Skip to main content
Sister Publication Links
  • Automotive News
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
Subscribe
  • Subscribe
  • login
  • HOME
  • News
    • News by Brand
    • Auto Shows
    • Canadians Abroad
    • Photo Galleries
    • Automakers
    • Suppliers
    • Retail
    • Dealer Best Practices
    • Government Relations
    • Trade and Tariffs
    • Technology
    • Labour
    • Aston Martin
    • BMW
      • Mini
      • Rolls Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ferrari
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Kia
    • Mazda
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Fiat Chrysler
      • Jeep
      • Fiat
      • Lancia
      • Maserati
      • Ram
    • Subaru
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
    • Volvo
    • VinFast
    • Toronto Auto Show
  • Opinion
    • Blogs
  • Video
  • Podcasts
  • EVENTS & AWARDS
    • 2022 Auto News Canada All-Stars
    • 2022 Canadians To Watch
    • 2022 Diversity Champions
    • Best Dealerships To Work For
    • Canada Congress
    • Retail Forum: Dealer Discussions
    • Leading Women Roundtables
    • Embracing Diversity Roundtable
    • EVs Decoded
  • Jobs & Classifieds
  • +MORE
    • IN THE DRIVER'S SEAT
    • NEWSLETTERS
    • SUBSCRIBE
    • CLASSIFIEDS
    • PEOPLE ON THE MOVE
    • COMPANIES ON THE MOVE
    • WEBINARS
    • ADVERTISE WITH US
    • CONTACT US
    • DIGITAL EDITION
    • PUBLISHING PARTNERS
MENU
Breadcrumb
  1. Home
  2. Buy Sell
March 17, 2023 12:00 AM

EVs emerge as buy-sell factor

Brands with a plan have appeal, but gasoline isn’t a goner just yet

David Kennedy
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Easthill Volkswagen
    SUPPLIED PHOTO

    In January, UpAuto acquired Easthill Volkswagen in Ontario — reflecting the strategy of President Michael Carmichael that the most valuable brands offer electric and internal-combustion options.

    When it comes to electric-versus-internal-combustion-engine vehicles, Michael Carmichael likes to keep a foot in “both ponds.”

    Many automakers “are wrestling with the all-in or all-out” on electrification, said the president of Stratford, Ont.-based UpAuto.

    But Carmichael, whose dealership group owns five new-car stores in small Ontario cities and towns, is trying a find a middle ground. The company’s latest acquisition of Easthill Volkswagen in Walkerton, about 200 kilometres northwest of Toronto, in January is part of this strategy.

    With the Germany-based automaker, Carmichael sees a like-minded approach to his.

    “VW’s built a very dynamic, exciting line of EVs,” he said. “They’re very affordable, … and I believe they’ve got mass-market appeal. All the while, they’re still going to have gas cars.”

    As each automaker refines how it will make the transition to EVs, their electrification strategies give UpAuto and other Canadian dealership groups yet another factor to consider when weighing acquisition opportunities.

    THE ROI OF EVS

    “Dealers buying today, when they look at a particular brand, … they already are aware of that brand’s strategy for electric vehicles, and they take that into consideration for the future,” said Peter Heasty, president of Toronto-based Baker Tilly WM Dealer Acquisitions Inc.

    • View the most recent dealership transactions here.

     

    By Heasty’s accounting, electrification has had a relatively limited impact on the buy-sell market to date. But that doesn’t mean dealers aren’t doing the math.

    Upfront costs are one important part of the arithmetic.

    Carmichael: He wants to add EVs but not give up the gasoline, so he was eager to acquire a Volkswagen store because that brand’s lineup reflects his view of the market.

    As with any other part of the transaction, Heasty said, “They ask if there are capital costs that the manufacturers are asking for today that [dealers] have to take into consideration.”

    He pointed to Ford Motor Co. as one example of a brand requiring significant investment for a dealership to sell EVs.

    “Ford … is mandating that their dealers spend well north of a million dollars,” Heasty said. “If we’re looking at a very large transaction, that is really not relevant. If it’s a smaller store, it becomes relevant.”

    Farid Ahmad, CEO of Dealer Solutions Mergers and Acquisitions, said he is seeing electrification come into focus in the sale of Ford dealerships as well.

    “Ford’s still a very strong brand, and it has a strong following,” Ahmad said. “But there is a confusion out there as to what’s being charged, when you’ve got to pay it, and the impact.”

    Despite added hesitancy from buyers, valuations have been unaffected, Ahmad said.

    “It’s more dealing with the confusion of it more than anything else,” he said.

    But as EVs become a more important part of the market, Ahmad expects electrification strategies to become a bigger factor in how prospective buyers value dealerships.

    “Slowly, it is going to be coming into play,” he said. “But I think we’re 12 months away from knowing its full impact.”

    ELECTRIC ADDS VALUE

    Despite this lack of clarity, Ahmad said, the strength of an automaker’s EV lineup is already playing a role in transactions. Franchises such as Hyundai and General Motors are attracting greater interest from buyers than in the past because of the two brands’ clear direction on EVs, he said. Brands with fewer electric models in the pipeline are leaning the opposite way, he said.

    PHOTO: LINKEDIN

    Gagnon: Buyers aren’t avoiding brands that lack a solid EV plan.

    Also watching the trend is Sylvie Gagnon, director of sales for Quebec at the buy-sell advisory firm Templeton Marsh. Dealerships representing brands with strong EV strategies, such as the German automakers, command greater attention when they go on the market, Gagnon said.

    “It’s positive for manufacturers that have a clear strategy and have EVs available right now and [more] EVs coming in every year,” she said.

    But a definitive road map for going electric is just one of the factors that dealership groups or individuals weigh when considering purchasing a store, Gagnon said. “It’s in their mind” and may help influence a decision, she said, but buyers are not writing off brands just because their EV strategies may be hazier than some others.

    Dealers considering acquisitions are typically working with long time horizons, said Baker Tilley’s Heasty. They are unlikely to be swayed into purchasing a dealership based on the EVs a brand has on offer today, he said.

    “EVs are becoming part of the furniture, and they will take their course in various franchises,” Heasty said. “Every dealer knows that over time that in the years to come, … the percentage of EV over internal-combustion business will shift.”

    Some short-term jockeying for EV sales may occur, Heasty said, but franchises that have established themselves as “triple A” brands over the past several decades will remain on top, even if they are perceived as being slower than others at this stage in the EV transition.

    RECOMMENDED FOR YOU
    Canadian dealership group Ride Automotive enters U.S.
    Recommended for You
    MazdaMarinfrom-MAIN_i.jpg
    Canadian dealership group Ride Automotive enters U.S.
    Buy Sell Panel Congress
    No end to dealership consolidation in Canada in 2023, experts say
    Crossroads
    Foundation Automotive adds another Texas store
    DSMA CEO on current mergers & acquisitions outlook
    Sponsored Content: DSMA CEO on current mergers & acquisitions outlook
    Digital Edition
    March 2023 Cover
    View latest issue
    See our archive
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up today for our Weekly Newsletter, Daily Newsletter and Breaking News Alerts. We'll deliver the news you need to know straight to your inbox.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Subscribe Now

    An Automotive News Canada subscription includes 12 monthly issues – delivered in print to your doorstep, and digitally to your inbox – plus unlimited, 24/7 access to our website.

    Subscribe Now
    Connect With Us
    • Facebook
    • Twitter
    • Instagram

    Our Mission

    The Automotive News Canada mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in Canada.

    Contact Us

    1155 Gratiot Ave
    Detroit MI 48207

    1-877-812-1257

    Email Us

    ISSN 2475-5001 (print)
    ISSN 2475-501X (online)

    Resources
    • About us
    • Contact Us
    • Digital Edition Archive
    • Advertise with Us
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Canada
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • News
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ferrari
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Kia
        • Mazda
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Fiat Chrysler
          • Jeep
          • Fiat
          • Lancia
          • Maserati
          • Ram
        • Subaru
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
        • Volvo
        • VinFast
      • Auto Shows
        • Toronto Auto Show
      • Canadians Abroad
      • Photo Galleries
      • Automakers
      • Suppliers
      • Retail
      • Dealer Best Practices
      • Government Relations
      • Trade and Tariffs
      • Technology
      • Labour
    • Opinion
      • Blogs
    • Video
    • Podcasts
    • EVENTS & AWARDS
      • 2022 Auto News Canada All-Stars
      • 2022 Canadians To Watch
      • 2022 Diversity Champions
      • Best Dealerships To Work For
      • Canada Congress
      • Retail Forum: Dealer Discussions
      • Leading Women Roundtables
      • Embracing Diversity Roundtable
      • EVs Decoded
    • Jobs & Classifieds
    • +MORE
      • IN THE DRIVER'S SEAT
      • NEWSLETTERS
      • SUBSCRIBE
      • CLASSIFIEDS
      • PEOPLE ON THE MOVE
      • COMPANIES ON THE MOVE
      • WEBINARS
      • ADVERTISE WITH US
      • CONTACT US
      • DIGITAL EDITION
      • PUBLISHING PARTNERS