We are offering a one week stay in a beautiful property located in the pacific coast of Costa Rica to you and your customers. All car dealers that book finance deals with us from December 21, 2023 to March 20, 2024 and reach 15 funded deals during that period of time will receive an email confirmation with the voucher for your stay.

Each of your customers that sign a finance contract with us will receive a ticket for a raffle for a week stay on the property. The raffle will be drawn in our offices on March, 21, 2024.

If you would like to see more pictures of the property visit their website www.vacationrental-cr.com/gallery.

*Conditions apply.

Conditions for dealers:

• The deals that count for this contest will be the ones received and funded from September 15th to November 30th, 2023.
• The voucher is for 1 week reservation during January to December of 2024 subject to availability.
• The weeks of Christmas, New Year and Easter Holidays are excluded.
• This voucher is only for the stay, does not include flights, transportation or meals.
• Once the reservation is made, if you need to cancel it or modify it you need to send written notice 30 days prior to your stay.
• Stay approximate value is $2100.00 USD.

Please print a copy of the contest’s flyer and posted in a visible place in your dealership for your customers to see. You can also place it in your vehicle windows to promote sales.

Customer Flyer

Customer conditions:

• The offer is for contracts signed from December 21, 2023 to March 20, 2024
• The voucher is for 1 week stay during April to December of 2024 subject to availability.
• Easter, Christmas and New Year Holidays are excluded.
• This voucher is only for the stay, does not include flights, transportation or meals.
• Once the reservation is made, if you need to cancel it or modify it you need to send written notice 30 days prior to your stay.
• Stay approximate value is $2100.00 USD.
• You can visit www.vacantionrental-cr.com for property’s pictures and location.

The Canadian used wholesale market saw its largest decline in prices yet, at –1.56%, for the period ending on Dec. 2. The prior week’s decline was only -0.38%, and Canadian Black Book’s Market Insights data indicates that the 2017-2019 average of the same week, a mere -0.31% in comparison, was significantly less steep.

Segment-specific, cars fell by -0.88% (compared to -0.23% the prior week), and truck/SUV segment prices declined –2.23% (compared to -0.53% the previous period). Not a single segment’s value increased for the week. In its report, CBB said the Canadian market “continued to decrease, and the overall decrease was the largest seen this year and more than six times the historical average.”

In the cars category, mid-size cars experienced the most significant decline in pricing (-3.11%), followed by near-luxury cars (-1.20%) and sports cars at (-1.13%). For trucks/SUVs, four segments had a 3% or greater depreciation: compact luxury crossovers/SUVs (-3.57%), compact crossovers/SUVs (-3.56%), full-size luxury crossovers/SUVs (-3.42%) and mid-size crossovers/SUVs (-3.00%).

CBB said supply remains low and demand for vehicles at auction on both sides of the border is decreasing. They also noted that upstream channels continue to tap into that supply before it can be made available to wholesale market.

“Most segments saw a change in average value of more than $100 this week as the truck and SUV segments fell the most,” said CBB. “We see that smaller vehicles have been outperforming their larger alternatives, as possibly both Canadian consumer budgets tighten and arbitrage risk to exporters continues to rise.”

They also noted that conversion rates were “quite low” during this reporting period, with some observed sell rates as low as 9% or as high as 49%. However, most were less than 30%. “Last week we saw less sellers dropping floors, which has been contributing to lanes with lower sell rates.”

dealer, C. auto, & Phillips, T. (2023, December 8). Used market decrease “more than 6x the historical average,” says CBB. Canadian Auto Dealer. https://canadianautodealer.ca/2023/12/used-market-decrease-more-than-6x-the-historical-average-says-cbb/

Wholesale vehicles price drops lessened a bit last week, with an average decline of 0.38%, says Canadian Black Book.

CBB data shows car segment prices dropped by 0.23%, while pickups and SUVs prices fell 0.53%. This continues a trend of truck depreciation being higher than that of cars, except for the small pickup segment.

Although depreciation rates weakened last week, still none of the 22 segments CBB tracks saw prices increase during the week.

Seeing the biggest price declines were the full-size cars (down by 1.03%), followed by the subcompact crossover and subcompact luxury crossovers with drops of 1% each.

Looking at car segments, all but one declined in price, as the premium sporty car segment didn’t change at all from the week prior. CBB head analyst Daniel Ross told Auto Remarketing Canada in a recent interview that sporty car prices are holding stronger than most during the second half of 2023.

Prestige luxury cars and luxury cars saw the least impactful price drops, down 0.01% and 0.08%, respectively. Full-size cars dropped the most, with a decline of 1.03%, followed by sporty cars (down 0.75%).

Trucks experienced slightly larger depreciation last week. Subcompact crossovers (down 1.03%) and subcompact luxury crossovers (down 0.99%). Minivans followed closely behind. Midsize crossover/SUVs (down 0.94%) and full-size pickups (0.80% decline) dropped more significantly, as well.

Price drops this past week followed historical norms for the season, CBB said. Supply remains low, keeping depreciation at a minimum.

That said, as far as the supply problem for new cars goes, there may be hope on the horizon. CBB analysts said the global semiconductor shortage is improving over last year as the numbers show an expected global cut of 2.466 million vehicles this year. This is significantly down compared to last year’s final number of 4.388 million.

“With only 20,000 more vehicles to be cut from production for the remainder of the year, the scenario has improved continuously throughout 2023,” CBB said.

CBB reported many segments last week in the lanes saw a drop of more than $100 in average value last week.

Once again, conversion rates were quite low this past week, according to CBB.

Some observed sell rates were as low as 6% and as high as 49% but most were less than 30%.

CBB once again saw sellers dropping floors, which has been contributing to lanes with lower sell rates.

The average listing price for used vehicles was slightly down week-over-week, as well, CBB reported, as the 14-day moving average was at roughly $37,900.

In the U.S. market, prices are dropping at a quicker rate for wholesale. Last week, car and truck segments fell by an average of 1.49%, while cars fell by a rate of 1.82%, which both represent larger declines than the week prior.

Auto Remarketing Staff. (2023, November 30). Depreciation in used-car prices slows down last week. Auto Remarketing. https://www.autoremarketing.com/arcanada/depreciation-in-used-car-prices-slows-down-last-week/

Customer financing is a way to let customers pay for goods or services in installments instead of up front. When you offer financing to your customers, you make your vehicles more affordable and put their dream car within reach.

Consider that 2 out of 3 customers are probably borrowing some portion of their purchase. Asking the right question from the start of the process will lead to more sales, and at a higher profit per sale.

Many customers do not actually realize which cars they can afford. They may say that their budget is $10,000.00, but they are doing a payment calculation in their head.

To give you an example, a 2013 model can be finance for 3 years. If the car sold for $10,000.00, the payment would be $190.00 bi-weekly with $0 down. A 2016 model can be financed for 5 years. If the car sold for $15,000.00 the payment would be $180 bi-weekly with $0. The client would be paying less for the newer and more expensive vehicle. Unless you know how your customers are calculating their budget, you might miss the sale.

Salespeople should be trying to move the conversation from a round number to payments from the start. It is much more difficult to move to payments after talking solely about the cash price first. Starting the conversation with a smaller amount will open your customer’s mind to other possibilities.   

Financing also offers a better opportunity for profit. You can ask the customer to pay $1,000.00 plus tax for a warranty right away or ask $13 per payment over a 3 year term. Which scenario is more likely to lead to a sale? This also applies to after-market products like winter tires, rust proofing, rims, and all kind of products.

Sit down with your customer and begin your conversation with a simple question, “What is your monthly budget?” You can better asses what the expectations your customer has in regard to what they can afford.

Auto financing is the easiest way to increase sales and profits. There is a direct relationship. A higher ratio of finance contracts per total sales will lead to more cars sold, and higher average profit.

Risman, M (2023, November 24). Why to finance vehicles instead of selling for cash? Part 3. Ontario Underwriters Newsletters. https://on-u.org/newsletters/

Part 2: Benefits for customers

There are two main ways of buying a new car: in cash (paying the total cost in full), or with car financing. Although it might seem like common sense to just pay upfront with cash than taking out a loan, it’s not always the case. Even if you have some cash in reserve, taking out a competitive auto loan can have a lot of advantages which include:

• Most of the time your customer will say that they are paying from their cash savings, they are using another method of borrowing to pay you for the car (usually from a line of credit).
• Not taking funds from a line of credit or savings account gives a little liquid flexibility and leaves room for an emergency fund to draw on.
• Taking out a car loan spreads the payments over a longer term, increasing the chances to buy a newer/better car instead of being restricted to the cash available.
• May improve credit score. Signing off on a loan that can be paid off is a great way to watch your customers credit score grow. Adding an auto loan can diversify the credit mix and slightly boost the credit score.
• With financing, your customers will own 100% of the vehicle at the end of the repayment term, yet they will still have the cash sitting unspent in their account or leave a credit line untouched, just waiting for a rainy day.
• The majority of auto-loans in Canada are open with a fixed rate while credit lines have variable rates. Cars are a depreciating asset, and most people pay only the minimum payments, which leaves the customer in a negative balance.

In summary, the auto dealer ALWAYS benefits from a client who finances their auto purchase. Dealers who also know how to explain the benefits of financing for that customer, will make move sales, and have a higher profit per sale.

In the last part of this series we will explain how to sale financing to customers.

Gonzalez, N. & Risman, M (2023, November 17). Why to finance vehicles instead of selling for cash? Part 2. Ontario Underwriters Newsletters. https://on-u.org/newsletters/

Given the announcements last week by the Federal Government regarding Canada’s immigration targets, we at DAC thought it would be timely to look at the Canadian new light vehicle sales market from a population perspective. Due to the pandemic and semiconductor shortages, sales decreased dramatically in 2020 and remained down as vehicle shortages held back the market in 2021 and 2022. However, amidst this environment, one factor that does not receive enough consideration is the rapidly increasing Canadian population.

Between 2017 and 2022 the number of Canadians of driving age (defined broadly as 15+ years) increased by a stunning 2.2 million people. Putting this into a sales perspective, sales of new light vehicles among reporting manufacturers reached 67 units per 1000 people (aged 15+ years) in the peak sales year of 2017. With declining sales and an exploding population this number decreased by a remarkable 32% by 2022, to only 45 vehicles per 1000 driving aged population. “When population growth is taken into account, the ground that the Canadian new light vehicle sales market needs to re-capture widens” commented Andrew King, Managing Partner at DAC. “However, 2023 has seen a pattern of sustained sales increases thus far and rising population should support additional market demand in the medium and long terms.”

Azarov, D. (2023, November 8). The Impact of Canada’s Exploding Population on Vehicle Sales. DesRosiers automotive reports.

Benefits for Used Car Dealerships

The advantages for a used car dealers to offer financing are clear and well know since almost 50% of all car sales are financed. To name a few of the reasons why offering financing to your customers is a good idea, please continue to read the following points:

• By offering financing to customers, businesses can boost their sales, and increase their average sales transaction size. Financing allows customers to make regular, affordable payments toward the cost of a big-ticket item, instead of paying the full price up front. Taken in consideration that according to the AutoTrader Price Index Report, the average new vehicle price in June 2023 was $66,288, 21.3% above the price in June 2022. As for used cars, the national average is currently $39,645, 4.1% higher than it was the prior year. Flexibility in customer payments will make a big difference. Cost is often the first consideration for customers shopping for a big purchase: they want to know if vehicle they want will fit within their budget.

• By leveraging auto finance, you can eliminate the sting of sticker shock for your customers and shift the conversation away from total costs. Instead, you can show customers how low monthly payments can allow them to buy exactly what they want. Financing allows you to re-frame the sales conversation, shifting the focus away from budget constraints to the value the purchase will bring.

• Financing increases a customer’s purchasing power. Not only does financing make it easier to close a potential sale, but it’s also a powerful tool for upselling. You can demonstrate to customers how a small increase in their monthly loan payments can allow them to afford upgrades or additional products. The option to add after market products, like warranties, winter tires, rust protection packages, etc. will increase the profitability of the transactions.

• Offering consumer financing can give you a competitive advantage, allowing smaller dealerships to compete with franchises and Automotive Groups. Your business can attract new customers by offering financing plans. If a prospective customer is shopping around for a big purchase, they may be more likely to choose your company over a competitor that doesn’t provide financing options. It can also help you earn repeat business, as customer credit programs often motivate customers to return for future purchases. A study shows that 93% of buyers that use consumer financing for the first time would use it again.

• Allowing finance as an option to manage better your customer budget, they can take advantage of a sale that can be perceived as a “Good Offer” without worrying about affordability in that regards. Fortunately, some new and used cars have dropped in price, and car buyers looking to save money can still find deals. It is expected that average car prices will reduce gradually, but inventory has remained an issue due to ongoing supply chain disruptions and inflation.

For a used car dealer, finance could make the difference between and a day cleaning cars or a day with a successful sale.

In our next part of this 3 part article, we will be reviewing the benefits of financing for customers.

Gonzalez, N. review by Risman, M (2023, November 3). Why to finance vehicles instead of selling for cash?. Ontario Underwriters Newsletters. https://on-u.org/newsletters/

Canadian used wholesale market prices have not slowed, with prices down -0.26% for the week ending on Sept. 2 compared to the prior week’s -0.30%, according to Canadian Black Book’s latest Market Insights report.

The car segment was down -0.09% (similar to the previous week), and the truck/SUV segment slipped -0.42%, which is slightly less than the prior week. Three out of 22 segments’ values were up for the week.

In the United States, the overall car and truck segments were down -1.40% last week and -0.86% the prior week. The volume-weighted car segments declined -1.44% versus the previous -0.83%, and the volume-weighted truck categories decreased -1.38% from -0.87% the prior week.

In Canada, eight of the nine car segments experienced a decline in pricing, with the biggest decreases coming from prestige luxury cars (-0.28%), luxury cars (-0.18%), and sub-compact cars (-0.17%). The one increase came from mid-size cars (+0.14%).

For the truck/SUV categories, 11 of the 13 segments showed a decline —  notably full-size vans (-0.93%), full-size crossovers/SUVs (-0.74%), and compact luxury crossovers/SUVs (-0.68%). On the up side, compact vans (+0.61%) and small pickups (+0.06%) experienced an increase in value.

The average listing price for used vehicles, as per the 14-day moving average, was at approximately $38,250. The analysis is based on around 189,000 vehicles listed for sale on Canadian dealer lots, according to CBB.

You can read the full report here.

Lefko, P., & dealer, C. auto. (2023, September 6). Used vehicle price decreases continue, decline slightly less this week. Canadian Auto Dealer. https://canadianautodealer.ca/2023/09/used-vehicle-price-decreases-continue-decline-slightly-less-this-week/

People hanging on to vehicles for longer leaving dealers with little inventory

The used car market is still experiencing a shortage of vehicles even as the automotive sector recovers from supply chain woes that have plagued the industry since the onset of the COVID-19 pandemic. Used vehicles for sale are displayed at an automotive dealership in Ottawa on Friday, Aug. 11, 2023. PHOTO BY SEAN KILPATRICK/THE CANADIAN PRESS

TORONTO — The used car market is still experiencing a shortage of vehicles even as the automotive sector recovers from supply chain woes that have plagued the industry since the onset of the COVID-19 pandemic.

Used vehicles became an alternative to consumers when the supply of new vehicles was severely limited during the pandemic, says Daniel Ross of automotive insights company Canadian Black Book (CBB), and prices for used cars started to rise.

“But after the increase of interest rates and inflation as a whole, affordability has become the main concern,” he says of the latest moves by the Bank of Canada to clamp down on rising costs.

Ross, who is the senior manager of automotive industry insights at CBB, says that’s driving buyers toward smaller, used vehicles rather than previously popular SUVs, pickup trucks or new vehicles with higher market prices — a trend expected to continue for the next 12 to 18 months.

But there are not enough used cars in the market to meet the growing demand. DesRosiers Automotive Consultants Inc. says dealers are having a hard time getting used cars and projects a slowdown in sales in the coming months.

The latest estimates by DesRosiers show the 2023 sales of new cars at franchised used dealers are expected at 305 units per location, and at just 140 for independent used car dealers. That’s lower than the sales projections cited at the beginning of this year.

Sourcing troubles worse

At least 51 per cent of the car dealers surveyed said their sourcing troubles for used vehicles have worsened since the pandemic, a report earlier this month by DesRosiers found.

The supply constraint is partly because people are holding on to their vehicles longer than usual, creating a bottleneck in the supply chain for used cars, says Jim Hamilton, interim manager at the Used Car Dealers Association of Ontario.

On average, he said, people look to sell their vehicles after four or five years of ownership and move on to newer make.

“Now, they’re hanging on to the cars double that time, which means more money in the service business — oil change, brake repairs and maintenance.”

A separate survey by DeRosiers shows that aftermarket retailers reported higher sales for automobile parts during the first quarter of 2023 — most of them having better sales compared to pre-pandemic levels.

June statistics for retail sales in Canada were driven by motor vehicles and parts dealers, which were up 2.5 per cent from May, much higher than the overall 0.1 per cent growth.

Ross of CBB is seeing those trends, too. He said people are buying out car leases before maturity, spending more on repairs and keeping them out of the used car lots.

Daily rental fleets are also following in the footsteps of regular buyers and holding on to the vehicles longer because they can’t replace the old fleet with the new ones. That means those cars aren’t entering the used market as expected

“This puts constraints on supply even further than what we’ve had in the past,” Ross said.

Between 2020 and 2021, used car prices soared 34.5 per cent as car manufacturers dealt with unprecedented backlogs in the supply of car parts to bring new vehicles to showrooms.

Now that the cost of used cars is stabilizing, people who may have been sitting on the fence in the last two years because of high prices are getting into the market.

Cindy Marques, a financial planner at Open Access Ltd., says she has noticed her clients are moving to buy cars only because they have to — lowering their expectations for new cars or opting for used to fit within their budget instead of delaying purchases.

Limited financing

“It’s not a matter of waiting for interest rates to go down but to bite the bullet and buy different cars than they hope they would get,” she said.

Limited financing options are also a factor in making the used car markets more attractive for buyers, said Ronald Corbett, vice-president for Toronto and southwestern province at Desjardins Ontario Credit Union.

With decreasing purchasing power and higher interest rates, Corbett said, qualification prospects for car loans are a little more difficult.

“People are more apt to be pinching every penny and not wanting to put that extra $40 or $60 a month toward any car purchase when they’re looking at prices for groceries, mortgage, rent and other costs,” he said.

Ross said the supply chain for some new cars has improved this year, with more cars now available at showrooms, alleviating some pressure from used car demand. Still, it remains sporadic.

“With the added effect of higher (market prices), the showrooms are not necessarily seeing as much gravity behind consumers coming to the new car market, as they previously have seen,” Ross said.

Years of limited access to new cars has shifted conditions.

Previously, Ross said, customers bought a new vehicle, then replaced it with another new car — with the original vehicle adding supply to the used market.

“But we’ve seen the opposite. New vehicle inventory is building as used vehicle inventory is still on the downturn.”

He said it takes at least two years for new cars to populate the used vehicle supply chain.

“Recovery stems from the new car market,” he said. “If you don’t have any new cars selling, you’re not going to have any used cars.”

Dubey, R. (2023, August 28). Used car market faces supply and Demand Crunch | Financial Post. Used car market faces supply crunch as inflation spurs drivers to search for cheaper wheels. https://financialpost.com/transportation/autos/used-cars-market-faces-supply-crunch