AutoCanada deal could be sign of things to come

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EDMONTON, ALTA. – A deal inked earlier this month between AutoCanada Inc. and General Motors could mark a significant shift in the country’s dealership ownership structure as the publically traded dealership group now counts a Chevrolet store in its fold.

AutoCanada officially obtained approval from GM to purchase a 31 per cent non-voting equity interest in Edmonton’s Nicholson Chevrolet. This marks the first time the automaker has permitted a publicly traded company to take an ownership stake at one of its stores.

“This investment, AutoCanada’s first with a GM Canada dealership, represents a significant milestone for the company,” AutoCanada chief Pat Priestner said in a release. “Chevrolet is a very significant brand in the Canadian automotive landscape and we are extremely pleased that GM Canada has agreed to accept AutoCanada as a part of the GM family.”

The company said Priestner and other senior company executives would own a holding company with a 51 per cent stake in Nicholson Chevrolet. Priestner would retain 100 per cent of the voting shares of the holding company.

AutoCanada currently operates 24 franchised dealerships across six provinces. The company sells Hyundai, Mitsubishi, Nissan, Subaru, Volkswagen, Infiniti and the entire Chrysler family.

Though early in the process, the deal could signal a change in policy for some automakers that have been resistant to publically traded dealership groups owning franchises in Canada. The GM purchase follows on the heels of the April 20 announcement that Kia would award AutoCanada an open point dealership in Edmonton.

There has been no official word from GM that it has changed its ownership policies.

AutoCanada said it would now be “actively seeking” additional GM stores, noting with “respect to any future GM dealership acquisitions outside the Sherwood Park area, we will seek to acquire a 100 per cent ownership interest, in which AutoCanada would purchase an 80 per cent non-voting equity interest,” with Priestner and other senior managers buying a 20 per cent equity interest.

Nicholson Chevrolet has been serving the Edmonton and Sherwood Park area for over 39 years. The store sold 755 new and 307 used vehicles in 2011.

Last year, AutoCanada dealerships said it sold approximately 28,000 vehicles and processed approximately 300,000 service and collision repair orders in 333 service bays.