AutoCanada Inc.’s internet earnings fell within the last three months of 2022 as the corporate took a writedown on its used-vehicle stock and noticed floorplan financing prices climb with rates of interest.

Canada’s solely publicly traded dealership group final week reported (in Canadian {dollars}) internet earnings of $14.8 million ($10.9 million USD) for the fourth quarter, down 79 p.c from $69.4 million the yr earlier than.

Used-vehicle writedown provisions value the corporate $12.4 million in the course of the quarter, whereas added floorplan financing prices amounted to $13.3 million.

“These new hits to profitability impacted what was in any other case a historic quarter for AutoCanada,” mentioned the corporate’s Government Chairman Paul Antony on a convention name with monetary analysts March 2.

Regardless of the decrease internet earnings, AutoCanada income hit a fourth quarter report of $1.4 billion, up from $1.2 billion in the identical quarter of 2021. For the yr, AutoCanada reported income of $6 billion for 2022, up from $4.6 billion for 2021.

Antony mentioned “continued fluctuations” in used automobile pricing prompted the writedown, earlier than including that the revaluation positions the corporate’s used stock correctly heading into the spring promoting season. On Jan. 1, AutoCanada additionally applied new measures to raised handle modifications in used-vehicle costs, rolling again a change it had enacted because the used market accelerated in the course of the pandemic.

After rising steeply in 2020 and 2021 to a peak in March 2022, used-vehicle costs in Canada declined within the second half of 2022, based on the Canadian Black E book Used Automobile Retention Index. Used-vehicle values declined about 5.4 p.c between March and December of 2022, the index exhibits.

AutoCanada’s gross income on used autos have been decrease within the last three months of 2022, although its used gross sales climbed 21.2 p.c in the course of the quarter to succeed in 14,418 autos.

This compares to a 1.3-percent decline in new-vehicle gross sales for the interval throughout AutoCanada’s 82 new-vehicle dealerships in Canada and the U.S.

Regardless of the present challenges, Antony mentioned the corporate continues to maneuver additional into the used market in pursuit of development.

“We see ourselves as being a hybrid of quite a lot of the most important auto retailers within the U.S., and CarMax. … We wish a bunch of new-car dealerships and a bunch of used-car dealerships that promote each on-line and in-store.”

Within the fourth quarter, the corporate offered 1.78 used autos for every new automobile sale. This compares to a used-to-new ratio of 1.45 in the identical interval of 2021, and a ratio of 0.88 within the fourth quarter of pre-pandemic 2019.

The corporate can also be increasing its presence within the collision centre and automobile restore enterprise. 

On Feb. 27, it introduced the acquisition of DCCHail, a paintless dent restore firm specializing within the insurance coverage declare administration course of and repairing hail broken autos, with a nationwide presence, together with Canada’s largest hail restore facility in Calgary, Alta.

DCCHail generates greater than $15 million in annual income, AutoCanada mentioned.

“The present administration workforce will proceed to function the enterprise going ahead,” the corporate mentioned. “Aside from persevering with to strengthen the operation’s efficiency, the acquisition unlocks extra development alternatives, together with the potential to increase the enterprise by leveraging AutoCanada’s dealership, components and repair and collision platforms.”