The Canadian dealership landscape has forever changed.
In August, Lithia & Driveway launched into Canada by acquiring/partnering with Pfaff Motors. Pfaff became the first Canadian dealer group to join a U.S. public dealership group—and most assuredly won’t be the last.
The not so well-kept secret about the deal was making the rounds earlier this summer, and that’s when Canadian auto dealer reached out to Chris Pfaff for an interview. At that time he wasn’t ready to comment until the deal closed, but granted us a video interview on his first day on the job.
He’s a class act. You can watch that interview on our website. I posted it on LinkedIn and it got a lot of attention and commentary, which shows there’s a lot of interest in this story.
Pfaff’s 11 dealerships and Pfaff Leasing will operate under the popular and well established Pfaff brand name. Pfaff will stay on as president and CEO, which is a smart move for Lithia and likely a relief for all his employees.
Regardless of who is doing the takeover, it always triggers a certain level of fear and anxiety among the employee base. Is my job safe? What will the new company want from me? Will they change our culture? Will they impose new operating rules and procedures on an already well-run machine?
These fears are likely amplified in this case because of two key factors: they are a publicly-held dealership group and will have different reporting needs and financial results, versus a privately-held dealership group.
And perhaps the biggest elephant in the showroom: they are an American-based company. A big remaining question is whether they truly leave the dealerships to operate as they have been, or whether they will start to tinker.
Most of the senior management will likely be in favour of being left alone, because they have spent years adapting to their local markets, navigating the relationships with their OEMs and their field teams, and above all understanding the needs of their customers.
What buyers want in Woodbridge, Ontario is a lot different than what buyers want in Vancouver—and not just in terms of products, but also in customer service and other highly regionalized factors. Woodbridge is likely even different from another nearby community like Vaughan—all locations where Pfaff has dealerships.
But these arguments, valid though they may be, are typical any time one company takes over another. I worked for a publishing company in Burlington, Ontario that was swallowed by a large publisher in Aurora, Ontario, and witnessed typically level-headed professionals all but lose their minds over the changes. Many, and I’ll argue most people, are change-averse or at least change-resistant.
In this case, however, I’m personally intrigued to see how Lithia is going to be able to bring some of their innovation north of the border. They have been rapidly growing, and have implemented a host of innovative new practices, particularly with regards to all things digital and with data.
While Pfaff’s employees won’t want to see all these new systems implemented overnight, I’d highly recommend they keep an open mind. Canada’s auto industry has been dragging its feet on a lot of innovation. The pandemic pushed dealerships and OEMs into embracing a different customer experience. I can picture things snapping back like a stretched waistband as the pandemic-imposed need for change eases.
Having a new innovator in town, shaking things up, trying new approaches, might be just what the doctor ordered for the Canadian automotive retail world.