Yellow Porsche

The Collapse of Pre-Owned

Yellow Porsche


The U.S. House of Representatives is making progress every day toward approving the trade agreement President Donald Trump worked out with Canada and Mexico, Speaker Nancy Pelosi said on Thursday. The House is on a “path to yes,” Pelosi said about ratifying the agreement, which was signed nearly a year ago, adding that her chamber’s inquiry into whether Trump should be impeached has “nothing to do” with its work on the agreement.

Source: Reuters


U.S. President Donald Trump's administration will look very closely at the planned merger between Fiat Chrysler and Peugeot owner PSA, White House economic adviser Larry Kudlow said on Friday.

The deal, announced on Thursday, would create the world's fourth-largest automaker.

"We will obviously look at it very, very carefully," Kudlow said on Bloomberg. "The president has not commented on the deal. ... We're not afraid of doing business with international companies, Lord knows." When asked about the 12.2 percent equity stake and 19.5 percent voting stake China's Dongfeng Motors holds in PSA, Kudlow said: "With respect to the Chinese story, we obviously are alert and on guard."

There has been speculation Dongfeng might sell its holdings, which could help ease the deal's passage through U.S. regulators, given U.S.-Chinese trade tensions. "We will welcome a good deal. We hope it will get more production in the United States, more factories and workers and employment in the U.S. And with respect to the Chinese angle, we will take a careful look at it," Kudlow said.

Source: Bloomberg


It’s a sign of how far Fiat Chrysler has come that the first question asked about its merger with Peugeot SA is not, “How will this save Chrysler?” It’s also a warning: Chrysler’s brands, engineering design and leadership will have to pull at least their share of the weight to make the new global giant thrive. We don’t even know yet what the new company will be called, but it’s clear much of its cash and sales growth will flow from Ram and Jeep, the main American brands based in Auburn Hills, just north of Detroit. Paris-based PSA will contribute expertise in electric vehicles, platforms to underpin small and midsize SUVs for Jeep and perhaps Dodge.

Source: Detroit Free Press


It Will Be A Long Way Before They Go Mainstream

Electric mobility may be growing at a rapid pace around the world, but it could be some time before e-cars go mainstream. Out of more than 5.1 million electric cars on the roads globally, nearly two million electric cars were sold in China, Europe and the U.S. last year. Still, this number accounts for less than 1% of the one billion vehicles being driven today, according to statistics by Bloomberg for the 2019 Electric Vehicle Outlook.

Source: CNBC


John Chisholm surveyed the changing dealership landscape and realized he had a choice to make. As the owner of a single dealership, Rose City Ford in Windsor, Ont., he knew the costs of being a single-point owner were becoming prohibitive. That meant he had to either sell his beloved dealership, which he took over from his father in 1996, or buy more stores to gain economic scale. “The problem in my case was that I’m in Windsor,” Chisholm said. “There are a few groups in Windsor that have consolidated most of the stores, so there really wasn’t a lot left, and it meant going to Toronto or London and commuting. “I have a 10-year-old daughter and a 17-year-old daughter. I just don’t want to be away from them that much.” 

So, Chisholm sold his store. But the sale, which closed in December 2018, wasn’t an ordinary buy-sell trans- action like those that have become increasingly common over the past several years. It took nearly a year for the $24.8-million deal to finalize. And by the time the store changed hands, Ford of Canada had reversed one of its long-standing policies so that Edmonton-based AutoCanada Inc., the country’s only publicly traded dealership group, could add the coveted brand to its portfolio. 

No seller’s remorse 

Almost a year after the deal closed, Chisholm said he had no regrets, especially as technology alters automotive retailing and as vehicle sales soften. “The retail automobile business is changing, and it’s changing rap- idly,” said Chisholm, who stayed on as a part-time adviser to AutoCanada. “I’m not afraid of it, but I don’t know that, at 61 years old, if I want to go through all that.” 

The Rose City Ford sale sheds light on the challenges single-point retailers face in an era marked by large, growing dealership groups. It also shows just how far some groups are willing to go to enter new markets and sell new brands. In AutoCanada’s case, that meant waiting nearly a year before finally adding the store to its stable of 64 rooftops in Canada and the United States. Farid Ahmad, whose Dealer Solutions Mergers and Acquisitions was hired by Chisholm to find a buyer for Rose City, said the process took at least twice as long as a typical deal he works on. That’s because Ford first had to change its policy barring public companies from owning its dealer- ships. The automaker, Ahmad said, is strategic in selecting which people and groups own its stores. Overturning a long-standing policy in Canada was not going to be easy. 

Still, Ahmad sensed an eagerness from Ford to get the deal done, an out- look he attributed to Chisholm’s reputation among Ford’s leadership team and AutoCanada’s plan to keep him as an adviser during the transition. 

This month, Chisholm will leave Rose City Ford to join Ahmad at Dealer Solutions, managing mergers and acquisitions in the United States. “We were well aware that Ford is a really desirable brand, and when a brand is as desirable as Ford, the manufacturer can get extremely fussy and choosy,” Ahmad said. “But that wasn’t the case here. They were willing to work to ensure that John Chisholm got a good deal and a straightforward deal. They could have derailed the deal if they wanted to.” 

‘right time’ for new policy 

In a statement to Automotive News Canada, Ford of Canada spokesman Matthew Drennan-Scace said the automaker made the decision in June 2018 to sell the store after care- ful consideration and consultation with its dealers across Canada. “It was the right time to update the ownership policy for Ford and Ford-Lincoln dealerships in Canada,” Drennan-Scace wrote. “We remain focused on ensuring our updated ownership model continues to meet the needs of the communities we serve.” 

Chisholm credited Mark Buzzell, the former Ford of Canada CEO, for facilitating the deal. Now Ford’s director of North American fleet, lease and remarketing operation, Buzzell is an American who had worked for Ford in the United States before taking on his role in Canada. For years, Ford has allowed public dealership groups to own its stores south of the border, even as the policy remained unchanged in Canada. “I think that the stars lined up for us having Mark Buzzell as the CEO from the U.S. who understood public own- ership and was used to it and comfortable with it,” Chisholm said. “I think that really, really boded well for us in the approval process.” 

Breakfast breakthrough 

Chisholm and his wife, Sophia, who was secretary-treasurer of Rose City Ford, met Ahmad on a trip to Toronto about 18 months before the sale. Chisholm said they talked about consolidation trends in the industry and about the store’s succession plans. “Really, the succession plan for us was to sell the dealership in due course,” he said. “Now, we had absolutely no inkling to sell the dealership. It was really a fact finding mission ... We were not even in the mindset to sell that store.”  About six months later, Chisholm contacted Ahmad to gauge what kind of interest there would be in the store. He and his wife pondered the future of the dealership and concluded it was time to sell. The costs of man- aging a dealership were spiralling, and the threat of a recession loomed, Chisholm said. “I was really surprised at the number of groups that are consolidating in Canada,” he said. “My eyes were really opened to the fact that the mom-and-pop dealership, the John-and-Sophie dealership, is going by the wayside, and that consolidation is happening. Margins are compressing and costs are rising all the time.” 

After Ford signed off on both its policy change and the AutoCanada sale, Chisholm broke the news to the 60 employees — people he considers family — at Rose City. “They were sad, but as it turns out, everyone is doing well,” he said, adding the staff has since grow to 72. 

AutoCanada Executive Chairman Paul Antony declined to comment fo this story, but the company wants to improve the operations of its Canadian stores and develop new profit centres. The strategy includes the creation of a special finance and wholesale division and plans to increase used-vehicle sales. 

AutoCanada’s Canadian operations reported net income of $12.8 milllion in the second quarter of 2019, up from a loss of $6 million a year earlier even as underperforming U.S. store dragged down the company’s overall performance. 

The industry is changing rapidly but the future is bright for innovating retailers, Chisholm said. 

“The brands that embrace what it is the consumer wants at a pace that the consumer can accept it and at a price that the consumer can accept it are going to survive really, really well.”

Source: Automotive News Canada


Over the last decade, the U.S. auto industry has witnessed an unprecedented collapse of pre-owned profitability. According to the National Automobile Dealers Assn., the average franchise dealer actually lost money in 2018 for the first time in history. There are a few contributing factors to this, but the biggest influencer is that pre-owned adopted the same pricing strategies as the new-car sector, pushing pre-owned off the same margin cliff, leaving dealers with a dramatically different landscape, and one that is significantly less profitable.

Source: WardsAuto


Uber Technologies Inc. disappointed investors with quarterly results showing lackluster gains in bookings and monthly active users, two of the metrics most closely watched by Wall Street. The ride-hailing company beat estimates for quarterly revenue and loss, improved its annual loss forecast and pledged to turn a profit by 2021. Those weren’t enough to lift the stock, though. Shares were down about 5% in extended trading after the results.

Source: Bloomberg


Mitsubishi Motors Corp. slashed its annual profit and sales outlook, becoming the latest Japanese automaker hit by sputtering global demand and a stronger yen. Operating profit for the fiscal year through March 2020 will be 30 billion yen ($275 million) instead of 90 billion yen, the company said in a statement Wednesday, citing decreases in wholesale volumes and the impact of currency swings that erode income brought home. The revenue outlook for the period was cut 5% to 2.45 trillion yen.

Source: Bloomberg


Subaru Corp lowered its annual profit forecast on expectations of a stronger yen and the impact on production from a typhoon last month, driving its shares down as much as 4.5%. Japan’s smallest major automaker, which is owned a fifth by top-ranked Toyota Motor Corp, cut its forecast for operating profit to 220 billion yen ($2 billion) for the year ending March 2020, from a previous forecast of 260 billion yen. Subaru revised its forecast for the yen to average 107 versus the dollar over the period, from 110 previously.

Source: Reuters


BMW’s third-quarter operating profit rose 33% thanks to stronger sales of sports utility vehicles and the absence of one-off headwinds which depressed earnings in the year-earlier quarter, the German luxury car maker said on Wednesday. The Munich-based company said its earnings before interest and taxes (EBIT) rose to 2.29 billion euros ($2.54 billion), up from 1.72 billion euros in the year-earlier quarter and ahead of the 2.16 billion euros forecast in a Refinitiv poll.

Source: Reuters