AutoCanada Announces Strategic Acquisition of Haldimand Motors by Used Digital Retail Division
Newly Formed Used Digital Retail Division to Drive Used Vehicle Sales Across All Channels (Omni-Channel), Including Completely Online
EDMONTON, AB, Dec.1, 2020 /CNW/ - AutoCanada Inc. ("AutoCanada" or the "Company") (TSX: ACQ), a multi-location North American automobile dealership group, announced that its newly formed Used Digital Retail Division has acquired Haldimand Motors, an independent used vehicle dealership located in Cayuga, Ontario, 30 minutes south of Hamilton, Ontario.
Operating for over 35 years, Haldimand Motors is one of Canada's largest volume used vehicle dealers, with facilities of over 80,000 square feet on 20 acres, 130 shop bays and a full-service department. Haldimand is a consistent winner of Hamilton Spectator's People's Choice Award and Hamilton Consumer's Choice Award for used car dealership and a past winner of AutoTrader's National Best Used Car Dealer. The strategic acquisition of Haldimand Motors is part of AutoCanada's previously announced Used Digital Retail Initiative and will be part of the newly formed Used Digital Retail Division.
AutoCanada's Used Digital Retail Division is expected to drive used vehicle sales across all channels (omni-channel), including completely online. This includes the development of a national network of used vehicle dealers through both organic development and acquisitions such as Haldimand Motors, as well as an online platform. Paul Antony, AutoCanada's Executive Chairman, will continue to have all Canadian and U.S. operations reporting into him, with the additional responsibility of overseeing the Used Digital Retail Division. In addition to his AutoCanada compensation, he will receive an incentive representing 15% of the value of the Used Digital Retail Division above AutoCanada's contributed capital (plus a rate of return).
Mr. Antony is uniquely qualified to oversee the Used Digital Retail Division through his extensive experience, which includes a long family history in the automobile industry and his role as Founder, Chairman & CEO at CARPROOF, a North American software and data company. Under Paul's leadership, CARPROOF grew rapidly, initially targeting 10% of the volume of its larger U.S. competitor CARFAX given the relative size of the Canadian market, ultimately exceeding that scale before CARPROOF's sale to IHS Markit (owner of CARFAX) in 2015. Mr. Antony sees parallels with the current used digital retail efforts by others in the United States and believes the AutoCanada Used Digital Retail Division is well positioned to evolve similarly.
"The addition of Haldimand's expansive used vehicle operations supports our Used Digital Retail Initiative – a strategy designed to address the substantial opportunity in the Canadian market with the dedicated sale of used vehicles across all channels, including completely online. We've been focused on used vehicle sales for some time as part of the Go Forward Plan and our progress there, which has been echoed by the experience of our U.S. peers, has provided validation of both this end market and our ability to execute. This includes our achievement of approximately 1:1 Used to New vehicle sales, which we believe can improve meaningfully beyond that over time. These efforts also provide a natural hedge against new car cyclicality through increased diversification. Our experience so far in 2020 has reinforced the validity of this strategy, where our used business continues to accelerate," said Mr. Antony.
"We see this opportunity providing us not only with a Canadian first mover advantage in the category and a wealth of domain expertise, but the ability to build a Used Digital Retail operation with attractive unit economics that should allow us to scale rapidly without meaningful cash burn – a notable difference from some of the U.S. Digital Retail players," continued Mr. Antony. He added, "Importantly, our Used Digital Retail platform also sets the stage to allow AutoCanada to provide a better and more consistent experience to our customers across channels whether they prefer to buy online or in-store. With consumers frequently transitioning from a used vehicle to a Certified Pre-Owned vehicle and ultimately new, it also allows us to attract consumers to our network earlier in the car buying lifecycle and to serve that customer how he or she needs to be served – including service and repair. In other words our Used Digital Retail Initiative sets the foundation to serve all customers for all transactions around mobility ownership as transportation evolves, which is important to the future of AutoCanada leadership in the markets we serve."
AutoCanada is a leading North American multi-location automobile dealership group currently operating 66 franchised dealerships, comprised of 27 brands, in eight provinces in Canada as well as a group in Illinois, USA. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Ford, Infiniti, Nissan, Hyundai, Subaru, Audi, Volkswagen, Kia, Mazda, Mercedes-Benz, Porsche, BMW, MINI, Volvo, Toyota, Lincoln, and Honda branded vehicles. In 2019, our dealerships sold approximately 71,000 vehicles and processed approximately 900,000 service and collision repair orders in our 1,047 service bays generating revenue in excess of $3 billion.
Certain statements contained in this press release are forward-looking statements and information (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. We hereby provide cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in these forward-looking statements. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will likely result", "are expected to", "will continue", "is anticipated", "projection", "vision", "goals", "objective", "target", "schedules", "outlook", "anticipate", "expect", "estimate", "could", "should", "plan", "seek", "may", "intend", "likely", "will", "believe" and similar expressions) are not historical facts and are forward looking. In particular, this press release contains forward-looking statements with respect to, among other things, future operating results of the acquired business, the successful integration of such business into AutoCanada's business, the development of the Company's Used Digital Retail Division and future operating results of the Company's Used Digital Retail Division.
The forward-looking statements included in this press release are not guarantees of future performance and should not be unduly relied upon. Readers are cautioned that forward-looking statements are based on current expectations, estimates and projections that, by their nature, forward-looking statements involve a number of known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. These known and unknown risks and uncertainties include, but are not limited to: future operating results, the impact of the COVID-19 pandemic on our operations, financial condition and liquidity and the duration of such impacts; potential changes in the regulatory and legislative environment; volatility in interest and tax rates; operating risks inherent in the automotive retail industry; and changes in general economic conditions including the capital and credit markets.
Forward-looking statements involve estimates and assumptions and are subject to risks, uncertainties and other factors some of which are beyond our control and difficult to predict. Accordingly, actual results or outcomes may differ materially from those expressed in the forward-looking statements. In particular, in presenting its forward-looking statements, AutoCanada has made assumptions respecting, among other things the future operating results of the acquired business, the successful integration of such business into AutoCanada's business, the development of the Company's Used Digital Retail Initiative and the future operating results of the Company's Used Digital Retail Division.
AutoCanada cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website at www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The forward-looking statements contained in this press release speak only as of the date hereof and AutoCanada assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.
SOURCE AutoCanada Inc.