Interest rates

AutoCanada expects rising interest rates to impact consumer affordability

AutoCanada, which has 81 franchise dealerships in Canada and the United States, released its financial results for the second quarter of 2022 on August 10. It reported revenue of $1.67 billion, up from $1.28 billion in 2021. Diluted earnings per share were $1.33, up 10 cents from $1.23 in the same quarter last year.

The company credited strong execution across its operations for the results, singling out its F&I, parts, service and collision repair operations for particularly strong performance.

Executive Chairman Paul Antony said the company’s used-car segment showed continued strength in the second quarter, but announced a $10 million write-down on its used-vehicle inventory in the second quarter. Canada.

“We have recently seen a slight reduction in second-hand pricing and margins and felt it was prudent to adjust our current pricing to maintain our operational metrics and goals,” Antony said on a conference call with senior executives. financial analysts.

Despite the writedown, Antony said used vehicle prices remained at “historically high” levels through the end of the second quarter and into the third quarter.

“Based on what we are seeing on the ground operationally, combined with the continued lack of new vehicle production, we expect the used vehicle market to remain strong.”

With about a four-month supply of used vehicles “in the field” in stores and prices the company is “now comfortable with,” Antony said AutoCanada is well positioned in the segment. used vehicles.

For comparison, he said the company had about a two-month supply of new vehicles in stock.

The acquired dealer group also continued to expand across Canada during the second quarter.

AutoCanada said it completed acquisitions worth $78.8 million in the second quarter, including the purchase of Audi Windsor and Porsche Center London in Ontario; Kelleher Ford and an adjacent collision center in Brandon, Man.; and Burwell Auto Body Ltd. in London, Ontario.

The company continues to evaluate other purchases. It said its current acquisition pipeline includes dealerships and collision centers with combined revenues of more than $125 million.