AutoCanada Inc. swung to a loss in the first quarter of 2024 and its revenue fell compared to a year earlier, as higher vehicle inventories and consumers opting for cheaper vehicles dampened per-vehicle profit.
The dealership group that owns 66 franchised stores in Canada and another 18 in the United States reported a net loss of $2.4 million, or 10 cents per share, for the quarter. This compares to net income of $8.4 million, or 33 cents per share in the same period of 2023.
Revenue declined to $1.42 billion during the quarter, down from $1.54 billion last year, the Edmonton-based group said May 2.
AutoCanada Executive Chair Paul Antony said replenishing new-vehicle inventories, consumer preferences for more affordable vehicles and a shortage of well-priced procurable used vehicles created a “rough road” for the company in the first quarter.
“Despite our best efforts, these conditions impacted our top-line growth and profitability during the quarter,” he told analysts on a conference call.
Antony also pointed repeatedly to the relative underperformance of some of its brands as among the headwinds it faced during the quarter.
“Some of our brands are actually falling short of where they should have been,” he told analysts, without naming the brands.
Overall new-vehicle sales were up 15.3 in Canada in the first quarter, though the luxury market and Stellantis were notable exceptions. Stellantis sales volume fell roughly 20 per cent in the first three months of the year.
Across Canada and the United States, 17 of AutoCanada’s 84 franchised dealerships represent Stellantis, its largest concentration of stores focused on a single company.
Despite the revenue decline, Antony said he is optimistic the company is making the “right changes” to regain positive momentum.
Among other steps, he said AutoCanada completed its restructuring of its U.S. division during the first three months of the year. Implementing “Canadian operating standards” across its 18 stores in Illinois will have “a positive impact” in coming quarters, he added.
Across the group, new-vehicle sales volume showed signs of recovery. Units sold climbed to 9,287 in the first quarter, up from 8,771 for the same period of 2023. Per-vehicle profit, however, fell nine per cent to $4,859 from $5,337 previously.
Used-vehicle sales declined to 13,330 units from 15,290 a year earlier. Profit per used vehicle sold also fell four per cent to $1,264 from $1,317.
Higher interest rates and larger new-vehicle inventories, meantime, raised company floorplan costs during the quarter. Floorplan financing expenses amounted to $19.6 million, up 25 per cent from $15.7 million a year earlier, the company said.
