AutoCanada Inc. expects rising rates of interest to influence shopper affordability, however says ongoing stock shortages mixed with sturdy demand ought to go away the tempo of new- and used-vehicle gross sales unchanged within the close to time period.
Automobile provide, not reticent patrons, would be the firm’s “most vital” barrier to gross sales development, the Edmonton-based dealership group mentioned in its newest earnings report.
“Whereas we have now seen constructive indicators and famous gradual enhancements in each the supply of stock and product allocations, we aren’t anticipating a return to ‘normalcy’ in stock ranges till late 2023 to 2024,” the corporate mentioned in a launch.
AutoCanada, which owns 81 franchised dealerships in Canada and america, launched its monetary outcomes for the second quarter of 2022 Aug. 10. It reported income of $1.67 billion, which compares to $1.28 billion in 2021. Diluted earnings per share got here in at $1.33, up 10 cents from $1.23 in the identical quarter final 12 months.
The corporate credited sturdy execution throughout its whole operation for the outcomes, singling out its F&I, elements, service and collision restore operations for notably sturdy efficiency.
Government Chairman Paul Antony, mentioned the corporate’s used-car section confirmed continued power in the course of the second quarter, however introduced a $10-million writedown on its Canadian used car stock.
“We’ve seen a slight discount in used costs and margins not too long ago and thought it prudent to regulate our present pricing to keep up our operational metrics and goals,” Antony mentioned on a convention name with monetary analysts.
Regardless of the writedown, Antony mentioned used-vehicle costs remained at “traditionally elevated” ranges via the top of the second quarter and into the third quarter.
“Based mostly on what we’re seeing on the bottom operationally, when mixed with continued lack of latest car manufacturing, has us anticipating that the used-vehicle market will stay sturdy.”
With an roughly four-month provide of used automobiles “on the bottom” at shops, and pricing the corporate is “now comfy with,” Antony mentioned AutoCanada is well-positioned within the used section.
By comparability, he mentioned the corporate has a few two-month provide of latest automobiles in inventory.
The acquisitive dealership group additionally continued its growth throughout Canada in the course of the second quarter.
AutoCanada mentioned it accomplished acquisitions price $78.8 million in Q2, comprised of the acquisition of Audi Windsor and Porsche Centre London in Ontario; Kelleher Ford and an adjoining collision centre in Brandon, Man.; and Burwell Auto Physique Ltd. in London, Ont.
The corporate continues to judge additional purchases. It mentioned its present acquisition pipeline consists of dealerships and collision centres with mixed revenues of greater than $125 million.