By Nancy McTaggart

After the turbulent times of 2009, the automotive world continues to evolve.  Under GM’s government-supported restructuring, they have downsized brands that were less profitable and are now focused on improvements and innovative upgrades to existing models.  Chrysler was sold to Italy’s Fiat Group, owners of Ferrari, Maserati, and Alfa Romeo.  Reports show sales in 2009 were off as much as 15 per cent for new vehicles.  U.S. sales, however, were down by 30 per cent. But did you know that 80 – 85 per cent of what is being manufactured in Canada was destined for the U.S. market?

Both GM and Chrysler have emerged from the government supported bankruptcy protection with a solid business plan. However, their single largest challenge will be to convince the public that they are in it for the long haul.  Customers had moved away from the conventional (tired) line up.  Competition will be aggressive.  It will be interesting to see if the market will continue to be dominated by a handful of big players – some of whom have reduced their dealer base significantly.   Long time automotive industry observer and analyst Dennis DesRosiers, expects as many as 600 dealerships will close over the next 4 years, spawning a vast army of “free agent” car buyers who have no loyalty to a particular brand or automaker.

(Above article in CAA spring 2010)

Comparing similarities in the depressed auto industry to our past experiences is all too easy.  We are all too familiar with “downsizing” as many sporting goods companies have experienced a decline in revenues, profits and staffing in past years.  Our original thinking was the “impact of 9-11” however, the number of corporate amalgamations or downsizing of North American companies started over a century ago.

Corporate acquisitions by Acushnet, Nike, Adidas, and Callaway made a significant impact, strengthening brand programs.  Meanwhile the retail sector continues to struggle with a handful of independent stores left.  The uncertainty of employment, investments, and health care has had a direct impact on many North Americans, unwilling to spend money on expensive recreational products.  Baby boomers, hit with the harsh reality that retirement is farther away, have adopted a “closer to the chest” spending.  The housing and auto industry are a reflection of the depressed national economy.

Our continued focus on the “lean and mean” simply indicates that getting back to the grass roots of successful retailing may be the only answer to survival.  Competing for a sale these days is tough enough but unfair advantages between retailers are obvious and no one is making any money on the sale.  It is time for a change in the market place.

Loyalties have changed dramatically.  Just as there is a lack of brand loyalty at the retail level, there has also been a change of loyalty at the wholesale level where buying power reigns.

Our market barometer continues to hinge on a single retailer who has taken the golf industry to a new level of big box exposure.  This one stop shopping of golf and related items has been a huge success and has been a welcome change to golf “retailing” in the Canadian market.

Credit exposures today, however, appear to depend on purchasing ability as wholesalers compete for wall space.  Financial institutions demand security and documents that allow a sound business decision, yet wholesalers appear to simply extend credit on a handshake.

Stop the train!  I want off!  The wheel of time continues to gain momentum in the race for sales dollars.  But have we taken the time to assess and properly evaluate other markets and opportunities?  With the Canadian dollar and our manufacturing quality, we applaud the Canadian manufacturers who have started to sell into the U.S. market.  And yes, we absolutely have the technology to research risk and opportunity outside your local markets.

Let’s be leaders.  We are a century ahead of the automotive industry and should continue to pioneer and be innovative in developing a strong business plan.

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