Toronto, Ontario — Canadian reports for June auto sales heat up the business landscape in this week’s Tuesday Ticker, while Tesla takes aim at an EV competitor through a California lawsuit.
Maritime madness
June 2020 auto sales for both Quebec and Newfoundland and Labrador confirmed the provinces are leading the way in auto sales growth, with each reporting higher sales numbers than June 2019.
Sales in provinces such as Nova Scotia, Ontario, Alberta and British Columbia were down between 22 and 33 per cent, with overall Canadian sales down by nearly 16 per cent. Newfoundland and Labrador and Quebec, however, bucked that trend, with sales in both provinces up by 8.8 per cent, with 3,523 and 46,637 sales, respectively, according to data compiled by Desrosiers Automotive Consultants.
Observers are struggling to explain the scenario—particularly in Newfoundland and Labrador, where key industries such as oil and gas are slumping and the unemployment rate sits at higher than 16 percent.
According to Kevin Peters, chief operating officer of Hickman Auto Group, which operates 13 dealerships in the province and employs some 500 people, the provincial government’s response to the pandemic along with strict protocols from the dealerships have culminated to create a “phenomenal” month for the sector.
He also said July, while not quite as frenzied, is also looking quite good.
“Newfoundlanders just seem to be a resilient group of people, and the business community has adapted to provide the services and the goods in a way that works for them and allows the business to go on day-to-day and consumers to interact,” Peters told CBC News.
Fuelled by financing
J.D. Power says 84-month captive OE financing has driven the success of Canada’s new-car sales for June.
Analysts from the data firm say June—which marks the traditional start of the summer selling season—was the “least bad” month for sales amid the pandemic.
Numbers still came in about 16 percent below the June 2019 mark, according to data from DesRosiers Automotive Consultants, but marked an improvement over March, April and May.
“Nearly all of the success we witnessed in June was down to one single sales strategy: captive financing of a new vehicle at 84 months at low APR+ some cash incentive,” analysts said in the July 9 Canadian New Vehicle Retail report.
The report, which offered a look at the June 2020 retail landscape, revealed:
- The proportion of all industry financing in the 84-month term gained 10 points of share vs. June of 2019 (47 percent vs 37 percent). Incidentally, 96 month was down during the same time.
- Finance type of sale increased again, from 53 percent to 61 percent of all transaction, with losses for both “cash” deals and leasing. This is up vs. last month, and last year.
- The frequency distribution of APR essentially at “0 percent” (by “zero” we mean “0.9 percent” or lower) increased dramatically from 26 percent last year to 42 percent this year.
- Even for luxury marques, the proportion of financing deals essentially at “0 percent” increased dramatically from 19 percent to 55 percent. Note that more than 1-in-5 luxury vehicles are now financed.
Trading trade secrets?
Tesla has filed a suit in a California court against Michigan, U.S.-based electric truck maker Rivian, allegeding the company used its employees to steal trade secrets.
In its lawsuit, Tesla claims Rivian hired away dozens of its former employees and alleged that some of them took confidential manufacturing, organizational and recruiting information, as well as lists of Tesla employees who could be targeted for hiring.
The lawsuit names four former Tesla employees who were hired by Rivian, and accuses each of taking documents from Tesla in violation of non-disclosure agreements they had signed when they were first hired.
“Misappropriating Tesla’s competitively useful confidential information when leaving Tesla for a new employer is obviously wrong and risky,” according to the complaint filed in state court in San Jose, California. “One would engage in that behavior only for an important benefit—to use it to serve the competitive interests of a new employer.”
Tesla also called itself Rivian’s “number one target from which to acquire information,” and said that Rivian has hired 178 ex-Tesla employees, roughly 70 of whom joined Rivian directly from Tesla.
A Rivian spokesperson has called the suit “baseless.”
“We admire Tesla for its leadership in resetting expectations of what an electric car can be,” said the spokesperson. “Upon joining Rivian, we require all employees to confirm that they have not, and will not, introduce former employers’ intellectual property into Rivian systems. This suit’s allegations are baseless and run counter to Rivian’s culture, ethos and corporate policies.”
