An improving supply of product as well as high interest rates are prompting the return of automaker incentives to help spur Canadian new-vehicle sales, said John Cappella, Porsche Canada CEO.
“Things were different at the end of [2023] versus the beginning of the year; supply has been addressed across most OEMs, and with that has come incentives again,” said Cappella, a keynote speaker at the Automotive News Canada Congress Feb. 15 in Toronto. “It didn’t take long. I think everyone was wishing they didn’t come back. In the last six months, we really saw an acceleration in incentives.”
The federal luxury tax, which went into effect Sept. 1, 2022, also was weighing on luxury sales, Cappella said. “There was this situation where the deals that were done before it was implemented were being delivered,” he said. “Now, people are starting to look at that and say, ‘that’s a pretty big bill,’ especially consumers in provinces, such as British Columbia, which impose a provincial luxury levy.
But the main push toward incentives is the growing availability of vehicles, which had been constrained during the pandemic-induced global parts shortages, said Cappella. With supply easing, “those [interest] rates are staring to coming into play again, and as a result you’ve seen those incentives come back.”
Asked whether the market was returning to pre-Covid-19 normal, Cappella said, “things are evolving so quickly, you can’t even compare it to last month now; 2019 is a long ways away.”
AN EVOLVING INDUSTRY
The industry, he said, is evolving much faster than ever before. “Think of the all the different cars that are now on the market that weren’t even around back then, [and] there’s electrification. There are factors that I know in my career I’ve never had to deal with.”
Twenty years ago, an automaker would target a segment with one vehicle that came with a few engine variants, he said.
“Now, you have the one car, and you have the ICE (internal-combustion-engine) version, the hybrid version, that battery-electric version, and you haven’t factored these things in what you’re going to sell a year or two, five years from now. That’s a lot more complex.”
The different technologies, he said, means automakers are having to invest “a lot more” in product development. “For brands like us, we’re not going to abandon the internal combustion engine overnight.”
The luxury brand aims to have more than 80 per cent of its product lineup be fully electric by 2030, and Cappella said automakers must focus on the next generation of buyers to bolster EV sales. “High school students today grew up plugging in a phone every single night. So, plugging in cars is not a big deal.”
Government policy, he added, should boost demand by offering consumer incentives for such things as installing EV home chargers.
Canada’s EV market is shifting from early adopters to “the early majority. They want to see the proof of concept, but those people will adopt. It just takes a little longer because that group is asking more questions.”
Porsche, which saw sales increase 16 per cent last year, will be launching four new products in 2024, Cappella said.
NEW PRODUCT
