AutoCanada announced this week it has purchased six dealerships from the Hyatt Automotive Group as well as a new Chrysler store in Saskatoon, Saskatchewan.
They Hyatt acquisition includes Infiniti, Nissan, Volkswagen, Mitsubishi stores and two Hyundai dealerships, all of which are located in Calgary, Alberta.
The completion of the transaction remains subject to various conditions, including the consent of the applicable OEMs, the company shared.
“AutoCanada has received manufacturer approval for two of the dealerships and is looking forward to receiving approval for the remaining four dealerships in the near future,” company management reported.
The transactions are expected to close during the period of June 23 to July 3.
The company this week also acquired Dodge City Auto, which owned and operated a Chrysler Dodge Jeep Ram dealership located in Saskatoon.
Commenting on the transaction, Pat Priestner, chairman and chief executive officer of AutoCanada stated, "We are very excited to add a Chrysler dealership to the existing two dealerships of our Saskatoon platform, an excellent market for auto retail. We would like to thank Chrysler Canada for its hard work in assisting us with this transaction. We would also like to thank the Payne and Ens families for allowing us the opportunity to continue to build upon their wonderful legacy, and to welcome all of the employees of Dodge City to the AutoCanada family."
Dodge City opened its doors over 45 years ago and operateed from a leased facility that includes a six-car showroom and 20 service bays.
In 2013, the dealership retailed 1,056 new vehicles and 841 used vehicles.
The transaction closed today and was one of the eight dealership acquisitions previously announced on April 29.
For more on that announcement, see the Auto Remarketing Canada story here.
And during Q1 2014, the company made a variety of moves to secure new dealerships, as well, including an investment in McNaught Cadillac Buick GMC, as well as a group dealership acquisition announced in late April.
“We are also very excited to have announced the signing of purchase agreements for a dealer group, as well as purchase agreements for additional unrelated dealerships outside of the dealer group. In total, we have signed purchase agreements for eight additional dealerships, which we expect to close by Aug. 1, 2014, subject to manufacturer approval,” Priestner said during the conference call in May to discuss Q1 financial results.
Quebec’s Mercedes-Benz Rive-Sud broke grown on a new larger dealership facility at the same location that has been home to the store for more than 50 years.
Tim Reuss, president and chief executive officer of Mercedes-Benz Canada, along with company executives, recently joined Claude Leclair, Carolynn Leclair and François Leclair, respectively president, vice president and general manager of Mercedes-Benz Rive-Sud, to turn over the first shovelful of soil at the 4844 Taschereau Boulevard in Greenfield Park, Quebec.
"This event represents an exciting milestone in the history of one of the oldest Mercedes-Benz dealerships in Canada," said Reuss. "After 50 years of operations, this sizable investment promises to be game changing as it demonstrates the Leclair family's motivation to best serve the needs of our many existing and potential customers in this well-established market. I applaud the hard work and dedication that this group has demonstrated since joining our Mercedes-Benz Canada dealer network."
The company said the new 120,000-square-foot dealership — scheduled to be fully operational in December — will “significantly expand both the sales and aftersales capabilities for the dealership.”
The new building will include a 35,000-square-foot showroom and a dedicated Sprinter Center that will be annexed to the facility.
The 45,000-square-foot service area will include 40 service bays.
François Leclair, general manager of Mercedes-Benz Rive-Sud, said, "We are celebrating the beginning of a new chapter for Mercedes-Benz Rive-Sud. Over the course of our first year tenure, our team's unwavering commitment and enthusiasm has enabled us to provide a first class experience for all our customers. We now look forward to continue delivering on this promise by providing an experience that is commensurate with the Mercedes-Benz brand in a modern, comfortable and highly functional facility."
AutoCanada announced today it has chosen a new chief financial officer.
Christopher Burrows has been picked for the position. Effective Sept. 1, Burrows will assume the role of vice president and CFO.
As part of the transition, Jeff Christie, VP of finance, will continue in his current role; and effective Sept. 1, he will be appointed VP of operations.
Commenting upon the changes in senior management, Pat Priestner, chairman and chief executive officer of AutoCanada, stated: "We are very pleased to add Chris to the team. Chris's scope of experience and strong financial background will add further bench strength to an already deep senior management team."
More Background on Burrows
Since 2010, Burrows has served as VP and CFO of K-Bro Linen Systems, a company specializing in providing laundry and linen services to industries such as healthcare and hospitality.
Burrows was responsible for all financial, administrative and corporate services functions including controllers, treasury, tax, financial risk and enterprise reporting, information technology, human resources, strategic planning and legal and regulatory compliance.
Before this experience, Burrows was VP finance, administration and tax with Stuart Olson (formerly The Churchill Corp,), a publicly traded construction and contracting company.
AutoCanada announced Thursday it will be buying up more dealerships than expected over the next year — and the company will be expanding under the same leadership.
The dealership group provided an update on acquisition guidance as well as announcing Pat Priestner, chairman and chief executive officer, will be staying on with the company until May 31, 2019.
Commenting on this extension, Priestner said, "I am very pleased to extend my current employment agreement to 31 May 2019. I am privileged to have a very strong management team whose efforts give me great confidence in the future of this company, and with the deal pipeline remaining strong I look forward to continuing to lead the company as it looks to take advantage of these opportunities."
The company also shared it plans to complete an additional eight to 10 dealership acquisitions over the next 12 months.
Priestner said, "The deal pipeline continues to be strong, and for that reason management is confident that it shall be able to add eight to 10 dealerships over the coming 12 months. These acquisitions are in addition to the three dealership acquisitions we closed in March and April of this year and the purchase agreements for eight dealerships, including a group (of which Canbec BMW/Mont Royal MINI were included), which we announced on April 29, 2014."
This announcement comes on the heels of a successful Q1 for the dealer group.
As AutoCanada announced strong financial results for the first quarter in May, the company highlighted one area, in particular, that contributed to an overall dealership revenue increase of 28.2 percent: used-vehicle sales.
Q1 was an extremely strong quarter for pre-owned, as the company’s used-vehicle revenues increased by 37.2 percent year-over-year.
Driving this revenue spike was a 30.8-percent increase in used sales and an increase in the average transaction price of $1,399 per used vehicle retailed, which translates to a 6.4-percent hike.
AutoCanada Inc. is continuing to expand this spring as it announced this week it is buying BMW and MINI stores in Quebec.
The company said it has obtained approval from BMW Canada Inc. to purchase the shares of Automobile Canbec Inc., which owns and operates a BMW and a MINI dealership, located in Montreal.
"BMW Canada's approval represents a significant milestone for our company, adding two premium brands with unparalleled heritages to the AutoCanada family. We would like to thank BMW Canada and its employees for all of their hard work and assistance with this transaction, and we look forward to developing a long term, mutually rewarding partnership." stated Pat Priestner, chairman and chief executive officer of AutoCanada.
BMW Canbec and MINI Mont Royal are well established dealerships, the company said, operating from a 120,000-square-foot leased facility which includes a 35-car showroom, a 35-bay service center, and a 30-bay body shop.
In 2013, the franchises retailed a combined 1,652 new vehicles and 713 used vehicles.
The expected closing date for the transaction is Monday.
The company announced earlier this month it had signed a purchase agreement for a dealer group, as well as purchase agreements for additional unrelated dealerships outside of the dealer group.
In total, AutoCanada has executed purchase agreements for eight dealerships, which the company expected to close at various times during the next 90 days.
For more information on AutoCanada’s acquisition pipeline, see here.
For insight into the dealer group’s first-quarter performance, see here.
Lexus has set up shop at the Montreal-Trudeau airport.
Instead of a cab, why not take a Lexus?
Travelers returning home over the next few months and interested in purchasing a luxury vehicle might want to stop by the Lexus Lounge — where they can arrange a test-drive home.
In an unusual marketing effort, travelers will be able to arrange a “Made to Measure” test drive for their commute home at the Lexus Lounge located at Gate 4 of the domestic terminal.
Instead of grabbing a cab, weary travelers can jump in a new Lexus, courtesy of the Montreal-area Lexus dealers, who came up with the idea.
“At Lexus, we’re focused on creating unique experiences,” said Cyril Dimitris, director, Lexus Canada. “This airport initiative is an example of how Lexus dealers in Montreal know how to embrace fresh and bold thinking to set themselves apart in that market.”
The initiative lasts through July 5.
Here’s how it works.
In setting up their test drive at the Lexus lounge prior to departure, guests will choose from a variety of Lexus vehicles, including the CT 200h, ES 300h, IS, and RX.
When their return flight arrives, participants will be personally greeted by a Lexus representative.
Then, customers will be brought to their chosen vehicle where a co-driver will be waiting to accompany them on their trip home.
Mercedes-Benz Winnipeg is getting a facelift, as store management and company leaders broke ground this week for a new location for the well-established dealership.
Tim Reuss, president and chief executive officer of Mercedes-Benz Canada, together with company executives, recently joined Winnipeg Acting Deputy Mayor, His Worship Grant Nordman; City Councillor Paula Havixbeck; and Mercedes-Benz Winnipeg president and general manger Brian Lowes to turn over the first shovelful of soil.
The Portage Avenue dealership — which has been in operation for more than 13 years — will be moving to a new retail sales facility at 23 Rothwell Road.
The company explained the expansion and new building has become necessary to keep up with the brand’s growing product portfolio.
Lowes said, "Over the years, we have experienced tremendous growth and this brand new facility is a very important milestone in our company's development. We look forward to continue providing our customers an overall purchase and ownership experience that is commensurate with the Mercedes-Benz brand when we are fully operational in our new home in the spring of next year."
The new dealership will be located on a 3.28-acre site and is scheduled to be fully operational in spring 2015.
The new building will be 52,000 square feet and will include two floors to allow for two separate new and pre-owned vehicle showrooms. The old site building measured just 19,000 square feet
The large indoor space will allow for much of the inventory to be housed indoors away from inclement weather.
The service area will feature 16 work bays, including four bays dedicated to the Mercedes-Benz Sprinter vans, as well as an additional three-bay detail center.
The store will also include a six-vehicle customer drive-thru reception area.
As far as aesthetics, the layout of the new facility will follow the Mercedes-Benz proprietary Auto Haus design concept, and will also integrate the new Mercedes-Benz retail corporate identity where black will replace the blue colors traditionally seen in Mercedes-Benz stores.
"Brian Lowes is a dynamic partner who has successfully established the dealership into the Winnipeg community at large since joining our Mercedes-Benz Canada dealer network six years ago," said Reuss. "I congratulate Brian and his entire team for their hard work and dedication at their current facility. I am confident that Mercedes-Benz Winnipeg's new larger home and convenient location will provide an ideal platform to represent our brands and more effectively serve the needs of existing and potential customers in this burgeoning market."
As AutoCanada announced strong financial results for the first quarter, the company highlighted one area, in particular, that contributed to an overall dealership revenue increase of 28.2 percent: used-vehicle sales.
Q1 was an extremely strong quarter for pre-owned, as the company’s used-vehicle revenues increased by 37.2 percent year-over-year.
Driving this revenue spike was a 30.8-percent increase in used sales and an increase in the average transaction price of $1,399 per used vehicle retailed, which translates to a 6.4-percent hike.
“Acquisitions completed in 2013 contributed to the increase; however, much of the increase related to improvements in same store sales,” management said.
Used same-store sales rose by 21.3 percent in Q1.
The company attributed this success to a 14.1-percent increase in used-vehicle retail volume — a considerable rise given the tight used supply environment.
AutoCanada management has been employing a few more avenues to secure used supply over the past 18 months, which the company says has pushed the increase in volume.
The dealership group has hired a number of inventory analysts that work directly with dealerships to “address appraisal, reconditioning, merchandising (both online and traditional), and pricing issues with the goal of improvement our return on investment in used vehicle inventories.
“We believe that these efforts are beginning to materialize in the form of improved volumes and margins and we hope that the trend continues,” management shared.
In fact, the company’s used-vehicle gross margins rose by 45.9 percent in Q1.
Commenting on the Q1 results, Pat Priestner, chairman and chief executive officer of AutoCanada Inc., said, “We are very pleased with our first quarter operating results. The improved operating results in our used-vehicle departments and our parts, service and collision repair departments on a same store basis more than offset what we would consider to be a slightly weaker than expected quarter for new-vehicle sales and new-vehicle margins. We give credit to our exceptional dealership teams for consistently exceeding the market and the strong performance in all four departments.”
The company contributed part of the overall success of Q1 to the additional dealerships it has acquired over the past few years.
In its Q1 analysis, the company highlighted one investment, in particular, that has been lucrative.
“The investments the company has made in General Motors dealerships continue to perform well as the income for our investments in these dealerships increased by $0.7 million during the first quarter,” company management said. “All of our General Motors dealerships are performing very well and have continued to improve each quarter.”
And during Q1 2014, the company made a variety of moves to secure new dealerships, as well, including an investment in McNaught Cadillac Buick GMC, as well as a group dealership acquisition announced in late April.
“We are also very excited to have announced the signing of purchase agreements for a dealer group, as well as purchase agreements for additional unrelated dealerships outside of the dealer group. In total, we have signed purchase agreements for eight additional dealerships, which we expect to close by Aug. 1, 2014, subject to manufacturer approval,” Priestner said.
When is the company expected to start seeing similar returns on this year’s investments?
Management said it will likely take a minimum of two years in order to fully integrates a store and achieve its anticipated performance objectives.
Editor's Note: For more insight from AutoCanada's analysis of Q1 results, see the upcoming May/June issue of Auto Remarketing Canada Digital Magazine.
It’s been a big week for AutoCanada. In time with the company revealing it is in the process of adding eight new dealership to its lineup, the dealer group also recently announced it has increased its floor plan credit facility to $550 million.
This marks an increase of $200 million to its existing syndicated floorplan facility it holds with ScotiaBank and The Canadian Imperial Bank of Commerce. All significant terms and conditions of the previous facility remain unchanged, the company said.
Chairman and chief executive officer Pat Priestner explained the move was, not surprisingly, due to the company’s intended expansion.
"Earlier this year, the company announced its intention to acquire an increased number of dealerships over the next two years. Recognizing the increased need for inventory financing associated with a higher rate of growth, Scotiabank, as lead syndicate partner and agent, approved a $200 million increase to the floorplan facility to a total of $550 million in availability. We are extremely pleased to be partnered with Scotiabank and CIBC and would like to give recognition to these two financial institutions for their continued support of our growth strategy and the inherent confidence they have in the future of AutoCanada," Priestner said.
The company revealed this week a series of purchases that have the potential to make the company more than $400 million in extra annual revenue.
AutoCanada has signed a purchase agreement for a dealer group, as well as purchase agreements for additional unrelated dealerships outside of the dealer group.
In total, AutoCanada has executed purchase agreements for eight dealerships, which the company expected to close at various times during the next 90 days.
Click here for more information on AutoCanada’s recent purchase agreements.
In other company news, AutoCanada also reported a change to the Chrysler Canada minimum ownership requirement for CanadaOne Auto Group (CAG) — another company controlled by AutoCanada chairman and chief executive officer Pat Priestner.
Chrysler Canada has reduced the minimum equity interest that it requires CAG to hold in AutoCanada until Jan. 1, 2015, to a 5 percent equity interest.
Previously CAG was required to maintain a minimum 20 percent equity interest until Jan. 1, 2015, at which time the minimum ownership requirement would expire, company officials explained.
"Although the minimum equity interest requirement would have expired at year-end in any event, the company appreciates Chrysler Canada accommodating us in providing this additional flexibility and capacity regarding our financing alternatives during the remaining months of 2014, enabling us to take advantage of continued strength of our deal pipeline,” Priestner said.
AutoCanada gave an update today on what’s in its acquisition pipeline, revealing a series of purchases that have the potential to make the company over $400 million in extra annual revenue.
The company announced today that it has signed a purchase agreement for a dealer group, as well as purchase agreements for additional unrelated dealerships outside of the dealer group.
In total, AutoCanada has executed purchase agreements for eight dealerships, which the company expected to close at various times during the next 90 days.
“All such agreements are in different stages of progress with respect to due diligence, and all are subject to manufacturer approval which is anticipated, but is not assured,” company officials shared.
Last year, the combined dealerships in the acquisition process brought in a total of $422 million and retailed 5,936 new vehicles and 3,538 used vehicles.
Commenting on this development, Pat Priestner, chairman and CEO of AutoCanada, stated that, "The company is excited by the opportunity to add additional dealerships to the AutoCanada family, and we are working diligently with the various Manufacturers to obtain their approval, which we would anticipate over the coming four to six weeks. In addition to these eight dealerships, we continue to pursue additional opportunities which are in various stages of progress."
AutoCanada has a number of financing alternatives available and anticipates financing these acquisitions through either debt or the issuance of equity or a combination thereof, the company explained.
Editor’s Note: Stay tunes to Auto Remarketing Canada for AutoCanada’s first-quarter results, which the company plans to announce on May 9.
