Auto dealerships continue to suffer from tight credit

Nov 14, 2009

The Canadian automotive retail sector was much stronger in the third quarter than in the first six months of 2009, but dealerships continue to take a beating from tight credit markets and vehicle sales incentives, according to AutoCanada Income Fund.

In a conference call with analysts this week, the dealership firm said overall Canadian sales of new vehicles were down six per cent in the third quarter, compared with a decrease of 18.3 per cent in the first six months of the year.

However, AutoCanada chief financial officer Tom Orysiuk said difficulty in selling financing and insurance to consumers, as well as declines in per-unit revenue, are hurting dealership owners like AutoCanada.

"This decrease is mainly due to tighter lending conditions due in part to the economic downturn," Orysiuk said.

Although Orysiuk acknowledged that credit markets are loosening a little bit, he said "it's not where it was a year ago, or a year and a half ago, by a long shot."

— The Canadian Press

Toronto Star