Lithia’s Canada entrance ‘just the start’

Lithia will “try to build on this momentum and continue to do deals in Canada,” Kerrigan said. “And I certainly don’t see them taking their foot off the gas pedal here in the U.S.”

Indeed, Lithia has made it clear that it will continue to add U.S. dealerships, targeting a goal of 500 stores, nearly double its current count of 263. DeBoer also has expressed interest in expanding to the United Kingdom and Australia.

“Those are a little less relevant at today’s date,” DeBoer said in July. “Those are probably two to five years out, kind of where Canada was a few years ago.”

For U.S. dealership groups, Canada may present opportunities particularly in used-vehicle and digital sales.

Publicly traded used-car retailers such as CarMax and Carvana, which have provided stiff competition for U.S. dealership groups, don’t operate in Canada.

And the cost of doing business is perceived as generally lower for a dealer in Canada than in the U.S., Richardson said.

Lithia and other U.S. groups will see benefits in purchasing underperforming groups, especially those yet to fully embrace digital retail, Richardson said.

Larger groups could take the underperformers and make them more efficient and therefore more valuable.

“There’s more upside and opportunity with those particular groups,” Richardson said.

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