Scotiabank released its Global Auto Report on Wednesday, predicting that new-vehicle sales in Canada will end up roughly the same as 2015’s tally of 1.9 million units.
Looking closer at the numbers, Scotiabank’s predicted 1.9 million units to-be-sold for 2016 is slightly higher than the 1,898,000 vehicles that were purchased in 2015.
In the report, the company says that it expects the sales volumes to remain largely flat for the year “as diverging trends between the industrial heartland and commodity producing regions balance each other out.”
Carlos Gomes, Scotiabank’s senior economist, summarized some of the expected factors to be at play that will be a theme in 2016.
"Car and light truck sales will continue to be supported by low interest rates and stimulative financial conditions around the world," Gomes said. "Economic activity and demand for new vehicles will continue to be buoyed by the strongest advance in Canadian non-resource exports since the new millennium, as well as by strengthening U.S. demand and a currency which recently fell below 70 cents (U.S.) for the first time since early 2003.
"Diverging trends between the industrial heartland and commodity-producing regions are expected to balance each other out in 2016, keeping volumes unchanged. Stronger employment growth and economic activity in the export-reliant manufacturing provinces will lift sales in these markets, but deteriorating fundamentals and weakening demographic and income trends will continue to pressure volumes in other regions."
Some other highlights of the report, according to Scotiabank, include the following:
- Even with sluggish global demand, 17 out of Ontario's 21 manufacturing sectors posted double-digit export gains in 2015.
- Broad-based manufacturing export gains are also expected to lift economic activity and vehicle sales in British Columbia and Quebec in 2016. Strengthening exports are particularly evident in British Columbia, with nearly half of all manufacturing industries posting export growth in excess of 20% in 2015.
- In Alberta, new-vehicle sales declined 12 percent last year to 236,000 units. A further slide to 220,000 is projected for 2016, as oil companies continue to curtail their capital expenditures and the labour market weakens amid a large overhang in global crude oil inventories.
- Vehicle sales in the remaining provinces were in line with expectations last year. Volumes declined in Saskatchewan and Newfoundland, undercut by the downturn in the energy sector, and were unchanged in Manitoba and edged higher across the Maritimes.
Click here to check out the full report.
Canadian importer for McLaren automobiles Pfaff Automotive Partners announced today it is bringing the luxury brand to the Quebec market.
Pfaff is extending the McLaren dealer network with the appointment of Nino and Renato De Cubellis, who will open McLaren Montreal in late 2016. This will be the third dealership in Canada for the high-performance nameplate.
And the two brothers are no stranger to luxury brands. In fact, they already own Jaguar Land Rover Laval. The new McLaren dealership will be located on Boulevard Chomedey, adjacent to their existing Jaguar Land Rover facility.
"Both Nino and Renato have always focused on providing long-term exceptional service instead of short-term gain," said Christopher Pfaff, president and chief executive officer of Pfaff Automotive Partners. "In that way, their values reflect ours: the trust and respect they have developed with their customers over the years has kept satisfaction high and consistent. Like us, Nino and Renato understand the value of exceptional customer service, and the level of engagement only a truly passionate team can deliver."
And the location choice is not a product of chance. Instead, Pfaff explained McLaren Montreal is strategically located, as Laval has been one of the fasted growth areas in Canada in terms of population and wealth.
"We are looking forward to McLaren Montreal opening up as our third dealership in Canada, and I am confident the De Cubellis brothers will do an excellent job representing McLaren," said Tony Joseph, president of McLaren North America. "Their experience with premium British brands makes them the ideal fit for McLaren."
The two brothers are celebrating a decade in business with their Jaguar Land Rover Laval store, but their experience in the luxury market goes back farther than that. In fact, the pair come from a family with an automotive background dating back to the early 1970’s, having dealt mainly with luxury brands.
"We enjoy developing sustainable long-term relationships with our customers," said Renato De Cubellis. "Purchasing a luxury vehicle is a big deal, and we understand the importance of making clients feel valued. Our friendly and knowledgeable staff is just as dedicated."
The brothers have already developed strong ties to their community. For example, Jaguar Land Rover Laval has supported AGAPE, an organization that caters to Laval's underprivileged residents, and in 2014 and 2015, the dealership pledged a platinum sponsorship to the Laval Families Magazine Young Author's Contest.
In 2016, they've pledged to take their efforts a step further by partnering with the Canadian Cancer Society.
"Pfaff has helped grow the McLaren brand in Canada, from the opening of the country's first McLaren store in 2012," said Christopher Pfaff. "From that starting point, we have grown to serve a nationwide audience, delivering vehicles from Nova Scotia to British Columbia, and established McLaren Vancouver in 2014. We have always strived to serve the Quebec market well, but with the introduction of the new Sports series, it became clear that Quebec – and Montreal in particular – was an untapped opportunity. We think the time is right for Quebec, and Montreal, to have its own McLaren dealership — and are equally certain that the De Cubellis brothers are the right partners to help us grow the brand even further."
Management at the Automotive Properties Real Estate Investment Trust (REIT) has been busy, announcing its third deal this week in less than a month.
To start of 2016, the REIT reported it has agreed to purchase the Audi Barrie dealership property in Innisfil, Ontario, for approximately $11.1 million.
The real estate deal is expected to close this month.
Audi Barrie is a newly constructed, 25,000-square-foot dealership, located on 3.1 acres. REIT management said the store is located along an “attractive” commercial corridor next to other luxury dealerships at 2484 Doral Drive in Innisfil.
How did the deal come about?
Well, in July, Audi Barrie was one of three development properties owned by the Dilawri Group at the time of the REIT’s initial public offering.
Per the strategic alliance agreement with Dilawri Group at the closing of the IPO, the REIT has a right of first offer to acquire any suitable properties from the Dilawri Group development pipeline.
Under the new agreement, Audi Barrie, operating by the Dilawri Group, will enter into a 19-year lease with the REIT on closing of the acquisition.
"We look forward to adding Audi Barrie, a brand new luxury dealership property, to our portfolio. Audi Barrie's long-term lease will be triple-net with a contractual 1.5 percent annual rent escalator," said Milton Lamb, president and chief executive officer of Automotive Properties REIT. "This transaction further advances our strategy of levering our relationship with the Dilawri Group to grow our portfolio in support of generating increased cash available for unitholder distributions."
The REIT will fund the purchase through a new mortgage with a Canadian chartered bank and a draw on its existing revolving credit facility.
In December, the REIT made its first purchase in Montreal, purchasing the real estate of Toyota Woodland, a 50,000-square-foot Toyota dealership facility.
Later that month, the REIT would announce it agreed to acquire a Go Auto dealership property in Edmonton, Alberta for $23 million. The REIT purchased the real estate underlying Go Auto’s Porsche Centre and Jaguar Land Rover Edmonton.
Just as it completed its first acquisition — Toyota Woodland — the Automotive Properties Real Estate Investment Trust also announced it has agreed to acquire a Go Auto dealership property in Edmonton, Alberta for $23 million.
The Automotive Properties REIT is purchasing the real estate underlying Go Auto’s Porsche Centre and Jaguar Land Rover Edmonton. The 44,800 square foot building is currently home to the two aforementioned dealerships.
The two Go Auto dealerships, located at 17007 111th Avenue N.W. in Edmonton, were built in 2014. And on closing of the transaction, the Go Auto tenants will enter into a 17-year triple-net lease with the REIT.
This marks the second purchase for the new REIT, as it announced the acquisition of the Toyota Woodland property in Quebec earlier this month. The Dilawri Group will be the operating tenant of Toyota Woodland and has entered into a 16-year lease with the REIT.
"This is an important milestone for us, as the transaction represents the REIT's first acquisition of a dealership property with a third party dealer as tenants, and adds Land Rover Jaguar as a new brand in our portfolio," said Milton Lamb, president and chief executive officer of Automotive Properties REIT. "These top-tier dealerships, owned by Go Auto, one of Canada's leading operators, also represents our first property in Edmonton, further expanding the REIT's geographic footprint, while also enhancing the luxury brand segment of our property portfolio."
As for how the REIT will fund the purchase, management explained they will be using a combination of a new $15 million mortgage with a Canadian chartered bank and a draw on its credit facility. Closing is expected to occur before the end of the year, subject to customary closing conditions.
Go Auto is one of the largest dealer groups in Canada with 40 dealerships located in located in Alberta, British Columbia and the Northwest Territories.
"We are delighted to enter into this transaction with Automotive Properties REIT," said Jared Preistner, president of Go Auto. "By selling the real estate underlying these dealerships, we are capitalizing on a unique opportunity to monetize value and redeploy the funds in our core business − the ownership and operation of leading automotive dealership businesses."
After releasing its first financial results report in November, Automotive Properties Real Estate Investment Trust, also known as the REIT, announced this week it is acquiring a dealership property in Montreal for $7.2 million.
Established this past June by the Dilawri Group of Companies, the focus of the trust is speeding up consolidation and acquiring dealerships in Canada and potentially the U.S.
The trust has agreed to purchase he real estate of Toyota Woodland, a 50,000-square-foot Toyota dealership facility in Montreal.
The purchase of over $7 million represents a cap rate of approximately 7.3 percent, management said.
This is the first purchase to be undertaken by the REIT with the Dilawri Group via the strategic alliance agreement decided with the dealer group at the closing of the REIT’s initial public offering.
As such, the Dilawri Group will be the operating tenant of Toyota Woodland and will enter into a 16-year lease with the REIT when the deal closes, which is expected to occur before the end of the year.
The store was built in 2007 and 2008 and is located within a commercial area at 1000-1039 Woodland Avenue.
"Montreal is a new market entry for the REIT, further diversifying our geographic presence. We are pleased to establish a foothold in Canada's second largest urban market with this recently constructed, best-in-class dealership," said Milton Lamb, president and chief executive officer of the REIT. "Consistent with our existing property portfolio, Toyota Woodland's long-term lease is triple-net and has an annual 1.5 percent fixed rent escalator, thereby further enhancing our stable cash flows."
Outlining how the REIT will pay for the purchase, management plans to use a combination of cash on hand from the exercise of the over-allotment option by the underwriters in the REIT's IPO and a draw on its credit facility.
"In addition to the acquisition opportunities available to the REIT through the Dilawri Group, we remain focused on building the REIT's third party acquisition opportunities. We are targeting prime automotive dealership properties in urban markets across Canada that can further enhance our brand and geographic diversification and grow cash available for distribution to our unitholders," Lamb concluded.
OpenRoad Auto Group opened its 16th dealership with the unveiling of Jaguar Land Rover Langley earlier this month.
The new dealership is located in the Langley Auto Collection, the luxury auto mall where the dealer group owns and operates BMW Langley, MINI Langley, Infiniti Langley and Porsche Centre Langley, as well.
"We’ve been fortunate to have great success in Langley so far with all of our dealerships in the Langley Auto Collection," said Christian Chia, president and chief executive officer of OpenRoad Auto Group. "We believe that Jaguar Land Rover Langley will be the perfect compliment to our dealership family and an ideal brand for the Fraser Valley's urban suburban lifestyle. We’re really excited to finally open our doors and share our passion for these incredible cars and SUVs."
The new 33,271-square-foot facility is open and ready to help customers with all of their new and pre-owned vehicle needs, the dealer group said.
OpenRoad will also be hosting a gala event for VIP guests at the new dealership this spring.
Dilawri Group of Companies announced this morning it has added its 58th dealership.
The dealer group has purchased Mercedes-Benz West Island, which represents the seventh franchised dealership purchase for the group in the greater Montreal area this year.
Mercedes-Benz West Island — a corporately owned dealership — first opened its doors in 2002 and has since established a “strong reputation for customer service excellence,” the release stated.
"We are very honored to have been selected by Mercedes-Benz Canada as the new owner and operator of Mercedes-Benz West Island, and we look forward to building upon the Mercedes-Benz tradition of excellence," said Christian Morin, regional director with Dilawri Group of Companies.
In light of growing demand for new and pre-owned Mercedes-Benz, AMG, smart and Sprinter vehicles, Dilawri plans to conduct a renovation and expansion of the existing dealership facility located at 4525 4525 Boulevard Saint-Jean in 2016.
"Mercedes-Benz West Island represents the second Mercedes-Benz franchise for our group. As such, we have experienced the brands rapid growth first hand and we recognize the need for our facilities to provide for enhanced customer amenities and ample service capacity,” said Kap Dilawri, principle director of Dilawri Group. “Renovating and expanding the existing facility will ensure that all current and future customers enjoy a world class experience.”
AutoCanada said this week its latest offering of common shares earned the company $75 million, a sum the dealer group says it will use to cut down on debt under its revolving credit facility.
AutoCanada had previously announced it issues 2,950,000 common shares at a price of $25.50 per share.
“The company will use the net proceeds of the offering to reduce indebtedness under its revolving credit facility, which may subsequently be redrawn and applied as needed to fund future capital expenditures, including the potential acquisition of additional dealerships, and for general corporate and working capital purposes,” AutoCanada management shared.
The dealer group first announced this plan back in November, when management said common shares would be offered under a short form prospectus to be filled in each province.
The offering was underwritten by a syndicate of underwriters led by RBC Capital Markets and Scotiabank and included CIBC World Markets, Clarus Securities, Canaccord Genuity, Cormark Securities, HSBC Securities (Canada), AltaCorp Capital, GMP Securities and National Bank Financial.
AutoCanada, one of the largest dealer groups in the country, touts 54 franchised dealerships and plans to expand more into Eastern Canada.
It was announced this week the Steele Auto Group has added another Nova Scotia store to its lineup, bringing the dealer group's store count to 19.
Christopher Megaffin has sold his Colonial Honda dealership to Steele Auto Group.
The Megaffin family has run the Halifax dealership on Robie Street for more than 30 years.
Due diligence for the deal is currently underway, the dealer group shared, and the transaction is expected to close on Feb. 1.
Rob Steele, chief executive officer of Steele Auto Group, noted this acquisition is particularly important as growth opportunities within Halifax Regional Municipality are limited, given the small number of available dealerships being operated independently.
“The purchase of Colonial Honda is obviously an important strategic move for us. Honda is a tremendous brand, popular across all demographics as being a solid, dependable, attractive product,” Steele said.
Steele added that he is “very proud” to represent the Honda brand in Corner Brook, Novia Scotia (through the Fairway Honda store), and now in Halifax.
With a history of three decades serving the community, Megaffin offered his thanks to his customers and employees for their loyalty over the years, adding that this is the correct decision for his family at the time.
Steele Auto Group management said Megaffin is also grateful “his customers will continue to be well-served; stability and opportunity are being provided to his valued employees, and ownership by the Steele Auto Group will provide continued opportunity for growth of the Honda brand.”
The Steele Auto Group is headquartered in Dartmouth, Nova Scotia and represents 22 brands: Audi, Buick, Cadillac, Chevrolet, Chrysler, Dodge, Equus, Fiat, Ford, GMC, Honda, Hyundai, Jaguar, Jeep, Land Rover, Lincoln, Mazda, Porsche, RAM, Subaru, Volkswagen and Volvo.
AutoCanada Inc. announced this week that it has entered into an agreement to acquire the operating assets of 417 Infiniti Nissan Limited. The dealer group also reported it has reached an agreement to increase the size of its revolving credit facility from $200 to $250 million.
First up, the to-be acquired accompany owns and operates two dealerships, 417 Nissan and 417 Infiniti in Ottawa, Ontario.
The transaction is subject to the customary closing conditions and approvals and is expected to close within the next 60 days.
Operations at the two dealerships will be overseen by jean Malouin, AutoCanada’s partner in Hunt Club Nissan and Barrhaven Nissan Open Point. The two dealerships operate out of a shared leased facility consisting of 28,000 square feet of space. It includes a 14-vehicle showroom and 15 services bays.
Last year, the dealerships collectively retailed 727 new vehicles and 180 used vehicles.
AutoCanada plans to relocate 417 Infiniti to a standalone leased facility adjacent to 417 Nissan, which will be renovated in accordance with Infiniti Retail Environment Design Initiative (IREDI) standards. According to the company, the relocation is expected to occur by the end of 2016.
Tom Orysiuk, the president and chief executive officer of AutoCanada, looks forward to the addition of the two franchises to his group’s stable.
"We are very pleased to welcome the 417 Nissan and 417 Infiniti family into our new Ottawa platform and look forward to building upon their successes together with Mr. Malouin and Nissan Canada,” Orysiuk said. “Ottawa is an extremely attractive market and we are fortunate to partner with a dealer principal who has shown exceptional results in the region with Hunt Club Nissan. We would like to acknowledge the efforts of Nissan Canada in making this transaction possible.”
In other news from the dealer group, AutoCanada announced Wednesday it has reached an agreement with its lending syndicate to increase the size of its revolving credit facility from $200 to $250 million.
The company explained advances under the increased credit facility are subject to increased borrowing base security.
“AutoCanada has provided unencumbered real estate assets, which are presently being securitized, and will be sufficient to make the full amount of the credit facility available to AutoCanada. The term of the credit facility remains unchanged,” the dealer group’s management shared.
Orysiuk went on to say, "The increase to our credit facility provides additional financial flexibility to support our vibrant acquisition pipeline and to continue to develop and meet capital expenditure requirements for existing and open-point facilities.
“We are very appreciative of the efforts of our syndicate partners at Royal Bank of Canada, HSBC, and Alberta Treasury Branches in working with us on these amendments, and on our growing partnership with them,” he added.
