By Raul Rodriguez Cota
Aug 28, 2024, 1:47 PM EDT
Canadian automaker AutoCanada Inc. is considering closing 18 of its U.S. dealerships to reduce its cash losses in recent months.
These dealerships, which are located in Illinois and operate under the Leader Automotive Group brand, are at the center of a plan of changes that the company is making due to declining sales and increasing competition in the market.
AutoCanada CEO Paul Antony admitted the company had not reacted quickly enough to address tough market conditions.
“Our recent performance has not met our own expectations, and it has become clear to me that we need to deepen our focus on reducing debt,” Antony said during a conference call with analysts earlier this month, according to Vibes US.
In addition to considering closing some branches, the company is also reviewing the possibility of selling assets that are not generating profits and are not essential to its core business, both in the United States and Canada.
This move seeks to strengthen the most profitable operations and improve the company’s financial stability.
If these dealerships close, it could have a major impact on local auto markets, meaning consumers would have fewer options for purchasing vehicles, and this could change the way the auto industry works in Illinois and possibly other areas as well.
In the second quarter of this year, AutoCanada reported that it earned $1.6 billion, which is less than the $1.8 billion it earned in the same period last year.
Losses in the United States reached $35.5 million, while operations in Canada generated a net profit of $2.4 million.
As a result of these results, AutoCanada has decided to stop all acquisition and merger activities with other companies, and has also decided not to spend on non-core projects.
This is part of a broader strategy to address economic uncertainty.
Paul Antony stressed the need to focus on improving the profitability of its core operations.
Continue reading:
– US cities where auto loan delinquencies are declining the most
– JCPenney abruptly closes many stores
– Hobby Lobby offers up to 90% off and a massive liquidation of its products