Canadian Interior Options

[VivienM]

The main reason why it is different for US manufacturers vs the Asian manufacturers is that there is a distributor/importer in-between the dealer and manufacturer (HMA or Hyundai Canada). Historically, the distributor/importer was set up to import all the cars, even though many Asian brand names are now made/assembled in the USA (as we all know). Some companies have regional distributors/importers that are not even owned by the parent company, such as Gulf States Toyota. Such a separate distributor/importer does not exist for US manufacturers, and therefore the dealers are ordering and buying the cars directly from the factory (so to speak).

But what about the Germans?

It's standard practice among multinationals to have one subsidiary per country. So you have MB USA, BMW USA, Audi of America, Hyundai USA, etc. Same in other industries. e.g. you have Apple Inc. (US), Apple Canada, Apple France, Apple UK, etc.

And what about an outfit like Ford? You have Ford Motor Co., Ford Motor Co. of Canada Limited, a Mexican outfit, etc. If you go down to your Ford dealer and custom order a Ford Edge, it will be built in Oakville, ON by Ford Canada, which will sell it to Ford Motor Co. (the US parent), which will sell it to your dealer.

I understand Toyota does something weirder in the US and has intermediate distributors, but that's unusual. Maybe that structure prevents factory orders, but there's no reason why each entity can't just pass the order to the next level up.

In any event, allowing factory orders/retail sold orders/etc has NOTHING to do with corporate structure or location of manufacture. I don't know why you think it does.

Most customers are not going to wait around that long for a car, and dealers/distributors have been burned in the past when doing that kind of custom ordering (plus one has to hire extra people and have computer systems that can handle those special transactions). Unless the customer is willing to put up a non-refundable deposit, dealers don't like to do that, and besides they don't get paid until delivery so they want you to purchase from their inventory. The Sonata is made in Alabama and the production quantities are much higher than the Genesis, so it would not surprise me that some custom custom requests may be possible for those reasons.

German car buyers seem to have no problem waiting. Go hang out at an Audi or MB forum. You'll find MANY, MANY posters ordered their cars, waited 3 months for them to come to the US or Canada, etc. There are even entire threads dedicated to tracking the cars on the Wallenius Wilhemsen web site.

And in my limited experience, at least with German dealers, they know what's in inventory at their dealership and other dealerships, and if you're discussing something else (e.g. a MB without the premium package, or a non-white/black/silver car), they'll happily say "there won't be one of those in inventory, but we can order you one, and it'll be here in three months."

Regarding you last comment about shipping a custom order to a dealer--for imported cars, they are not shipped directly from Hyundai Korea to the dealer. The cars are imported by HMA or Hyundai Canada (not a trivial matter), and then sold and shipped to the dealer by the distributor/importer.

Oh please.

Have you ever heard of a bonded warehouse/carrier? (Bonded carriers can carry goods around before they're cleared through customs, and are required by law not to release the goods until they get customs' okay.)

The cars arrive at the port of entry (for German cars coming into Canada, Halifax; for German cars coming into the Eastern U.S., I think it's Baltimore). They stay there for a few days. They may be inspected, etc. The cars get sorted by destination, and put onto trains. When they reach the closest big rail yard to the destination, they're unloaded, put on trucks, and the trucks drive to the dealership listed on the sticker, where the car is unloaded, PDIed, and delivered to the customer.

Meanwhile, while this is going on, the Canadian (or U.S.) head office is doing all the import paperwork, paying customs, etc.

Another analogy: let's say you order a custom Apple computer. It is sold to you by Apple Canada Inc., since you're a Canadian customer. But it will be shipped straight from Foxconn in China to your address by FedEx or whoever. Apple Canada Inc. handles the customs arrangements and 'imports' the computer. Once customs has signed off on the shipment (which is a computerized thing, at least for small shipments), FedEx gets the all clear to deliver. It never touches an Apple Canada warehouse, and you can see it on the FedEx tracking which shows China as the pickup location.

I don't really know exactly why Hyundai Canada decided to have only one interior color per exterior color.

Oh, I agree that they are trying to limit the number of combinations.

Ultimately, it is up the auto companies to decide how much trouble they want to go to in order to accommodate special customer requests. It may be that once the Genesis is more established, they will allow more special requests like you say they do with the Sonata, but even if they do, the lead times are still going to be a lot longer than a Hyundai built in Alabama.

I think we are confusing two things:
1) The ability to custom order something that is available in your country, and
2) The ability to custom order something sold in other countries, but not available in your country.

Most automakers will let you do 1) easily. If I can go to mercedes-benz.ca or audi.ca and equip a car in a given way, then once I give them a (usually-refundable) deposit, my local dealer can call up MB Canada or Audi Canada, and a matching car will arrive three months later. Same with Ford - I know a friend's dad who had custom ordered the first EcoBoost Lincoln MKS in Ottawa. He picked his options from the Canadian order guide, got screwed because the Canadian navigation package doesn't include a rear view camera, and 'the Ford organization' delivered the car with the options he picked to his dealership. Of course, past April or May, it's impossible to order the current model year, but the dealer will have the order guide for 2011s, and will happily place an order for a 2011.

You claim that Hyundai USA does not do this. That may be. I was told that Hyundai Canada does, at least on Sonatas.

And as I said, Audi USA has SOME options (listed on the normal order guide for the US market) that are offered ONLY this way. You will not find a single inventory car with those options unless somebody backed out of a factory order. Go to audiworld's forums, for example - every year, a friendly US sales rep posts the order guide for the US market, a friendly Canadian sales rep posts the Canadian order guide, etc.

Many/most automakers supply dealer inventory the same way (i.e. the manager picks options from the order guide, enters the order, and the automaker builds/ships it), but give lower priority to inventory orders compared to sold orders. One example: some years ago, I noticed while playing with GM's inventory web site that all cars of a given model at one dealer had the optional side airbags, while none at another dealer did. Why? Clearly one dealer's manager ordered the airbags on all his cars, while the other didn't.

2) is what the people wanting different interiors want. It is rare. Audi Canada does it, for obscene fees (e.g. ~$3000 for a colour). Most automakers do not.

The thing is, if you are set up to do 1), then you can increase the number of choices, and reduce the need for 2).

For as long as a given interior colour is offered with ONE exterior in Canada, then they have to supply all the spare parts in that interior colour in Canada, and so there is no additional post-sale difficulty in offering it with more exteriors. And you don't need to stock that combo in inventory if you think it won't be popular - just have the plant build that combination and ship it over if somebody wants it and is willing to wait. Worst case scenario, no one orders it, and all the manufacturer has lost is a little ink in their order guide.

 

[Mark_888]

I understand Toyota does something weirder in the US and has intermediate distributors, but that's unusual. Maybe that structure prevents factory orders, but there's no reason why each entity can't just pass the order to the next level up.

No, it is not unusual. It was the standard model for most foreign car manufacturers, especially the Japanese auto makers. As I mentioned, this business model has been made a little more complicated by the fact that most foreign car manufacturers now build at least some of their cars in the US. Originally, these US distributors just imported and then sold them to dealers in the US, provided warranty coverage and parts distribution, did national advertising, etc.

In any event, allowing factory orders/retail sold orders/etc has NOTHING to do with corporate structure or location of manufacture. I don't know why you think it does.

Yes it does matter. The distributor orders in advance from the manufacturer, and then the dealer buys from the distributor (but buys from stock). For Hyundai, Toyota, Honda, etc, the dealer does not purchase from the factory as is done by American cars.

The other thing is that you are confusing "order" with "requesting". An order is contract to sell and to buy something at a certain price in a defined time period. It is legally binding. When a distributor orders from the factory, it is legally binding. In most cases, these orders are placed in advance and the cars made to spec. When a dealer tells a distributor that he would like to reserve a car with particular colors, that is a request and not legally binding by either party (unless the car is already in stock at the distributor, in which case an order will be done and the car is sold to the dealer and then shipped from the distributor to dealer promptly).

And in my limited experience, at least with German dealers, they know what's in inventory at their dealership and other dealerships, and if you're discussing something else (e.g. a MB without the premium package, or a non-white/black/silver car), they'll happily say "there won't be one of those in inventory, but we can order you one, and it'll be here in three months."

You are confusing two things. First, most Japanese dealers can see the US importer/distributor inventory (and planned shipments from the factory to the distributor), and they can see the inventory at other dealers. I am not 100% sure about Hyundai, but I suspect they can also do that since I previously mentioned that I got my Genesis when my dealer traded a car with another dealer 150 miles away. You keep repeating what I already agreed to.

But that has nothing to do with whether a Hyundai dealer can custom order a car built in a foreign country. I explained in my previous post that BMW (and some others) do allow this, because they decided to provide that service, but most Asian car companies don't provide this service for cars built in Asia and shipped to the US. Keep in mind that BMW gets a premium price for their cars, and the Genesis does not have that kind of gross profit margin built into its pricing (which is why we are all here in the first place).

Oh please.

Have you ever heard of a bonded warehouse/carrier? (Bonded carriers can carry goods around before they're cleared through customs, and are required by law not to release the goods until they get customs' okay.)

The cars arrive at the port of entry (for German cars coming into Canada, Halifax; for German cars coming into the Eastern U.S., I think it's Baltimore). They stay there for a few days. They may be inspected, etc. The cars get sorted by destination, and put onto trains. When they reach the closest big rail yard to the destination, they're unloaded, put on trucks, and the trucks drive to the dealership listed on the sticker, where the car is unloaded, PDIed, and delivered to the customer.

I don't know what this "oh please" tirade is about. All I was explaining is that the cars are purchased from the factory in Korea and imported by the distributor (HMA), instead of each dealer buying from the factory in Korea and importing themselves. This creates a middle-man that does not exist for American car companies in most cases.

You claim that Hyundai USA does not do this. That may be. I was told that Hyundai Canada does, at least on Sonatas.

Did you even read my post? I agreed that since the Sonata is built in Alabama (not imported from Korea) and produced in large quantities, they may allow custom requests from dealers. Toyota has starting doing the same for cars built in Kentucky. But the lead time for the Genesis is much longer (seems to be about 3 months minimum) and number of cars produced is much lower than the Sonata.

 

[CanukV6]

So Boys & Girls lets review all this cra...., I mean useful information here and see what we have learned:

• Customers buy from Dealers who buy from Importers who buy from the Factory. Wow! Thanks for explaining that.
• North American customers won't wait 3 months to get what they want. Um, I certainly would.
• The Canadian Hyundai Importer decides that customers should only need one interior colour choice for each exterior colour, so that is all they offer. Do they even talk to their customers?

I'm so glad we got all that sorted out

 

[VivienM]

Yes it does matter. The distributor orders in advance from the manufacturer, and then the dealer buys from the distributor (but buys from stock). For Hyundai, Toyota, Honda, etc, the dealer does not purchase from the factory as is done by American cars.

Again, you're being technical about corporate structure!

Let's say some corporate lawyer comes up with the idea that having each Ford plant be its own corporation saves some taxes. So, they go down to Delaware, incorporate Ford Chicago Plant Inc. as a wholly-owned subsidized subsidiary of Ford Motor Company, and sell the plant to Ford Chicago Plant Inc., etc.

Is that going to change anything in practice? Nope. Dealer orders a Lincoln MKS from Ford Motor Co. Ford Motor Co. orders the car from Ford Chicago Plant Inc. Ford Chicago Plant Inc. invoices Ford Motor Co., arranges for the railway to pick up the car and ship it to the selling dealer.

Besides, HOW do you explain Canadian-made or Mexican-made cars from US automakers? Clearly, if you go down to your Chevy dealer and order an Impala, your dealer orders from General Motors Co., which plays the role of 'distributor'/'importer', and General Motors Co. forwards the request to General Motors of Canada Ltd., which operates the Oshawa plant in which Impalas are built.
Same with trucks. For a long time, GM built many of its 1500s in Oshawa. US dealers ordered a truck from the giant order guide, and GM decided based on internal considerations (e.g. plant volume, if the tooling for certain configurations is only in one place) whether to have it built in the GMCL-owned Oshawa plant or in a GM-owned U.S. plant. Either way, the matching truck shows up one day at the selling dealer.

The other thing is that you are confusing "order" with "requesting". An order is contract to sell and to buy something at a certain price in a defined time period. It is legally binding. When a distributor orders from the factory, it is legally binding. In most cases, these orders are placed in advance and the cars made to spec. When a dealer tells a distributor that he would like to reserve a car with particular colors, that is a request and not legally binding by either party (unless the car is already in stock at the distributor, in which case an order will be done and the car is sold to the dealer and then shipped from the distributor to dealer promptly).

And the way it is done in Canada with most manufacturers is ordering by your definition.

They enter an order in the computer system, and it will be built and show up 6-8 weeks later (for North American production), or 3 months later (for European). A little later if you've ordered something for which they have supply issues, obviously.

But it's not moral suasion. i.e. if the Audi or Ford or GM dealer enters a retail sold order for Mr. Vivien M_____ of whatever address in the computer system, then the matching car will be built and shipped, full stop.

The U.S. Hyundai system you've described is, quite bluntly, retarded. If two dealers in, say, Illinois have customers who want a black on black V8 with Tech, but Hyundai USA releases only one, then the customer with the dealer that checks the computer more often gets the car, and the other customer is... stuck until Hyundai USA decides that another one is coming. And all the second dealer can do is politely call up their contact @ Hyundai USA and say 'look, please consider putting another car into the system because I have a grumpy customer'?!

I'm sorry, but if that's what is done, it speaks VERY poorly of Hyundai USA (and competitors who do this). If a configuration can be built on the U.S. web site, and it's the middle of the model year, then a dealer should be able to procure a car with that configuration in some organized fashion. Period.

You are confusing two things. First, most Japanese dealers can see the US importer/distributor inventory (and planned shipments from the factory to the distributor), and they can see the inventory at other dealers. I am not 100% sure about Hyundai, but I suspect they can also do that since I previously mentioned that I got my Genesis when my dealer traded a car with another dealer 150 miles away. You keep repeating what I already agreed to.

And with, say, Audi Canada (I pick Audi because I spent lots of time with Canadian Audi sales guys), it's the same thing, plus they can custom order.

First thing they do, they check their inventory.
Second thing they do, they check other dealers' inventory.
Third thing they do, they check inbound UNSOLD inventory orders. If, for example, the Audi dealer in Winnipeg has an inbound inventory car with my requested options, then they can call up the manager in Winnipeg, arrange to trade/buy the car from him, and then when the boat shows up at the port in Halifax, the Halifax people send the car to my dealer instead of Winnipeg.

If, after they've done this, there is no matching car, they enter an order in the system. If it's not a restricted-production model (i.e. A5) with a waiting list, then three months later, a matching car will show up at the dealer.

It makes no sense to me that you are shocked by this. My friend's dad who just got the MKS has ordered Saabs, Jaguars, Jeeps, etc in the last two decades. All cars not made in Canada where the Canadian operation is a distributor/importer. In all cases, they gave him the Canadian order guide, made a note of what he wanted, and caused the respective factory to build a matching car and ship it over! And in the case of his last two cars, he literally got the first ones of that model in town, i.e. before any dealer inventory cars showed up.

I admit I have never talked to a Canadian Lexus operation, say, about this. But I have no reason to think they do it differently. Otherwise HALF the options/colours/etc on their web site would be academic because there's no way they have Canadian inventory, either on the ground or inbound, for half of those configurations.

I don't know what this "oh please" tirade is about. All I was explaining is that the cars are purchased from the factory in Korea and imported by the distributor (HMA), instead of each dealer buying from the factory in Korea and importing themselves. This creates a middle-man that does not exist for American car companies in most cases.

The "oh please" tirade is about your apparent unwillingness to accept that it is RIDICULOUSLY easy for a person or two (or a computer system) at Audi Canada, Hyundai USA, Volkswagen France, etc. to sit at a computer, receive orders from their dealers, and send the order on to the corporate entity that controls the plant (in another country) that builds that product.

Really, other than the headings on the paperwork being a little different, it's not much different than sending the order to a plant controlled by the same corporate entity.

Same with parts orders - if a dealer in Canada needs a given part to fix a car, they'll order it from the manufacturer's Canadian subsidiary, and the Canadian subsidiary either finds it in their warehouse, or orders it from wherever abroad.

Indeed, the very POINT of an outfit like Audi Canada or Hyundai Canada, neither one of which do any manufacturing, is to consolidate orders for parts and cars from their Canadian dealers and obtain the parts and cars from the 'proper' place in the VAG or Hyundai international corporate organizations.

And as I said, the 'middle-man' exists for MOST Canadian-bought cars. That's not the point.

Did you even read my post? I agreed that since the Sonata is built in Alabama (not imported from Korea) and produced in large quantities, they may allow custom requests from dealers. Toyota has starting doing the same for cars built in Kentucky. But the lead time for the Genesis is much longer (seems to be about 3 months minimum) and number of cars produced is much lower than the Sonata.

And again, 3 months' lead time is industry standard for a car shipped by boat.

What difference does the location of manufacture really make? Alabama means 6-8 weeks instead of 3 months. A customer willing to wait 6-8 weeks would probably wait 3 months...

Really, this is just a completely insane business model as far as I can tell. Instead of doing the 'normal' thing, i.e. the plant only builds cars that have been ordered either for dealer inventory or retail customers, you're saying that Asian automakers in the U.S. decide what they want to build and ship to the US, then present their dealers with a list of what's coming and say 'pick from these cars'!

And if what's on the list doesn't match what the dealer's customers want to buy, then the only thing the dealers can do is politely ask their representative at Hyundai USA or wherever to please consider producing more ______________ for next week/month/etc's list, while they look like IDIOTS to customers who are sitting there, cash in hand, waiting to buy something listed on Hyundai USA's web site as being an available configuration in the US market?

So much for Asians' vaunted manufacturing efficiency. Ford/GM/etc were able to custom-build cars in the 1950s, if not earlier...

The only reason this stupid business model works is because of the giant size of the U.S. market. So many cars are made, and Asian automakers offer relatively few configurations (compared, say, to a domestic full-sized truck), that in 95% of cases a matching car is bound to be SOMEWHERE in the system. And in the remaining 5%, well, apparently they have no problem looking like morons.

The thing is, Hyundai Canada may very well do the same thing with Korean-built cars, I don't know. But even with the higher volume cars... how many fully-loaded (leather, sunroof, auto climate, etc.) blue Elantras are sitting in Canadian inventory? The 'luxury-equipped' econoboxes are not that popular, and there may not be every colour in inventory somewhere.

And yes, if I matched into a Hyundai Canada dealer, and they told me "sorry, no automatic Elantra Limiteds in blue are in the system, and we have no idea when we can get you one. We can call Hyundai Canada and ask nicely to have them put one in, but they can say no. Would you like a red one instead?", I would NOT be a happy camper. The blue automatic Limited is listed on Hyundai Canada's web site, so I think it reasonable to expect Hyundai Canada's dealers to be able to obtain one in a reasonable, non-whimsical fashion.

 

[Mark_888]

Really, this is just a completely insane business model as far as I can tell. Instead of doing the 'normal' thing, i.e. the plant only builds cars that have been ordered either for dealer inventory or retail customers, you're saying that Asian automakers in the U.S. decide what they want to build and ship to the US, then present their dealers with a list of what's coming and say 'pick from these cars'!

Really, this is just a completely insane business model as far as I can tell. Instead of doing the 'normal' thing, i.e. the plant only builds cars that have been ordered either for dealer inventory or retail customers, you're saying that Asian automakers in the U.S. decide what they want to build and ship to the US, then present their dealers with a list of what's coming and say 'pick from these cars'!

Yes, that pretty much how it works. However, they get a lot of feedback from dealers on what is selling and they even conduct customer focus group sessions from time to time. Keep in mind that if distributors don't order the cars that dealers want to buy from them (which is a reflection of what customers tell dealers that they want), then they won't be able to sell the cars they buy from the factory to the dealers.

In addition to the above, they keep very accurate statistics about what sells and what doesn't sell well, in order to make decisions about what to order from the factory next time. Sometimes they can be fooled with things like how many people will want a V8 vs V6, as Hyundai was when oil prices plummeted from the time the first Genesis cars were made for the US market in early 2008 until todays oil prices which are much lower. Sometimes they just get it wrong. But people who have been in the auto business for a long time usually have a pretty good idea of what people want, and they make adjustments as they go along based on feedback they are getting.

All things considered, the Asian auto manufacturers have done exceptionally well with this business model over the last 30 years. And Hyundai is doing quite well right now, even though you can't get that Saddle Leather in Canada (depending in the exterior color).