Sunday, February 16, 2014

2014 Toronto AutoShow Video Report

Well, it's that time of year again and the Toronto International AutoShow opened this weekend so I took my iPhone to the show and shot this video report.  (It was easier than writing a long detailed report).

In short, there is lots more to see at the show that what I can fit in the video including interactive displays and presentations as well as more vehicles in every category than you can imagine.  Every manufacturer has at least one jaw-dropping concept vehicle to show plus several innovations and new introductions to feature.  Although it can be overwhelming, it's also a great opportunity to learn about the new technologies that are changing how the automobile impacts your life.  If you are in the market for a new car, the choices are virtually endless.  The Toronto International AutoShow is on until Sunday, February 23rd at the Metro Toronto Convention Centre.  I will be on duty at the Mazda stand on Saturday, February 22nd from 4:00 pm to 10:00 pm so come by and say hello.


video


Sunday, January 26, 2014

Why I "Fired" My Customer

Last year, I "fired" some of my customers.  Well, to be accurate, they were prospects, not customers. Customers are people who have made a commitment and bought the product.  You can't really "fire" them because they are now part of the family.  And once accepted into that circle, they all become valued relationships.  Prospects, however, are simply people who might be ready to buy but have not yet found the confidence to make a decision.  I might also say that prospects are those who have yet to recognize the overall value of my offering.  Some never do.

So I came to the conclusion this past year that some people are are best left to some other store to deal with.  Most fall into the category of "price shoppers" (which is fine if you are reasonable in your expectations).  I'm talking about the unreasonable prospects who believe that dealerships (and by logical extension, the people who work there) are not entitled to make any profit on the sale of a vehicle.  Some even go as far as to believe that we should sell vehicles at a loss (because there is some secret slush fund somewhere that compensates us for below-cost deals).  I even had one prospect (who I eventually "fired") tell me that the loss we should take on his deal could be made up on some other naive customer who we could somehow get to over-pay for his car.

Marketing guru, Seth Godin, talked about the unreasonable customer and said it was probably worth firing a customer if he distracts you from delighting customers that are reasonable.  In general, dealerships are afraid to fire customers, no matter how unreasonable. Godin says this is a mistake. It's a great joy to go out of your way and WOW customers who are reasonable (and they usually appreciate the higher level of service you provide).  But unreasonable customers are almost always the most difficult to please and they sap your energy and enthusiasm that you need to thoroughly delight those reasonable customers.

Unfortunately, the auto industry's bad reputation acquired over decades of poorly treating customers has left customers suspicious and ready to do "battle" despite new laws and regulations that dealerships must now observe.  But car manufacturers are now putting tremendous pressure on their dealerships to put customer service at the top of their priorities if they expect to keep their franchise.  And even if these measures were not being taken, customers now have access to every bit of information via the internet to know if they are getting a great deal.  The automotive industry has probably gone from being the most secretive to the most open and transparent of all  retail operations.  Not because they wanted to but because customers demanded it and technology made it possible.

This week, I had a prospect who had been introduced to me via a service that provides (for a fee) the dealership invoice cost on the selected vehicle.  After some time spent discussing his transportation situation, reviewing a few model/trim options that would fit his needs, and outlining the differences between the model being considered and a competitor's vehicle, this prospect said he would buy the vehicle if we would sell it at a price that was about $900 below the dealer cost (and he won't budge).  It is one thing to get an unreasonable offer from an uninformed buyer but getting such an offer from an informed buyer means we failed to establish any kind of business relationship where the prospect can recognize that the dealership (and the person representing the dealership) are providing a service that requires some level of compensation.  Yes, I had to fire him.

If you are shopping for a car, don't be an unreasonable customer.  Google makes it easy to educate yourself and get a pretty good idea of what is a fair and reasonable deal.  (And, of course, you can read this blog for suggestions and advice).  When you contact a dealership at some point in the process, you should expect (and demand) outstanding service (before, during, and after the sale) but you should also expect to pay a reasonable price for it.  I'd hate to have to fire you!

Thursday, December 19, 2013

Treat Yourself

If you are currently shopping for a new car, there is no need to read further, but if you are NOT in the market for a new car, this post is for you.  Why?

When you are driving your four, five, or six year old car and happy that your car payments will be ending soon and you feel satisfied that you made a good choice buying this car some years back, you are probably not keeping up to date on developments in the car business (unless of course you are a "gear head" or active enthusiast).  Your transportation situation is looking pretty satisfactory.  But the reality for most of us is that we only start looking into what is happening with the new car models when we have come to the conclusion that our current car is no longer cutting it.  But if you are NOT in the market for something new, you are not reading new car reviews online, not attending the annual car show in your region, and you are probably not wandering into new car showrooms to just keep on top of what's new.

Here is the more likely scenario.  Right now, you are probably making payments on a 4 to 6 year old car that is at least a full generation behind the current version of your car.  And, those monthly payments you are happy will be ending soon are about to turn into random lump sum payments as the annual cost of keeping your aging car in top running condition starts to escalate.  In fact, Consumer Reports studies show that the annual cost of repairs and maintenance on an 8 year car is double that of a 5 year old car and the 5 year old car will cost twice as much per year in repairs and maintenance as a 3 year old car.

This may prompt you to ask yourself
  • Why am I making monthly payments on a vehicle that is off warranty and is entering the high cost maintenance period of its life?
  • Why am I driving a vehicle that is out-of-date in terms of styling, safety, and technology?
  • If I could change my current vehicle for a new 2014 model without changing my monthly cost of driving, why wouldn't I do it?
The Solution:
Don't you owe it to yourself to at least review your transportation options?  Take this opportunity to talk to me about what makes sense for you.  If you are going to be making payments anyway, why not be making them on a new vehicle that better fits your lifestyle?  You deserve it!  Treat Yourself!

Friday, November 22, 2013

2014 Mazda3 Ride 'n Drive Event: The Highlights



Mazda continues to roll out it's re-designed fleet of vehicles with the full suite of SKYACTIV Technologies.  As each new vehicle arrives, we (dealership personnel) get the opportunity to drive the vehicles on a closed circuit against their direct competitors.   Over the past year and a half, I have been able to test the Mazda CX-5 (compact SUV), the new 2014 Mazda6 (mid-sized sedan), and, most recently, the new 2014 Mazda3 (sedan and hatchback).  All these vehicles have been built on the new SKYACTIV platform and are definitely the best engineered vehicles Mazda has ever produced

Earlier this month, the 2014 Mazda3 Ride 'n Drive Event was held in Toronto where we got a chance to put the new2014 Mazda3 up against the Ford FocusVW Jetta, Honda Civic, and Hyundai Elantra on a demanding slalom course at the Toronto Congress Centre.  Click on the video link (above) to share some of the experience and excitement.

Unfortunately, I have not figured out a way to replicate this experience for my customers (other than to share the above video).  However, even on a more traditional test drive on city streets, the outstanding driving dynamics of the vehicle, show themselves. Already, reviews of the vehicle have been pouring in and they are all giving the car top grades.  For example, Road and Track Magazine awarded the 2014 Mazda3 Best Economy Car and said "You can drive it all day with a grin on your face. And you'll want to."




Sunday, September 22, 2013

Should You Buy a Hybrid Vehicle?

One bias I will declare right up front and it is that I have always considered a one-motor vehicle to be a more elegant engineering solution than a vehicle with two (or more) motors.  So, when you consider that a hybrid vehicle is one that uses both a conventional internal combustion engine (fuelled by gas or diesel) and an electric motor powered by a battery, it is going to take some convincing that hybrids are a better overall solution.

For the purposes of this discussion, let's focus on fuel economy and total cost of ownership.  The other factor is overall driving dynamics for which the early hybrid vehicles have received some criticism, however, let's address the economic arguments for today.  The "elegant" solutions I mentioned above would include 100% electric vehicles, gasoline, and clean diesel.  If we consider only gasoline, diesel, and hybrid options, we have one car maker with all three.

The Volkswagen Comparison

How about the recent study done by the National Post comparing three Volkswagens:  
  1. 2013 Jetta GL powered by a conventional, naturally aspirated (as in no turbocharger) gasoline 2.5-litre in-line five-cylinder
  2. Jetta Turbo Hybrid, powered by a 1.4L turbocharged four-cylinder mated to a 27-hp electric motor
  3. Jetta TDI, with the company’s evergreen 2.0L turbo-diesel four-cylinder.
The official Natural Resources Canada rating for the gasoline Jetta 2.5L is 9.1 litres per 100 kilometres in the city and a more miserly 6.2 L/100 km on the highway. The TDI’s (turbo diesel) corresponding numbers ring in at 6.7 city and 4.6 highway, VW’s 2.0L turbo-diesel showing decent around-town economy along with outstanding highway mileage.  Still, the Hybrid trumps all, its 4.5/4.2 L/100 km ratings showing the efficiency expected in city driving for a gas/electric combo, but also better highway economy than the TDI, which is a little surprising. A hybrid’s electric motor’s added boost is usually most effective at low speeds and generally less efficient at highways speeds. Could Volkswagen have finally unlocked the secret to diesel-beating highway fuel economy?

Unfortunately for the government ratings and Volkswagen’s engineers (who continue to profess that the hybrid is more thrifty than their lauded oil burner), the answer is quite simply no.  In all National Post tests at steady-state highway cruising, the diesel trumped the Hybrid (and, naturally, the 2.5L gas engine).  Please note that all three cars were driven at the same time, tail-to-front, their cruise controls set to identical speeds.  Even at the lowest speeds, when they thought the Hybrid’s turbocharged engine might be at its most frugal, the TDI (diesel) always triumphed, though by a smaller margin.

For the record, with a speedometer reading indicating 100 kilometres an hour the TDI sipped 4.2 L/100 km, while the Hybrid consumed a still-economical 4.8 L/100 km. The 2.5L GL, unsurprisingly, trailed at 5.9 L/100 km.   And the faster they went, the greater the diesel’s advantage became (though the Hybrid hung in there better than other gas/electrics tested).

In town, the results, as expected, reversed. The 2.5L was left even further behind during the stoplight circuit, averaging 10.8 L/100 km during the Port Hope, Ontario, test run. The TDI, meanwhile, posted a still-credible 7.9 L/100 km, while the Hybrid’s electrical assistance proved its worth by sipping just 5.9 L/100 km.

What about the eco impact of hybrids?  What happens to the batteries?

The conventional wisdom has been that hybrid batteries have a short lifespan and are expensive to replace?  While the nickel-metal hydride batteries used in the current generation of hybrid cars would indeed be expensive to replace, costing at least a few thousand dollars, the reality is that most car manufacturers warranty their batteries for 8-10 years or 160,000 km. Since there aren't yet many hybrids on the road that have hit those lengthy milestones, it's difficult to ascertain how long hybrid batteries will actually last. Anecdotally, however, a cab driver in Vancouver drove his Toyota Prius 320,000 km in 25 months, and his car's batteries remained strong.

Average Annual Vehicle Operating Costs 

TravelSmart.ca recently calculated the annual costs of operating an "average" motor vehicle in Canada by using CAA data and a Toyota Camry travelling 18,000 kilometres per year with gasoline costing $1.23 per litre.  Here's how the breakdown looked:

Depreciation      $3,634
Auto Insurance  $2,667
Fuel Cost           $1,822
Repairs              $1,180
Financing Cost  $1,025
License & Reg  $   124
Total                $10,452

It seems clear that a Hybrid will get you lower fuel costs but what about depreciation?  Michael Vaughan at the Globe & Mail noted recently that if you go back to the 2008 model year and compare the gas version and the hybrid version of the Honda Civic. You would have paid more for the Civic hybrid yet the hybrid is worth less today than the gasoline Civic. The gasoline engine Civic has held onto 43 per cent of its purchase price while the hybrid only gets 38 per cent of its original value. Same story for SUVs. The 2006 Lexus RX gasoline engine SUV holds 42 per cent of its value while the more expensive hybrid only hangs onto 38 per cent.

Now let's take a look at clean diesel versus gasoline. The 2008 Jetta with gasoline engine holds onto 38 per cent of its value while the Diesel Jetta holds 48 per cent.  Big difference.  Now to the SUVs; let's compare the gasoline and clean diesel versions of the 2009 Mercedes-Benz M Class. Again diesel is the winner, holding 55 per cent of its value over four years as opposed to the gasoline version that only hangs on to 49 per cent.

If you want to go "green" yet come out ahead in the Depreciation Derby then it looks like diesel is your choice over hybrid.  It doesn't mean that one technology is superior to the other, but it does demonstrate what the market thinks.  Diesels are perceived by consumers as economical and reliable so they retain more value.  Hybrids, and one would assume battery electric cars, are more problematic.

Parting Thoughts

It's interesting to me (because I sell Mazda vehicles) that Mazda decided not to offer hybrid versions of their vehicles at all and instead, dramatically re-worked the engines (both gasoline and diesel) along with weight reductions to the vehicles that is achieving hybrid-level fuel economy numbers without the added weight and expense of that second motor and its batteries.  Other manufacturers are also discovering that re-thinking the gasoline and/or diesel powerplant is proving to provide similar benefits to the hybrid without the drawbacks.  The other options that have appeared recently include SKYACTIV (Mazda), EcoBoost (Ford),  and CVT (Nissan and others).  Almost all car manufacturers have developed (or are working on) a 100% electric vehicle which is looking more like the true alternative to the internal combustion engine (gasoline or diesel).


Sunday, September 8, 2013

Did YOUR Mistake Cost ME the Sale?

Pardon me if this sounds like a rant!  The intention is for it to be helpful and educational.  Now, I can handle losing business to competitors if the customer is making an informed decision and perhaps they like the competitive offering better.  However, occasionally, people make ill-informed decisions based on a friend providing advice that is inaccurate or by getting confused about what a competitor is actually offering.  It's not hard to understand how this can happen.  Perhaps it has happened to you

The truth is that the proliferation of automotive brands, models, and packages and strangely structured incentive programs by car manufacturers adds up to a confusing landscape of choices.  Lots of sales people use this to their advantage in a number of ways.  Frequently, the bewildered car shopper who set out to make an apples-to-apples comparison, is not sure what is a fair deal or whether they are getting screwed.  By the time the shopper reaches me and gets a complete and accurate explanation of the alternatives, they don't know what to believe.  And, here are a few reasons:
  • Low Balling.  In Metropolitan areas where dealerships of the same brand are a short drive away, the temptation to give a customer a "low ball" quote, as they leave the dealership without buying, is very strong.  The consumer visits several other dealerships seeing if anyone will beat the low ball number they have received.  Since no dealer can beat the number, they return to the first dealer only to find that the car was "sold?", was a different trim level than was understood, or it was based on a "cash purchase, not finance".  In short, there are lots of ways the dealer can switch the vehicle because he was never in a position to sell the original car at the low ball quoted price.  It was only offered to insure that the customer would return.
  • Cash versus Finance.  Usually, near the end of the model year, manufacturers provide 0% financing deals for extended terms (often as high as 84 months).  Since it costs marketing dollars to buy down the lending rates to 0%, the manufacturer saves money if the buyer pays cash.  Most of this savings is normally provided in the form of a cash purchase discount.  So the customer has the alternative to finance at 0% OR pay cash and take advantage of a discount for paying cash (which can be several thousand dollars).  It is not difficult to image how an unscrupulous dealer can have the customer thinking that they are financing the vehicle at the cash price.
  • Value of the Trade-in.  This is often an area of confusion because the amount that the dealer tells you he is giving for your trade-in may include a few things such as a discount on the new car (that the dealer would probably have given you anyway, i.e., without a trade), or a rebate or allowance from the manufacturer that the dealer is getting but not disclosing, or including the taxable savings on the trade, i.e., the government sales tax saved by combining the transactions.
  • Over Estimating Dealer Margins.  Most consumers (according to a recent JD Power study) over-estimate how much margin car dealers are making on a vehicle.  This sets up expectations of large potential discounts which cannot be realized.  I have seen customers leave the dealership because they believed the deal in front of them still had a couple thousand dollars available to negotiate when it was only a couple hundred dollars.  If you are determined to squeeze every last dollar out of the deal, you should subscribe to a dealer invoice service and offer to pay a fair amount above the dealer invoice.  The transaction will go smoother and you will get better service from the dealer.  In Canada, the most common services are CarCostCanada and UnHaggle.
  • Model/Trim Switch.  Models, trim levels, and sub-trim levels can be confusing  and each brand configures their packages differently so an apples-to-apples comparison is difficult.  I often meet with customers who have been shopping and are "sure" that a certain model/trim comes with heated seats when I know it does not.  Unfortunately, car sales people frequently misrepresent (knowingly or unknowingly) what equipment is standard and optional on a specific vehicle.  If you are confused, you are easy to switch.
Fortunately, the research is showing that more car shoppers are doing the bulk of their research online and visiting fewer dealerships before they buy.  This means they arrive at the dealership better informed and ready to do business.

Let me know if any of the above scenarios were part of your car buying process.  How did you handle it?

Sunday, July 21, 2013

Top FIVE Things You Need to Know About Buying a Car

One of the great benefits of writing a blog is that (eventually), Google starts to rank your posts so it becomes clear what topics people are interested in reading (and which they are not).  Nevertheless, I am always interested in the feedback I receive which helps me discern what might engage the readers of this blog.  If you have landed on this post as part of your car buying research process, please leave a question or comment about how it is going so far and what information you wish you could find.

If you search the internet for car shopping advice and tips, you will quickly be overwhelmed by tricks and scams to look out for as well as tricky techniques to "out smart" the car sales person as well as how not to be outsmarted by him/her.  A lot of the warnings and horror stories I find online are frequently from another era in the car sales business that we hope is gone forever.  The availability of information online has completely levelled the playing field and even tilted it in the favour of consumers.

Here are the topics that have attracted the most page views and the most comments on this blog.  It appears that the majority of readers are looking for a "peek behind the curtain" so they do not get blindsided by charges that they had not expected.  You can click through to find the information you are most interested in.  If you still have questions, please post them in the "Comments" section and I will answer them quickly.  Perhaps your question is the topic for my next post!

READERS' MOST POPULAR POSTS
  1. What Fees Must I Pay on a New Car?
  2. Did You Read the Vehicle Purchase Agreement?
  3. Using Your Line-of-Credit to Buy a Car
  4. "All-In" Pricing: What Does It Mean?
  5. What's the Best Time to Buy a New Car?