AutoCanada recently reported strong results for the fourth quarter and full year of 2014 during its last quarterly conference call, outlining across-the-board improvements in profitability. What the group wanted to bring more attention to, however, is the sales strife it is currently experiencing during its first quarter of this year.

The company’s management team frequently referred to what it’s calling a decline in consumer confidence due to the current economic and political climate in the country, which led to a lag in sales for the months of January and February.

Although exact sales figures are not currently available, the company cited an example figure from R.L. Polk, which reported a 9.4 percent decline in retail volumes in January 2015 compared to the year before in the Calgary area. Relating to the brands the company sells in Calgary, the decline includes decreases in retail sales for FCA Canada products (17.5 percent), Japanese-made vehicles (10.2 percent) and Korean-made vehicles (33.3 percent). The company said it is also experiencing similar sales challenges in Edmonton and Grande Prairie as well as volume and/or margin difficulties at a number of its dealerships in other areas of Canada.

Tom Orysiuk, the company’s chief executive officer and president, says that such “short-term curves” are to be expected in every form of retail business.

“In Q1 of 2015, the company finds itself in such a time of change, which in the very early months has provided some challenges,” Orysiuk said. “The economic environment in Canada has clearly changed, though its degree and extent currently remains indeterminate. The reduction in oil price brings with it mixed blessings for Canada. On the whole, the change should be positive for Ontario and Quebec, and to a lesser extent, British Columbia and Manitoba. The Maritimes as well should be slightly positively impacted. Saskatchewan and especially Alberta, however, are negatively impacted with the recent Alberta Treasury Branch Financial study showing 40 percent of Albertans are deferring major purchases of homes and automobiles. With a large percentage of the company’s revenue and profit coming from western dealerships, and Alberta dealerships in particular, this will pose significant challenges. The extent of the change in the price of oil and consumer confidence, however, be it positive or negative, cannot be fully appreciated as of yet.”

Orysiuk said that his management staff has encountered operational challenges unrelated to the economy, including unprecedented weather in some areas as well as some “operational misses.” Such misses may be present at some of the newly acquired stores, 17 of which were purchased in 2014.

“Clearly, this is not the position the company expects to be in and it is not one that management is satisfied with being in,” Orysiuk said. “As the result, the company is prudently but aggressively reviewing its operations to make sure that our dealerships are focused on the basics of selling, customer servicing and follow-up.”

The company’s president said the seasonality of sales at newly acquired dealerships is typically expected to lag behind that of stores the group has owned for over two years, but should be expected to regulate over time.

Barring any unforeseen changes, Orysiuk said that the company will remain profitable, but will not see profits like that of the first quarter of 2014. Despite the slow pace of sales in January and February, the group’s CEO said, at the time of the company’s conference call in mid-March, that he would need to see how the rest of the month went to know if things would begin to make a turn.

“The majority of March sales are going to happen over the next 10 days,” Orysiuk said on March 20. “What typically happens in the dealerships is the last week, the last 10 days, you get a significant portion of your sales. We process the deals, you might have a bit of a feel for it in April. So, the next 10 days are going to be real key.”