AutoCanada Inc. plans to close two of its franchises in Chicago this month as part of an effort to turn around its flailing American dealership group.
The company said on an earnings call Friday that it is closing Chevrolet of Lincoln Park and Cadillac of Lincoln Park. AutoCanada executives said the company has lost C$2 million ($1.5 million USD) on the stores in the first nine months of the year.
“With an eye on driving future profitability, a decision was made to close two loss-generating franchises in the fourth quarter of 2019,” AutoCanada said in a news release. The franchises were expected to close by mid-November.
AutoCanada said it also continues to seek buyers for four other U.S. dealerships. It was not immediately clear which of its other U.S. stores were for sale. The dealership group bought nine U.S. locations from an Illinois dealership group for C$135 million in 2018.
Its U.S. stores, which were rebranded as the Leader Automotive Group this year, have been a strain on AutoCanada’s finances since the deal was made, including the third quarter of 2019.
The dealership group — which reports all results in Canadian dollars — said its U.S. stores recorded a $14.8-million loss in the quarter ended Sept. 30, including a $13.4-million restructuring charge related to the closure of the two stores.
The U.S. loss more than offset $10.7 million in net income for its Canadian operations, giving the company a net loss of $4.1 million on the quarter. That compares with a $15-million loss in the same quarter of 2018.
“We are very pleased to post another strong quarter, and this accelerating momentum provides continued validation of the effort we started over a year ago,” Executive Chairman Paul Antony said in a news release. “Our same store metrics in Canada were once again up across the board, while we made significant and continued progress in stabilizing our U.S. operations.”
Third-quarter revenue rose 13 percent from a year earlier to $981.9 million. Canadian revenues gained 20 percent to $871.2 million while U.S. revenue dipped 22 percent to $110.7 million.
Total vehicle sales rose 2.8 percent to 19,652 units sold. That growth was driven by an 11-percent gain in used vehicle retail sales to 7,384 units. That offset a 1.7 percent decline in new-vehicle sales.
In Canada, new-vehicle sales rose 3.7 percent from a year earlier to 10,670 units. That compares with a 27 percent plunge in new-vehicle sales in the United States to 1,598 units.
AutoCanada said it sold Calgary Hyundai in July for $2 million. The company, which as recently as 2018 used acquisitions as a means for growth, did not buy any new stores in the third quarter.