First-time Canadian dealers find U.S. more financially feasible

Two Canadians in the automotive dealership business are about to become first-time owners of a store in Southern California, after discovering that it was financially more feasible than trying to purchase one in Canada.

Phil Alalouf and Todd Hewitt, both from Vancouver, British Columbia, formed the PATH Auto Group using the initials in their names. Alalouf and Hewitt each have more than 30 years of experience on the retail side. They decided they wanted to own a dealership rather than be minority owners in two stores owned by the Foundation Auto Group.

“We’re very grateful to have learned (from Foundation Auto),” said Alalouf. “I never thought it was possible to buy a dealership unless [you have a] bunch of money or have a family background in the business. They gave us the pathway into what that could look like and how you deal with banks—how to get lenders and finances in place.”

Alalouf and Hewitt reached out to various brokers and ended up working with Performance Brokerage Services. Because of a non-disclosure agreement, the partners are not allowed to reveal the brand of the store they purchased, although Alalouf said he has a long history with the brand.

Alalouf said the opportunities in the U.S. are much greater than in Canada in terms of investment. So when the opportunity to buy a store that had a brand he was familiar with—which happened to be in a warm climate—it made sense to do it.

“For me it was this big full circle and had every check you could imagine,” said Alalouf. “The price was aligned with what we could afford. We looked in Canada, but the (larger auto groups) are buying up in bulk, so you’re not going to be in a major market anyways, not that we wanted to. We could invest less in the U.S. and make more. It’s just [that] the pure profitability of the stores in the U.S. is so much greater than what it is in Canada, and I would never have thought that. I always thought Canada was the way. I wouldn’t have known (otherwise) had I not gone down to the U.S.”

He said he wanted to buy a business in Kelowna, B.C., where his two sons could work with him, but found the market too cost prohibitive. He also said the stores they looked into were off the grid.

The deal is set to close April 30.

Related Articles
Share via
Copy link