Pfaff Automotive Companions is poised for progress in Canada following the sale of a majority stake to U.S. powerhouse Lithia Motors Inc., in accordance with the Toronto-based luxurious group’s CEO and a mergers and acquisitions specialist.
Chris Pfaff stated together with the inflow of money comes entry to Lithia’s administration programs and, ultimately, its Driveway omnichannel gross sales platform. Omnichannel refers to a promoting system designed to offer a seamless transition from tire-kicking to buying for potential prospects, whether or not they begin their journey on-line or in particular person.
“We’re going to develop in a short time right here in Canada,” Pfaff stated in an Automotive Information Canada podcast.
“I’d say that placing these two firms collectively is one plus one equals three. It’s actually, actually sturdy.”
Pfaff Automotive operates 16 luxurious dealerships throughout Canada, quite a lot of leasing and financing shops in addition to a motorsports staff, a HarleyDavidson dealership and a marine gear restailer.
Medford, Ore.-based Lithia boasts a market capitalization of US $11.5 billion (Cdn $14.36 billion) and operates 275 dealerships. It’s the second-largest group in the US, in accordance with sibling publication Automotive Information.
The partnership, stated Pfaff, offers “us the power to do additional acquisitions. We’re on the lookout for extra alternatives, and we’re on the lookout for good individuals to be a part of that as effectively.”
Investments in future expertise, akin to information seize, can be “big … so I believe that we’re loads stronger going ahead for progress.”
A KEY TO ENTER CANADA
Samir Akhavan, managing associate at Toronto-based buy-sell firm Templeton Marsh, stated the deal positions each firms for enlargement on this nation.
“Now that Pfaff is a part of Lithia, it’s most likely simpler for Lithia to take a look at different supplier teams. Pfaff has a lot nearer relationships with most of these supplier teams and is ready to extra shortly assess a chance and say, ‘Let’s get after it.’”
Akhavan stated he additionally expects the Lithia buy to be an “aha second, a catalyst” for different dealership teams trying both to increase or promote their companies.
“The Pfaff-Lithia deal has bought much more individuals considering severely about what they need to do down the highway. They’re considering, ‘Now we have had file years, it’s the highest of the market. Do I need to work one other 10 years or get out now?’”
Akhavan estimates there are about 10 or extra dealership teams in Canada with 20 or extra shops, and he expects these teams to develop, primarily by buying present dealerships. Smaller, regional teams may additionally search to stretch exterior their present footprint by buying dealerships in neighbouring provinces.
SIX-YEAR COURTSHIP
Pfaff stated Lithia CEO Bryan DeBoer first kicked the tires about six years in the past, however talks bought severe final September. Pfaff wouldn’t disclose the acquisition worth or the dimensions of the stake Lithia assumes. He did say that Pfaff owns a minority stake.
Other than progress and elevated effectivity as a consequence of adopting some Lithia administration practices, there can be few seen modifications, stated Pfaff. “Even the branding of Pfaff stays the identical. I’m nonetheless working the platform, what we’ve and what we had earlier than in Canada … the administration remains to be the identical,” he stated. “I might say we’ve bought some very subtle assist again in Medford, Ore., when it comes to what they do with expertise and administration reporting.”
Not included within the sale had been Mercedes-Benz Kitchener-Waterloo and Pfaff HarleyDavidson. Pfaff wouldn’t say why.
“They might go into [the deal] sooner or later, who is aware of? However I actually can’t touch upon that.”
Officers for Mercedes-Benz Canada stated in a press release it does “not touch upon supplier community transactions.”
Additionally not included within the deal is Pfaff Motorsports, which has been racking up podium finishes on the Worldwide Motor Sports activities Affiliation with its distinctive plaid Porsche GT3 R in addition to competing in Classic Auto Racing Affiliation of Canada (VARAC) with its H.J. Pfaff Audi historic race staff.
ONLINE OPPORTUNITY
Pfaff stated he’s excited concerning the prospects for Lithia’s Driveway gross sales platform, saying that Canadian shoppers “are usually not actually taking the total journey on-line when it comes to buying a automobile, however they’re actually taking a part of the steps in the direction of it.
“However I do suppose as time strikes on, it’s going to develop into increasingly the place individuals can be comfy with that.”
Pfaff Automotive started in 1964 when Hans J. Pfaff was awarded a Volkswagen franchise, which opened in Newmarket, Ont. At this time, the corporate’s manufacturers embody Porsche, Pagani, McLaren, Mercedes-Benz, Audi, Subaru and BMW.
The corporate’s place within the luxurious and ultraluxury market is one aspect of the deal that makes the partnership with Lithia sturdy, Pfaff stated.
“I might say that the mainline home and Japanese enterprise, they know for certain higher than I do, the place perhaps within the greater finish, unique and luxurious, we’ve bought plenty of expertise there. So I believe there’s a very nice complement there.”