Edmonton’s AutoCanada revenues down more than $200M as Canadian auto sales stall

AutoCanada Inc.’s revenues have dropped sharply — by nearly 15 per cent — from a lack of activity in its new and used vehicle sales, but collision repairs and the ongoing sale of its dealerships in the United States are cushioning the blow.

With revenues from sales slumping, interim chief executive Sam Cochrane said the company will prioritize collision repair, among other services, to help drive growth of the business across the country.

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In the near term, our priorities will include expanding our collision operations and strengthening the performance of our dealership network,” Cochrane said in AutoCanada’s latest earnings report.

With close to 7,900 new vehicles sold this year, the recent quarter brought a 17.7 per cent drop in sales over the same period last year. Despite generating more used vehicle sales than new, AutoCanada’s numbers were still down sharply in the third quarter compared to last year.

AutoCanada has

more than 80 franchised dealerships in eight provinces. The third quarter earnings report is the first since AutoCanada’s announcement that Cochrane would be taking over as interim CEO amid a tough financial outlook as the company reports a revenue loss of $211 million compared to 2024.

Cochrane said the quarter is reflective of a transition for the company that he said was the “most significant cost transformation in AutoCanada’s history.”

The dip in revenue comes after stronger mid-year performance for the company. In its second quarter report, AutoCanada’s revenue was down just $43 million, or about three per cent, from a year earlier.

Cochrane said AutoCanada continues its internal transformation to maximize savings, which includes more efficiencies and divesting from the United States, which the group has now largely completed with agreements in place and deal closures expected before the year’s end.

Since the second quarter, the company has seen a consistent decline in its stock price, and also tacked on an additional $168 million in lost revenues from the previous quarter.

On Thursday’s earnings conference call, Cochrane said “just over 70 per cent” of the reduction in vehicle sales revenue can be attributed to AutoCanada’s ongoing restructuring efforts, which he said has led to a drag on in-store performance.

“All the things that we’ve done to get the cost down, whether that’s reducing marketing spend, reducing inventory and reducing headcount, are all things that are going to lead to softness,” said Cochrane. He said the restructuring is due to be finished in the coming weeks, allowing the company to focus on growth afterwards.

According to CIBC economist John Fanjoy, the dip in revenue isn’t just hitting AutoCanada.

In his latest report on the global auto sector, Fanjoy said sales were up nearly two per cent in September compared to August, but he said that the increase is predominantly driven by Europe, with other regions like Latin America and Asia Pacific also posting moderate gains. The increase in sales appears to be hitting in most other areas around the world, excluding North America.

In Canada, Fanjoy said said sales dropped by 2.8 per cent from September to October — a trend he doesn’t expect to change throughout the remainder of the year.

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The automotive sales rate is expected to remain soft through the end of 2025, compared to the spring, as softer labour markets pose headwinds to consumer spending growth,” said Fanjoy.

AutoCanada’s report said that the loss of revenue from sales and parts and service is partially offset by a gain of 19 per cent in revenue from its collision repair services over last year.

It’s not all bad news for AutoCanada, which despite its revenue deficit, managed to cut operating expenses by 10.7 per cent over the same period last year.

On July 16, AutoCanada announced that it had entered into agreements to sell 13 of its U.S. dealerships, but that the final transactions were subject to closing conditions and approvals, which it expected within six months at the time.

“To date, we’ve received approximately $37 million with another $12 million expected to close before year end,” said Cochrane of the sale of the U.S. dealerships. “The remaining transactions are on track to close through the first half of 2026 bringing total anticipated proceeds to around $130 million.”

zdelaney@postmedia.com

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