Purchasing co-operative now servicing Ontario dealers
Leader Auto Resources, more commonly known as LAR, is well known to dealers in eastern Canada. Now it is expanding its reach further into Ontario, with a focus on Toronto area dealers.To that end, Yves Gionet has joined the company as director and general manager – Ontario, with responsibility for day-to-day operations in this important marketplace. Gionet and LAR’s president and CEO, Robert Issenman recently visited Canadian auto dealer’s Markham, Ont. offices to bring us up to date on LAR and its plans.
Largest in North America
Founded in 1980, with eight Montreal-area dealers, LAR is now the largest dealer-owned co-operative and purchasing group for fran- chised new-car and truck dealerships in North America (LAR doesn’t deal with aftermarket providers). Following 30 years of continued growth and expansion, it now claims more than 1,425 dealer members in Ontario, Quebec, the Atlantic Provinces and the north-eastern U.S.In addition, LAR leverages its purchasing clout with the strength of an additional 12,000 European dealers, through membership in TEMEC, a European purchasing cooperative, and by a strategic alliance with the Western Canadian Dealer Buying Group.Purchasing power, along with centralized purchasing and distribution, is what LAR is all about, says Issenman. “From the very beginning, our goal was to eliminate as many layersas possible in the distribution system.” Manufacturers want to deal with the bigplayers, Issenman explains. “They don’t want the onesies and twosies.” LAR gives them what they want, while substantially simplify- ing life, and reducing costs, for dealers – in effect, bringing the manufacturer and dealer to each other’s doorsteps.
Unique structure
All the Canadian dealers LAR serves are shareholders in the company. They must buy in to become customers. To satisfy regulatory issues in the U.S, American dealers must put up a security deposit instead of becoming shareholders.“The investment isn’t huge,” Issenman says, but it is mandatory to ensure that the dealers are committed to the relationship. It necessitates the involvement of the dealer principal or general manager, making sure they understand how the system works and the extent of the savings involved. Issenman likens LAR’s role to that of a supermarket and the jobber’s to that of aconvenience store. A family typically does its weekly grocery shopping at a supermarket, he says. There is a place for the convenience store, to satisfy small and immediate needs, but it wouldn’t make economic sense to do all your shopping there.As for the economics, that’s where LAR’s purchasing power pays dividends… literally. It permits the company to procure directly from the manufacturer, eliminating up to two levels from the traditional distribution chain. It also enables procurement from an Asian supplier base to LAR’s specifications, includ- ing a range of private-label LAR products.The resulting savings are passed on directly to LAR’s shareholder customers in the form of discount repayments – more than $243-million paid out since the company’s inception. Last year alone, LAR distributed more than $11.8-million to dealer prin- cipals, and it boasts more than 30 “LAR millionaires.”Beyond LAR’s competitive pricing, addi- tional discounts (rebates) for each product or service are published at the beginning of the year, so customers know exactly what to expect. The discounts are not homogenized – they vary according to category – but they are fixed for the year.Payment of the rebates is totally transpar- ent, fully documented by individual purchase with every remittance. All dealers pay exactly the same price for every item, eliminating “one-off” and tiered pricing.
Aggressive growth plans
Until now, LAR has grown steadily but organically. However, the company was recapitalized recently with a significant equity investment from Blue Sky Equity, which will enable much more aggressive expansion.With this new investment, LAR’s dealer shareholders retain a majority equity posi- tion, voting control and substantially all of the current additional discounts and/or pre-tax profits of the company.The company’s move into the Toronto area is one result of LAR’s bold expansion plans, which also include increased activity in the north-eastern U.S. Asked what singular message LAR would like to get out to Toronto-area dealers, Issenman responded: “We’re here to provide a unique service that has provided tremendous value to dealers in eastern Canada and the U.S. It’s time-tested and proven with real dol- lars and we’re confident that we can provide similar value to dealers in the GTA.”
