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.
“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.