Automotive News Canada - November 2019 - v2 - 13

* N O V E M B E R 2 019

AUTOCANADA STRATEGY

From broken to break even?

New head of U.S.
operations is
turning around the
underperforming
stores that are on
the chopping block
By JOHN IRWIN
TORONTO BUREAU

"The almost immediate
write-downs came as a lot of a
surprise to almost everyone,"
Murray said. "This isn't your
first time doing acquisitions, so
what exactly happened?
"Frankly, it ultimately led
to the fact that a number of
their key shareholders and the
board had to make management changes with the leadership team."
Indeed, Landry would leave
as CEO in August 2018, and
Antony would replace him in
effect if not in title. Under pressure from shareholders, the
company would soon make
turning around its struggling
U.S. operations a key priority.

AUTOCANADA INC.'S
money-losing U.S. stores have
been a drag on the bottom line
of the publicly traded dealership group since it acquired
the Illinois locations in April
2018.
Two of those dealerships
'REALIGNING EVERYTHING'
were set to be closed Nov. 15,
and another four were for sale.
Tammy Darvish, the forBut company executives and
mer executive vice-president of
industry analysts think they
DARCARS Automotive Group
can turn around the perforin Bethesda, Md., was tasked
mance of the AutoCanada U.S.
with completing that turnbusiness and even keep the
around in March. She replaced
four stores.
Bill Berman, the former COO
"In 2020, we won't be losof AutoNation Inc., in the role
ing money there," said
after he left just months
Executive Chairman
after starting.
Paul Antony during a
On an August conferNovember call with anaence call, Darvish, 56,
lysts.
said she concentrated
It's an aggressive
on restructuring comtarget, but it's one
pensation to be "more
AutoCanada is confident
performance-based
it can hit. As proof, the
rather than a fixed comPaul Antony: pensation." She also
company pointed to a
new management team Goal for the
wanted to make sure
and a new approach to dealership
the company had "the
group's U.S.
retail that emphasizright people in the right
es profitable sales over stores is
place." The poor finanto
not
lose
volume, as well as closcial performance of the
ing two Chicago stores money in
U.S. stores stemmed
2020.
that had lost $2 milfrom cost structure
FILE PHOTO
lion over the first nine
problems, Antony said,
months of the year.
adding that Darvish was in
Should AutoCanada pull
the midst of "realigning everyoff such a feat, it would be a
thing."
remarkable turnaround for the
Antony said the compaU.S. locations, purchased from
ny's turnaround plan in the
the Grossinger Auto Group for
United States involves boosting
$135 million in 2018.
used-vehicle sales and increasing revenue from fixed ops and
U.S. MOVE 'A BIT CURIOUS'
finance and insurance.
In the months surroundDarvish's efforts were
ing the Grossinger acquisition,
already beginning to bear fruit
AutoCanada was on a buying
to the point where AutoCanada
spree, as it was under pressure
was re-examining whether it
from shareholders to diversieven needs to sell those four
fy its brand portfolio and geostores anymore, said Antony.
graphic footprint, having long
The company has not identibeen focused on the Prairie
fied which dealerships it was
provinces.
looking to sell.
To a degree, then, the leap
"She's actually turning
into the United States, led
them around, and it's making
by former CEO and founder
us have to really reconsider
Steven Landry, made sense. It
actually selling them, which
gave AutoCanada access to a
we will do over the course of
new, large market in Chicago
the next quarter," Antony said.
and gave the group its first
"So, I would say that we
Toyota, Honda, Lincoln and
don't plan on shutting any
Volvo stores.
more stores down in the United
Still, the move came across
States, and frankly, we're feelas "a bit curious" to Chris
ing much better about the
Murray, an analyst with
assets that we have there."
AltaCorp Capital Inc., and it
Analyst Murray said it
would soon become clear why.
would take time for changes to
AutoCanada would evenresult in positive earnings in
tually write down the value of
the United States, but it could
its U.S. operations by $46.3 milhappen.
lion, and it would come to dis"Directionally, they seem to
cover what the company would be on the right path."
call "highly abnormal" costs at
Antony declined to comthose stores.
ment for this story. - ANC

Illinois dealership group was 'very poorly run'
By JOHN IRWIN
TORONTO BUREAU

TORONTO - TAMMY DARVISH, THE
AutoCanada executive tapped to turn around
the group's lacklustre American stores, said one
of her top priorities is to change what she called
a poor culture at those outlets.
"Not to be mean, but [the group] was very
poorly run," Darvish, president of U.S. operations, said of the Illinois dealership group
AutoCanada acquired in 2018. "We had to ...

At the Automotive News Canada Retail Forum
in Toronto, Tammy Darvish, AutoCanada's
second head of United States operations,
said everyone in the group's American boat
needs to be rowing in the same direction. She
described a workplace too toxic to succeed.
P H O T O : G I A N C A R L O PA W E L E C

DESIGNED FOR THE
FIERCE WINTER AHEAD
 CROSSOVERS AND SUVS
 LONGER TREAD WEAR
 OPTIMAL ROAD CONTACT
 IMMEDIATE SNOW & ICE TRACTION
 ENHANCED STABILITY & GRIP

start fresh with these employees."
Darvish, 56, delivered her comments at the
Automotive News Canada Retail Forum in
Toronto on Oct. 23, as AutoCanada attempts
to turn around the stores, which have dragged
down the company's earnings since the acquisition was completed.
The group acquired nine locations from the
Grossinger Auto Group in Illinois for $135 million in 2018, giving AutoCanada a presence in
the United States for the first time.
Darvish, a veteran of the American auto
retail scene, is the dealership group's second
head of U.S. operations. She said employees at
the same stores seldom knew one other or what
they did, and she described a culture too toxic to
be successful.
She said she has organized several events to
change that, including a Chicago beach party on
the Lake Michigan shoreline and a reveal party
for the American stores' new name, the Leader
Automotive Group.
At the same time, the company has been
implementing a restructuring plan centred
around managing expenses, renegotiating vendor contracts and changing compensation models. AutoCanada said it planned to sell four of
its Illinois dealerships as part of the strategy,
although it has said that might no longer be necessary.
"You have all these people on the boat, and
you've got to be rowing in the same direction,"
Darvish said. "I can't have anyone on the boat
not even picking up an oar or, even worse, have
someone in the boat drilling holes in it while
the rest of us are trying to move ahead." - ANC

http://www.atlastire.com/products.php http://www.atlastire.com http://www.tiredistribution.com

Automotive News Canada - November 2019 - v2

Table of Contents for the Digital Edition of Automotive News Canada - November 2019 - v2