than any politician and will buy what they want to buy not what some politician tells them to buy. And the vehicles companies simply respond to these consumers needs. They do have a role in shaping consumer thinking but much of the desire of the consumer emanates from their day to day need NOT what any vehicle company says their needs should be and certainly not from what any politician tells them to buy.

Indeed if you look at the second block of data on this chart you will see exactly what I mean when I say that OEMs do not control the consumer but instead respond to the consumer. This second section breaks out the D-3 nameplates from the import nameplates. Despite their serious problems, the D-3 remain incredibly powerful entities in the market and there is no argument that they were the most powerful companies by a wide margin at the beginning of the decade. If OEMs dictated what consumers bought then how is it that the three most powerful players ( the D-3 ) at the beginning of the decade accounted for 66. 1 percent of light vehicle sales but by the end of the decade they accounted for only 43.8 percent of sales.

There is a frightening view in policy circles that any OEM can dictate to the consumer what they should purchase and thus our policymakers put in place a process where OEMs are being asked to make sure certain benchmarks are met. But in reality, our policymakers should be taking on this responsibility NOT any OEM. The OEMs in Canada simply sell to the consumer the products the consumers desire. If the policymakers want consumers to buy the more fuel-efficient product then they need to alter consumer behaviour. And they have tools at their disposal to do exactly this with the most powerful tool being the tax system and the regulatory system. They could legislate old gas guzzlers off the road for instance through an inspection program like they do in many countries around the world. But politicians refuse to take responsibility because they don’t want to tell consumers or better put … FORCE … consumers to do something they fundamentally don’t want to do. After all, they might lose their vote. So they vacate this responsibility and push it onto the OEMs to do their dirty work for them. But the OEMs little to no control over the consumer and thus not a lot gets done.

I don’t deny that the OEMs have some responsibility but if our political masters want more fuel efficiency then they also should take more responsibility for this agenda item.

Sorry to get off topic a little but my mind wanders.

Back to the D-3 import nameplate decade of sales. It was needless to say a very difficult decade for the D-3. All three lost market share which I’ll highlight in more detail in one of my next e-mails. But GM declined from 30.5 percent of the market to 17.4 percent, Ford’s share was up in 2009 but they still declined from 18.2 percent of the market to 15.4 percent and Chrysler declined from 17.3 percent of the market to 11.2 percent. Collectively the D-3 lost 22.2 points of market share a record for any one decade. Import nameplates grew from about 525K units in a 1.55 million market to about 820K in a 1.46 million market an incredible performance that ultimately led to the near bankruptcy in Canada of both GM and Chrysler. The same happened in the US and it did result in Chapter 11 filings.

I’ll send some more decade level information out over the next few days and weeks and take a very close look at the decade through multiple windows. I’ll also try to avoid getting into these rants about our policymakers.

My thoughts for the day.

Dennis

DesRosiers Automotive Consultants Inc
Dennis DesRosiers
President
dennis@desrosiers.ca
80 Fulton Way Suite 101
Richmond Hill, Ontario
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