AutoCanada overhauls management amid oil-driven car sales slowdown
Edmonton-based dealership group AutoCanada Inc. is undertaking a management overhaul in the midst of a major sales slump, with the company predicting conditions will get worse before they get better.
The company announced that Steven Landry — who previously spent 27 years at Chrysler Group, including a stint as president of Chrysler Canada — will take over as CEO on April 1. He will replace Tom Orysiuk, who will stay on as president. Company founder Pat Priestner will leave his executive chairman position to become nonexecutive chairman, a step toward retirement in 2017.
The shuffle comes as the company struggles through one of the most challenging periods in its 20year history. Almost half of AutoCanada’s dealerships are in Alberta, where vehicles sales have gone into a tailspin along with the price of oil.
In the fourth quarter, the company reported a net loss of $7.4 million or $0.29 per share. Same-store revenue fell 12.1 per cent and samestore sales of new vehicles plunged 21 per cent.
The company said it expects 2016 to be even “more challenging than last year.”
AutoCanada shares closed down six per cent Friday to $18.
In a recent note, Scotiabank analyst Anthony Zicha said his conversations with dealers suggest sales in the Calgary area fell 10 to 25 per cent in the first two months of this year.
“Although we are not by any measure pleased by these results, believe me, it was not a lack of effort,” Priestner said on a conference call Friday. “(The drop in oil prices) has led to a significant increase in unemployment, a lessening in consumer confidence and a greater difficulty in consumers obtaining auto loans, particularly in Alberta.”
To cope, AutoCanada is working to cut its annualized operating costs by $15 million.
The only saving grace in the quarter was a 16.5 per cent jump in used vehicle sales and a 2.6 per cent increase in parts, service and collision repair revenue as consumers opted to buy used cars or hang onto their old ones a little longer.
Overall, revenue rose 2.6 per cent to $672.3 million due in large part to the company’s aggressive acquisition strategy, which has seen it add 23 new dealerships over the past two years.
Priestner said the company has the capacity to do deals without tapping into debt or equity markets.