AutoCanada Inc., one of the companies in the forefront of a consolidation wave reshaping vehicle retailing in Canada, is stepping up its the pace of growth, buying two more dealerships.
The largest publicly traded Canadian auto dealership company said Thursday it will buy the St. James Group of Companies, which consists of an Audi and a Volkswagen franchise in Winnipeg. The purchase of the Audi store gives AutoCanada its first outlet in one of the fastest-growing brands in the country and one whose dealerships are in high demand.
The Winnipeg dealerships are the third and fourth outlets Edmonton-based AutoCanada has bought this year, and chief executive officer Pat Priestner said the company's conservative estimate is that it will buy six or seven in total in 2013.
AutoCanada's growth is part of a transformation of the country's dealership network as owners of one or two stores sell out to large dealership groups amid demands from auto makers for expensive property upgrades and the growing pace of technological change.
"The landscape had definitely changed," Mr. Priestner said on a conference call with AutoCanada shareholders and analysts on Wednesday as the company announced that it racked up record sales and profit in the year ended Dec. 31, 2012.
Until recently, he said on the call, the company thought it had limited acquisition opportunities in the near term, but more in a two-to-five-year period.
"Over the past number of months, the opportunities have been much greater, with a number of independent dealers deciding to leave the business a little earlier than we had anticipated," he said.
Dealer groups that own multiple stores have been growing in recent years – and even more noticeably in recent months.
In 2000, 27 groups owned five or more outlets. By the end of last year, that number had risen to 104. The number of single-point dealers fell to 1,886 last year from 2,906 in 2000.
Dealer groups raised their share of vehicle sales in Canada to 39 per cent last from 9.1 per cent in 2000.
A decision by General Motors of Canada Ltd. to open up its network to AutoCanada after opposing ownership of stores by publicly traded companies has also opened up new acquisition opportunities. One of the acquistions made earlier this year was an 80 per cent non-voting interest in a Chevrolet Buick GMC outlet in Duncan, B.C.
The AutoCanada strategy is to continue to focus on dealerships in Western Canada, Mr. Priestner said. It operates 28 stores now. Five are in Edmonton, six are in Grande Praire, Alta., three in Prince George, B.C., and four in the Fraser Valley area of British Columbia.
The two Winnipeg stores sold a total of 642 new vehicles last year and 252 used cars and trucks.
The recent acquisitions and the ability to buy stakes in GM dealerships are helping diversify the company from what had been a reliance on Chrysler Canada Inc. Ten of AutoCanada's dealerships sell are Chrysler outlets and AutoCanada said it is close to the limit the auto maker has placed on the number of stores that can be owned by one entity.