Solera Canada


From the blog

Turbulence in Canada’s auto industry

Why partnering on results tracking and market insights is critical for navigating uncertainty

A new report on Canada’s auto industry reinforces how key partnerships are critical to understanding the rapidly changing marketplace and business environment.

Everyone is familiar with the metaphorical expression, ‘from the frying pan into the fire,’ which cautions that hasty decision making can make matters worse. There is another metaphorical tale about how a frog will boil to death if it is placed in a pot of tepid water which is then gradually heated. The frog is imperiled by ignoring what is happening in its immediate environment until it is too late, which suggests that businesses cannot manage risk effectively if they do not have comprehensive and timely information.

As 2019 ended, the world and life in Canada seemed stable enough. Now, midway through 2022, we find ourselves in a boiling cauldron of uncertainty.

Unexpected Global Crisis Takes a Toll on Canadian Auto Industry

First, the COVID-19 global pandemic erupted in March 2020. Thankfully, efforts to mitigate its impacts had the world on a path to normalcy. Then, in February 2022, Russia invaded Ukraine and global focus shifted rapidly to the first armed conflict in Europe in decades. Meanwhile, market and policy responses to climate change were both expanding in number and intensifying.

No one anticipated the pendulum-like economic effects that pandemic response measures would have both nationally and globally. In terms of Canada’s auto industry, Solera’s recently released 2021 Canadian Claims Year in Review highlights how demand collapsed in 2020, while supply became a huge problem in 2021. Among other impacts, these swings massively inflated Canadian used vehicle prices which rose 35% during that time frame.

As Inflation Grows, Canadian Auto Industry Faces Challenges

A 21% increase in repair costs over the past five years had already made inflation a concern. Managing this issue alone presents a challenge, but uncertainty only ramps up as global macroeconomic and geopolitical shocks intersect with existing trends. Even a cursory reading of the Year in Review report prompts consideration of a range of issues.

  • Will escalating fuel prices affect the consumer shift to light trucks and SUVs (81% of new vehicle sales in 2021) seen over the past four years? Will the cost of fuel further accelerate sales growth of zero emission vehicles (5% of new vehicle sales in 2021)?
  • What will the impact of electric vehicle quotas in Canada’s climate plan (60% by 2030) be on the claims industry? Will the difference in repair costs between EVs and internal combustion powered vehicles (28% higher for one popular model) continue to widen?
  • Is the average cash value of total loss claims set to spike or are there signs of relief on the horizon?

2021 Canadian Claims Year in Review Helps Navigate Bumpy Roads Ahead for Canadian Auto Industry

Sometimes circumstances dictate that we must leap quickly and hope that we don’t end up ‘in the fire.’ In most other circumstances, we can mitigate the metaphorical danger of being boiled alive by marshalling all the data resources and analytical tools at our disposal to minimize risk.

Few companies, if any, have the capability in-house to fully track changing market and business environment conditions that may affect their performance. Forging alliances with strategic partners capable of tracking results across multiple dimensions to fill gaps and supply valuable market insights is more critically important than ever.

Download the full 2021 Canadian Claims Year in Review report here.

Meta Description: 2021 Canadian Claims Year In Review gives key insights into the Canadian Auto Industry.

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