AutoCanada to purchase Hyatt dealership's

[jdmXSI]

link

AutoCanada Inc., which is playing a leading role in the consolidation of Canada’s automobile dealerships, is poised to shake up the Calgary market with its first purchase of a dealer group.

The Edmonton-based company will purchase most of the dealerships owned by Calgary-based Hyatt Automotive Group, dealer sources in Calgary said.


AutoCanada announced last month that it had signed an agreement to buy eight dealerships, including its first dealer group of more than two stores, in transactions that are scheduled to close Aug. 1, pending approval by auto makers whose franchises are involved. The identities of the dealerships that have been purchased have not previously been made public.

Dealer sources said Hyatt Group will likely hold on to a dealership that sells Mercedes-Benz, Smart and Sprinter vehicles. Hyatt also holds an Acura store, but Honda Canada Inc., which owns the Acura brand, does not permit publicly traded companies to own its dealerships.

AutoCanada chief executive officer Pat Priestner would not comment last week when asked how big the dealer group is, or whether the purchase of the unidentified dealer group included stores the company does not own now. AutoCanada does not operate Acura or Mercedes-Benz outlets.

Hyatt Group owner Steven Itzcovitch did not return phone calls seeking comment.

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“There are a lot more dealerships for sale today and likely over the next few years,” Mr. Priestner said on a conference call to discuss AutoCanada’s first-quarter financial results last week. “That’s going to accelerate a lot, we think.”

More dealer groups than ever before are discussing sales, he added.

The dealership landscape is changing across the country amid demands by auto makers that their dealers spend millions of dollars upgrading their stores and as aging dealers decide to leave the business.

AutoCanada made its first move into Calgary last year with the purchase of Courtesy Chrysler Dodge.

“We really like Western Canada,” Mr. Priestner said on the conference call from Edmonton. “We know a lot of people here … we have a lot of connections out here. The market’s really good here. I think you’re going to see us focus on British Columbia, Saskatchewan, obviously Alberta and Manitoba right now.”

The company’s current acquisition outlook forecasts the purchase of 10 stores and a dealer group by May, 2016, including the eight that are scheduled to close by Aug. 1.

In addition to the Mercedes-Benz and Acura stores, Hyatt Group operates two Hyundai dealerships and Infiniti, Mitsubishi, Nissan and Volkswagen outlets.

[corsvette]

There are fewer and Fewer ma and pop dealers around. Soon all dealers will be corporate owned.

Is AutoCanada the "Go' auto that's in Edmonton and Red Deer?

[Masked Bandit]

In theory greater buying power (larger groups) should help bring prices down. Think of Walmart versus Ma & Pa type store. No way the stand alone guy can compete. The question becomes whether or not the big chain will actually lower prices to squeeze out Ma & Pa or if they just keep bigger profits for themselves. Maybe a bit of both?

[redbaron303]

Apparently AutoCanada is group that is owned by the brother of "Go Auto" group.

Rumor has it that it's their tactic to gain a majority share of the market by having two separate companies....
If it's true I wonder how family dinners will be "My group is better than yours" :-)

- They have recently acquired Hyundai in Crowfoot apparently and Hyatt is apparently not permitted to sell their Honda/Acura and Mercedes franchise because of that "publicly traded" clause... Just things I've heard...

But from what I've seen in the industry in theory what Masked Bandit has said should be true.... but I find these groups difficult to deal with - and when they own the majority of dealers they look for maximum profit - what are you planning on doing, going to the competition? When they are the competition?

[reiRei]

Autocanada is a very large dealer group, they started with Chrysler Dodge Jeep Ram stores and then expanded to include Hyundai and Mitsubishi (if I'm not mistaken), they have a larger presence in Northern Alberta (Capital Motors and Crosstown Auto Centre are owned by them), but it appears that they are expanding to Southern Alberta and BC (and so forth...)

They are a big entity in Canada, and hopefully through this acquisition the end customer won't be losing out.

[ExtraSlow]

This will do absoutley zero to help or hurt the customer experience. I know someone who works at Hyatt, and I'm pretty sure his store will be sold, I should call him up and see what his pulse is about this whole deal.

[redbaron303]

My buddy that works for a Hyatt store has said thus far, no issues and no major changes YET.

[Xtrema]

Originally posted by redbaron303
My buddy that works for a Hyatt store has said thus far, no issues and no major changes YET.

Deal is closing on Aug 1st, of course no change yet.

[redbaron303]

Yes, I realize that - that said usually when a take over is done or in the works, you see things starting to change prior to in anticipation of the pending deal closing. There's also usually a lot of gossip at the agency about pending changes, forthcoming changes and such --- but from what he's heard to date it doesn't sound like they're planning an entire overhaul of what is already there - acquisition and tweaking slightly to their business model.

I guess we'll see when the deal closes if that's true or not!

[heavyD]

Can someone please purchase either of the two Subaru dealerships in town and move it to a location that's at least semi-modern?

[benyl]

Originally posted by heavyD
Can someone please purchase either of the two Subaru dealerships in town and move it to a location that's at least semi-modern?

Why? Most subaru owners are birkenstock wearing tree huggers that like the outdoors. Rustic is in their blood.

haha

[Xtrema]

Originally posted by redbaron303
I guess we'll see when the deal closes if that's true or not!

There may be jocking for positions within in organization pending the new owner arriving. Or insiders that may not like to work with new owners and leaving for other dealers.

But end of the day, it's pretty foolish to make changes that impact day to day operation before anything is signed.

After all, I'm sure people on the floor (sales, tech and their managers) will not be impacted much. It's probably more on the finance and middle management side if any "efficiency" to be found.

[Redlyne_mr2]

Originally posted by heavyD
Can someone please purchase either of the two Subaru dealerships in town and move it to a location that's at least semi-modern?

I already tried, Subaru Canada is so tough to work with.

As for the sale, I feel for the staff. Hyatt has a decent pay plan and I'm sure that will all change. They'll go after volume which will be great if you simply want to buy a car and move on but Im sure many of their managers will be replaced and the personal level of service that Hyatt stores use to offer will dissapear.

[jdmXSI]

^ kinda what I was thinking.

They will definately look for inefficeincies and for places to trim cost to make it "more in line" with their other stores. I think in the next 6 months, there will be a shift of people moving around the industry in Calgary.

[Skyline_Addict]

Originally posted by redbaron303
Apparently AutoCanada is group that is owned by the brother of "Go Auto" group.

Rumor has it that it's their tactic to gain a majority share of the market by having two separate companies....
If it's true I wonder how family dinners will be "My group is better than yours" :-)

Yes, they are separate companies but definitely do have some relationships as far as owners and key figures in both companies are concerned.

AutoCanada is currently the bigger of the two as far as # dealerships is concerned.

Plenty of dealerships are still owned by private corporations, especially in the more rural parts of the country. Dealerships are a very finite thing though, so as more dealerships are acquired by these large groups, the likelihood of seeing mom and pop outfits pop up to replace them is slim to nil.

[bowlofrice]

all except acura and merc will be bought out, all stores will be... landlorded by the hyatt group, the major reason hyatt is "merging" is because a few of the higher end luxury brands refuse to franchise out to smaller groups. In merging they can franchise as either "hyatt group of autocanada private" or hyatt group of autocanada public"....... the hyatt owners are currently under a confidentiality agreement so they cant talk about it.. but the did have a meeting with some of the shop staff today to calm our worries... dunno if we are allowed to talk about it since i never signed anything... LOL

[dj_rice]

Originally posted by redbaron303
Apparently AutoCanada is group that is owned by the brother of "Go Auto" group.

Rumor has it that it's their tactic to gain a majority share of the market by having two separate companies....
If it's true I wonder how family dinners will be "My group is better than yours" :-)

Yes that is true. AutoCanada is owned by Patrick Priestner.

Go Auto is owned by Mike Priestner. They do not like each other. Not sure the backstory behind that. But Go Auto and AutoCanada are two massive dealer groups. Go Auto I believe owns about 21-22 dealers now. And they keep expanding into SK and BC now. I used to work for a Go Auto dealer. We were a struggling dealer and weren't as busy, once Go Auto took over, it was crazy busy as hell but alot of things changed as they are very focused on having 100% customer service/satisfaction. With having a big dealer group, gives the company more purchasing power. So having Go Auto acquire us was a good thing/bad thing. There was no more personal relationships with customers and more pump out the volume now. Most of our customers were senior repeat customers who would come back due to loyalty and when they heard about Go Auto, they were turned off at the time due to Go Auto wanted to turn our image around to attract more younger crowd.

For the sales guy, they were paid flat $600/car sold. No commission. And they marketed this to customers everywhere.

The only plus side I saw of having a large dealer group purchase was the benefits/perks. Watch out for these 2 groups, they will be making some big moves in the next few years.

[redbaron303]

DJ_rice - very interesting perspective. Appreciate it. I've never enjoyed dealing with Hyatt group... I've only had interactions with GO Auto minimally but from a dealer to dealer perspective they seem half decent/easy to deal with.

The loss of the relationship and long term client is terrible IMO. Its part of the reason for sales people and service advisors and such ... Turning the dealership into a strictly or transactional focused mentality is good for newcomers but alienates long term clients like you said - most of which prefer a more personalised experience.

In consumer based selling it should be a clientcentric approach with the bottom line kept in good focus. Word of mouth help build the business IMO.

On a separate side note - between this and the dealer tactic thread - BMW group is introducing a product advisor position to be modelled after the apple genius/specialist - their job will be to educate the client and pass along to the sales person already focused and assessed so they can get on with a test drive, appraisal and purchase of the new car. Its targeted to help the client focus and give someone educating themselves a dealer resource that can help them without the "selling".

[Pacman]

Just look at the stock price for ACQ.TO over the past few years. Made a run from $1.50 or so to curently at $70.

They are a great company from an investor standpoint.

[Redlyne_mr2]

Originally posted by redbaron303
In consumer based selling it should be a clientcentric approach with the bottom line kept in good focus. Word of mouth help build the business IMO.

On a separate side note - between this and the dealer tactic thread - BMW group is introducing a product advisor position to be modelled after the apple genius/specialist - their job will be to educate the client and pass along to the sales person already focused and assessed so they can get on with a test drive, appraisal and purchase of the new car. Its targeted to help the client focus and give someone educating themselves a dealer resource that can help them without the "selling".

They're going this in Europe, I don't think we'll see this happen in North America, it doesn't make any sense to me.