Car wars

A Conversation with The Colonel May 2010 Car Wars

Are there car wars in Canada? Especially in the entry level luxury segment. Yes!

Car Wars There are ongoing comments, and opinions from various sources about some sort of car war in Canada. Yes....car wars in Canada!!! We are fortunate, The Colonel (who is this guy) dropped by this morning and is sharing his thoughts, and answering our questions. Lets get right to the point: Q- Colonel are there car wars in Canada? ,[object Object],Q- That was a loaded answer. Seems there's a war among the luxury segment? ,[object Object],Q- Yes...you got it right on the head. Seems some of them might be losing money, or close! ,[object Object],Q- If they are not losing money, and selling vehicles, and leasing, and applying what seems like high residuals to their leases....what's up? ,[object Object],[object Object]

Controlling the Variables to Gain an Advantage The manufacturers that control all their variables have a distinct market/competitive advantage. The manufacturers that are grappling with an effective, and aggressive CPO program are conservative.

Car Wars Q- You are saying that the upwardly mobile Canadian prefers to lease. ,[object Object],Q- How about all this talk of high residuals to lower monthly lease payments. ,[object Object],Q- Interesting, how does it work? ,[object Object],Q- That simple? ,[object Object],Q- That entire segment "entry level luxury" is doing reasonably well. ,[object Object],Q- Sort of follow? ,[object Object],Q- This seems to have happened overnight? ,[object Object],Q- Like a perfect storm that was building up? ,[object Object],[object Object]

Strategies to Set Residual Values The customer prefers to see a higher than lower residual value on a lease. Manufacturers embellish their leases by showing a higher residual value.

Car Wars Q- Other moved out of the way? Perhaps the leaders in the segment have raised the stakes as a barrier to entry. ,[object Object],Q- Do you have an example? ,[object Object],Q- Agreed...but Chrysler does not really compete in the "entry level luxury". ,[object Object],Q-You are saying that the upwardly mobile Canadian when it comes to entry level luxury is responsive to a lease, and to a manufacturer that puts skin in the game. ,[object Object],Q-But those high residuals! ,[object Object],Q-Its still high! ,[object Object],Q-Got it.You are embellishing the optics of the lease deal. ,[object Object],Thank You Colonel.

Car wars

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