Articles, by Charles Seguin
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Automobile dealers all over the world are facing challenging times. For some, at least, the most fundamental elements of the factory-dealer relationship are at risk. The sombre reality is, these are the most serious times we have ever experienced. The current recession on its own is posing tremendous downward sales pressure on all brands. Forecasters in Canada are calling for a 1.5-million new vehicle market in 2009 - approximately a 10-percent decline. This may be optimistic given the historical 1/10 market relationship of Canada to the U.S. as forecasts for that market range from 9-million units, pessimistically, to just 11.5 million, optimistically.
Tighter capital means fewer dealership transactions likely.
The first seven months of this year have been some of the most turbulent on record for the North-American auto industry. The Detroit Three's market share continues to slide, and overall U.S. auto sales are showing double-digit declines. But 2008 has seen a significant difference in performance between the U.S. and Canada. The situation in the U.S. is far worse than it is here. Canadian light vehicle sales are actually up!
The answer may lie in how you perceive it.
Throughout my career, I have observed that there are as many ways of running an automobile dealership as there are dealers. Of course some are better run than others.
One cannot help but observe the dark cloud hanging over the North American economy and wonder what short- and medium-term impact that will have on Canadian consumers and by extension automobile dealers. So far so, good with YTD new-vehicle sales holding their own in Canada. But what if this does not last?
Perhaps its time to make some tough decisions.
As Im sure you have noticed, the news concerning our economy is not great these days. And more downward pressure seems headed our way. This is partly due to the credit worries from our friends to the south, as well as to a dollar well north of $.90 (US) and to some fundamental imbalances in the automotive industry. As a result, dealer profits are feeling the pinch and things could get even tighter before they improve.