Some dealers are branching into other business areas to spread out their risk and reap new rewards
Some auto dealers are transforming into retailers who also happen to sell vehicles.
Many dealers add ancillary and complementary products related to vehicles, but others have gone way outside the box to diversify their portfolio.
With so much uncertainty around evolving business models, and the role of dealers with their OEMs, some dealers aren’t waiting for the dust to settle — they are forging out on their own in bold new directions.
We’ll explore just a few of these evolutions that are already happening across the country.
For example, with consumers moving toward EVs as a substitute or an addition to their internal combustion engine vehicles, some dealerships are starting to stock chargers in their parts departments.
Morgan Crosbie, a Sales Representative at Finch Chevrolet Cadillac Buick GMC in London, Ont. said his dealership started carrying charging units in its parts department at the same time it began selling EVs for consumers who wanted an alternative to gas-powered vehicles.
“I would say that most people that were early adopters to electric vehicles didn’t realize we could be a one-stop shop, so we didn’t see a lot of people purchasing them from our parts department because they were already independently finding all the things they needed to do through (social media) forums and things like that,” said Crosbie.
“The fact we’ve accommodated (new EV buyers) on that front is great. We make sure we always have them in stock.”
He said the charging stations are sold at a “heavily-subsidized” cost.
“I’m proud to say we’re not buttering the bread on both sides,” said Crosbie. “It’s not like we’re introducing you to an orange after you’ve been eating apples and then having to sell you an orange peeler for a profit.”
Norman Hébert Jr., President of Groupe Park Avenue, which has 19 stores in Quebec representing 17 brands, said his company also sells home charging stations.
He said it is “not a big financial opportunity” for his company because they are “lower ticket and low margin.” But he said they are important because consumers need them when they buy EVs and may be moving to a place that doesn’t have them readily available.
“Why should they go somewhere else to buy them? They should call us,” said Hébert Jr. “We should have them and stock them and know how to counsel our customers on best uses and best practices.”
He said his company has given every one of its General Managers a home charging station manufactured by Quebec-based FLO EV Charging.
“We want them to really understand how they work,” said Hébert Jr. “To drive electric cars, this helps them to have the chargers at home.”
He said with Quebec moving toward banning internal combustion and plug-in hybrid vehicles by 2035, charging units could be something that will be more in demand for consumers, thus presenting another product for dealers to retail.
“It’s just logical that in the same way dealerships sell tires they will sell chargers and eventually sell adapters to plug into the Tesla systems as those systems become readily available,” said Hébert Jr. “Those are all certain areas that we’re going to want to be in.”
Within the last few months, the Zanchin Auto Group has begun selling chargers, mainly at some of its luxury brand stores. Zanchin Executive Vice President Andria Zanchin said her company is buying the chargers straight from the manufacturers.
“I think it’s convenience for the customers, more than anything,” said Zanchin. “We know it’s not a good ownership experience if they are buying an electric vehicle and don’t have their own charger at home. Nobody wants to be waking up in the morning thinking ‘I’ve got to go find a charger to plug into for five hours.’ As (the industry) gets into (selling EVs) more and more people purchase them, they will be more affordable.”
Zanchin said anti-theft products are becoming an item that people want because of the rise in auto theft in recent years.
“On certain models that we know are more prone to getting stolen, we will offer anti-theft (products),” said Zanchin. “Within that realm, there’s so many anti-theft (products) you can offer. It’s up to the dealership to vet who would be a good provider and a good fit for their particular vehicles. Some vehicles that are a little bit higher on the theft list, those are the ones that sell more anti-theft products.
“But you also have to be careful because there’s certain anti-theft systems that are very invasive with all the wiring and it could be a problem for warranty. You have to do your research. There’s a lot of thought that goes into it.”
There are also some dealerships that have developed businesses that are not directly related to auto retailing.
The 401 Group of Companies began in 2011 with CampMart, selling recreational vehicles. The company has expanded since then into becoming the largest RV business in Ontario with 11 superstores.
About four years later, the company branched out into automotive retail acquiring Tillsonburg Kia. In 2021, it added to its holdings with a powersport marina when it acquired Sudbury Yamaha in a package deal that also included Sudbury Mitsubishi. It now owns three powersports businesses. Overall, the company has 41 rooftops and represents more than 60 brands. It is also involved in selling auto financing.
“We happen to be one of those few companies that has a little bit of everything,” said 401 Vice President Ted Lancaster. “If you only have one business stream and something occurs within that business area that creates some financial challenges, your entire portfolio is challenged. If you diversify you have some balancing capability as an overall group to keep your financial stability in place.”
The company purchased a restaurant a few years ago near its headquarters in Cambridge and now has plans to build a hotel in Kanata.
“If the car market were to significantly take a dive, we have powersports, we have RV, we have the restaurant and soon the hotel that can keep our overall financial health in pretty good condition,” said Lancaster. “Likewise, if the RV market goes down, we have automotive. If traditional automotive goes down, we have subprime. We’ve got a balance across a number of different platforms and streams that allows us to keep our entire portfolio balanced and our books relatively strong.”
Alberta-based GoAuto is another major group in the retail automotive space that has a wide range of businesses, including insurance, in-house financing and the RV sector. Earlier this year, it entered into the grocery store / restaurant business with the launch of L’OCA Quality Market.
GoAuto Principal Jared Priestner said the new endeavour is something that interested him, more than just a diversification play.
“Within auto, we’re heavily diversified across pretty much every brand,” said Priestner. “Auto is a pretty big mature category. As interest and personal preference change, they may shift from one brand to another, but we think the car business is a really stable, long-term business.
“The food business would take quite an effort to build up the brand to be a rival to our car company because we’ve been working on this car company for 30-plus years and this is brand new. It would take quite a while to be a meaningful dent in our automotive earnings, but hopefully it will. It’s probably a decade away from that being a reality.”
The Yachimec Auto Group, also based out of Alberta, is another company that has several diverse businesses. It has multiple dealerships, two marine businesses, in-house vehicle financing and is involved in a worldwide paintball league and paintball broadcasts.
“The boat business is a luxury business, it’s not a need, it’s a want,” said Bart Yachimec, who is President/Owner of the Yachimec Auto Group and is a second-generation auto dealer.
“The car business is a need, so it’s a completely different animal. I grew up on a lake and getting into the boat business was just an opportunity that we saw and thought we could make money. Wizard Lake Marine was profitable. We went in and adopted a lot of the car business side to their business, everything from financing, structure, accountabilities, floorplans, banking systems, everything. The car business analyzes everything.”
The paintball business developed from an automotive meeting Yachimec attended in Hawaii in 2000. Yachimec took his family along for spring break and his two sons, Zane and Zach, played the sport and developed a passion for it and became professional players.
“It took over our lives,” said Yachimec, a one time professional hockey player.
Zane is involved in the boat business and Zack in automotive.
These are just a few examples that offer reminders that car dealers are the type of entrepreneurs that will always be adapting to market demand and seizing on new opportunities.
