Auto conference

North American-made vehicles are positioned to take share away from imports this year, according to a majority of speakers at a conference for the automobile industry.The conference, held Feb. 15 in Toronto and called 'Canada's Auto Industry: Revving Up for the...

North American-made vehicles are positioned to take share away from imports this year, according to a majority of speakers at a conference for the automobile industry.

The conference, held Feb. 15 in Toronto and called ‘Canada’s Auto Industry: Revving Up for the Retail Recovery,’ drew 150 industry executives, dealers and suppliers.

Industry experts predict sales of cars and light trucks to peak at 1.3 million in Canada in 1994, about a 10% increase over last year.

Michael Flynn, associate director, Office for the Study of Automotive Transportation, University of Michigan Transportation Research Institute, says the Big Three automakers (Chrysler, General Motors and Ford) now have a $2,000 to $3,000 per vehicle cost advantage over Japanese imports thanks to the steady appreciation of the Japanese yen against the u.s. dollar.

However, Flynn warned this is only a temporary setback for Japanese automakers.

‘Unlike the experience of the Big Three in the 1970s and ’80s, the reputation of the Japanese is undamaged,’ he says.

‘No one is saying that Toyota and Honda don’t make good cars. They’re just saying that, today, they’re too expensive.’

Several speakers addressed the increasing popularity of leasing.

Bernard Campbell, managing director, DRI/McGraw-Hill, noted the cost of the average new car in the u.s. is approaching 50% of annual family income.

Campbell says consumers are balking at financing their car loan for today’s average term of 48 to 60 months, so they see leasing as a viable alternative.

In Canada, Jim O’Donnell, senior vice-president, automotive financing and retail lending for the Bank of Nova Scotia, noted retail leases accounted for 25% of Ford’s and gm’s retail sales in 1993.

O’Donnell predicted leasing would account for more than 50% of the new car market in the next five years.

Some manufacturers recently introduced leasing for late model used cars, particularly in the luxury segment (vehicles costing more than $30,000.)

Despite the optimistic forecasts, O’Donnell warned the consumer is still wary of the practice.

He says until leasing is as straightforward and simple as retail financing, it is unlikely to take off.