VANCOUVER — Billionaire auto dealer Jimmy Pattison remains bullish on the future of auto sales in Canada and is buying dealerships despite uncertainty wrought by COVID-19.
The entrepreneur’s sprawling, privately held empire encompasses everything from supermarkets to forest companies to broadcasting, but Pattison got his start selling cars. The Jim Pattison Group’s autosales unit owns 26 dealerships across western Canada that, along with the group’s leasing arm, employ 1,445 people.
“We’ve never seen business better in the car business right now,” Pattison, who turned 92 on Oct. 1, told Automotive News Canada.
“In the last few months, business has been very good and particularly the used-car business.”
Pattison has backed his optimism with the recent purchase of additional dealerships. Earlier this year, he acquired Victoria’s Campus Auto Group from Dick Graham, who is retiring after more than 40 years in the business. Campus Auto comprises four stores selling Honda, Acura, Nissan and Infiniti.
Bill Harbottle, president of Pattison’s auto group, said Campus was attractive as a long-established operation with long-serving, loyal staff and a shared philosophy on customer service. The acquisition also expanded Pattison’s brand presence on Vancouver Island, Harbottle said. He did not disclose details of the deal.
Purchase agreements for the dealerships, which were negotiated in 2019, received approval from the automakers in January before closing in March, just as the pandemic took hold, Harbottle said.
“There was never any thought about not completing due to the pandemic. When we make an agreement, we stick to it, and our view is always long term — i.e., 25 to 30 years out — not short term.”
PANDEMIC DIDN’T STOP DEALS
Mike Lewicki of Toronto-based Lewicki Automotive Consulting, which advises on dealership mergers and acquisitions, praised Pattison’s purchases. Several buy-sell transactions scheduled to close during government-mandated business shutdowns when COVID-19 took hold in the spring were cancelled as buyers invoked their agreement’s “adverse material event” clause.
“Full credit to Jim if he had that deal and he chose to not use that clause,” said Lewicki, adding that a number of deals have since been revived as auto sales bounced back. Lewicki did not advise Pattison on the Campus Auto deal.
Pattison remains on the lookout for other acquisitions. Sometimes a manufacturer will offer a tip that one of its dealers is thinking of selling. Often, it’s dealer principals themselves who call.
“Sometimes it’s health reasons,” Pattison said. “Sometimes they want to retire and their family doesn’t want to follow through in the family business.”
Although new-car sales plunged during the early months of the pandemic, they roared back through the summer. In September, sales were up an estimated 2.4 per cent over the same period last year, according to DesRosiers Automotive Consultants.
Used-car wholesale prices strengthened through early fall after a spring decline, according to data from Canadian Black Book, reflecting strong demand and worries about tight supply.
Sales results have varied by brand and segment as well as region, Harbottle said.
“Generally, the Lower Mainland [Metro Vancouver] has been stronger than Vancouver Island for new-vehicle sales,” he said. “Used-vehicle sales are up in most markets in Canada. Light-truck and SUV models are capturing a growing and larger share of the market this year.”
SAFETY IN SALES
Pattison played down the possibility of another sales drop if a second wave of COVID-19 forces more restrictions on Canadians.
“People want to be sure they feel safe, and a lot of people feel safer in their own car than they do on the bus or the train.”
The pandemic altered the sales environment at Pattison’s dealerships, too, although no employees are currently working from home, Harbottle said, and service operations in most locations are fully staffed. COVID-19 is speeding the trend to online sales, and staff are delivering demonstrator vehicles to customers’ homes.
“There definitely has been an accelerated move to digital retailing and changes in the overall purchase/sale process,” he said.
“People are avoiding crowds and not getting together. Anything that takes meeting together with strangers is definitely being hit.”
The pandemic hasn’t stopped Pattison from heading to his office in downtown Vancouver, but he has had to modify his annual fall trip across the West to visit his holdings. Instead of driving as he normally does, he’ll fly and pick up a car. He prefers to drive because it’s easier to drop in unexpectedly on the supermarkets, radio stations and farm-equipment dealerships he owns in smaller towns.
“And besides,” Pattison said, “I like driving, so it’s not work.”