By CRM Staff
Toronto, Ontario – April 9, 2019 –
Canada’s Declining Car Sales
Auto sales numbers in Canada have seen year-over-year declines for 13 months, according to a report from Derosiers Automotive Consultants.
The report notes that auto sales during March totaled about 182,000 vehicles, about 3,500 vehicles fewer than in March 2018.
This decline does not affect all vehicle classes. March 2019 saw a slight increase in pickup sales compared to the previous year, while sedan sales were down by more than 10 percent.
Some OEMs have also fared better than others. Ford Canada sold almost 28,000 vehicles in March, up from about 24,000 the year before.
Despite the thirteen month trend, investors remain optimistic that OEMs will benefit from booming economies on both sides of the border. With the exception of Fiat Chrysler Automobiles, which saw a precipitous drop in value in February, the stock prices of OEMs remain above their market averages.
What’s Good for General Motors?
General Motors has seen a seven percent drop in its first-quarter sales compared to 2017, though the OEM has benefited from increased consumer interest in its SUVs, crossovers and pickups, vehicles which now make up eight-in-ten of the cars sold by GM. Despite the overall decline in vehicle sales, the OEM saw record first-quarter sales of its GMC Acadia, an SUV; Chevrolet Trax and Equinox, both crossovers; and Colorado; a pickup. Speculators appear to be cautiously optimistic about the company, with the stock price ticking up by 13 percent over the quarter.
Chevrolet Trax and Equinox, as well as GM’s midsize Chevrolet Colorado pickup, all set first-quarter sales records, while the GMC Acadia SUV had its best quarter ever.
GM plans to launch more full-size pickups in the second half of the year with two new heavy-duty pickups from Chevrolet and GMC.
“We are bullish on pickups and expect to gain sales momentum throughout the year,” said Kurt McNeil, vice president of U.S. sales operations. “We are installing capacity in Flint to build more HD pickups in total, more crew cab models, more dualies and diesel models, too, all in response to dealer and customer demand.”
However, sales of traditional passenger cars continued to slide, dragging down the automaker’s total.
GM has undertaken a plan to reshape its business, including idling factories that produce slow-selling sedans and compact cars, and consequently cutting 14,000 jobs at factories in the U.S. and Canada. The move has divided opinion. Supporters say the company is taking the necessary steps to improve profitability, but labor leaders and politicians from affected regions have criticized the decision.
Shares of GM have risen 5.6 percent over the last 12 months and are up by nearly 13 percent since the beginning of the year.
Pandora’s Trade Deal
Canada’s government has poured cold water on plans to rewrite the new trade agreement between Canada, the United States and Mexico. In a statement from U.S. Speaker of the House Nancy Pelosi calling for text in the USMCA agreement to be redrafted in order to ensure that some labour provisions could be more effectively enforced, Foreign Minister Chrystia Freeland said that reopening the recently negotiated USMCA deal, which replaced NAFTA last Autumn, would open up a “Pandora’s Box.”
“…Canada’s view is that we’ve done our deal,” Freeland told the press last Thursday during an official visit to the U.S. capital. “A lot of time, a lot of effort went into [the negotiations], compromises were made on all sides.”
Pelosi’s primary concern with the deal as it stands has little to do with Canada. The venerable Democrat is eager to have the right of Mexican workers to unionize to be recognized.
Such a move could possibly lead to a rise in vehicle prices, though it is unlikely to have a significant impact. In order to be sold throughout the trade zone, vehicle manufacturing workers must be paid at least $16-per-hour, which is already significantly higher than the average wage in Mexico. The artificial minimum wage on auto workers would likely limit the effectiveness of industrial action by workers in the field.
Freeland also said that rather than renegotiate the treaty, she would like for the governments of all three nations to work towards ratification. She said it would be harder for Canada to ratify the deal until the U.S. tariffs on Canadian steel and aluminum are lifted. The tariffs, put in place by the president, are not affected by the deal as they were placed under the aegis of Presidential power, not Congressional. They were implemented by Trump in early 2019 after he declared both the domestic strength of both industries was integral to U.S. national defence.
The expression “Pandora’s Box” refers to a myth originally told during the Mycenean bronze age. In the most commonly told version of the story, Pandora, a maiden of incomparable beauty, was gifted a beautiful box from the gods, and told she must not open it. When she did, out sprang death, sadness, pestilence, aging and, thanks to the timely intervention of the humanity-loving titan Prometheus, hope.
Boyd Group To Spend Money to Make Money
The Boyd group has expanded its line of credit to $400 million as part of an accordion feature written into their agreement with the lending facilities, including TD Bank as lead arranger, Bank of America, Bank of Nova Scotia and National Bank of Canada. According to the senior executives, the move comes as Boyd considers a number of potential business acquisitions.
“As we execute on our long-term growth strategy, we continue to see many attractive opportunities to make accretive acquisitions,” said chief financial officer Pat Pathipati. “This expanded facility positions us well to take advantage of those opportunities.”
The Winnipeg-based Boyd Group is one of the largest operators of non-franchised collision repair centres. The Company operates locations in five Canadian provinces under the trade name Boyd Autobody & Glass and Assured Automotive.
Assured Performance’s Assuring Performance
Assured Performance’s network grew by 20 percent in 2018, and by a further 8 percent in the first quarter of 2019, the company has announced.
With almost 3,000 repair facilities certified by the program in the U.S. and Canada, the company has announced a goal of reaching 3,600 certified facilities by the end of the year.
Assured has also announced that it has blanketed the North American market, with certified facilities operating in all of Canada and the U.S.’s large metropolitan areas.
