Large car dealership group looks to close all US locations citing cyberattack and Stellantis woes
Leader Automotive Group in Illinois recently announced it could close all 18 of its car dealerships. The company partners with 16 popular automotive brands, selling new and used models, including Chevrolet, Honda, Hyundai, Jeep, Kia, and Toyota cars. AutoCanada Inc. owns the group, and after Q2 performance revealed steep “inventory impairment” and other dealership issues, the company is looking to make swift and blunt corrective movements.
Interestingly, AutoCanada’s Canadian businesses reported a total net income of $2.4 million. However, its Canadian sector was far from remedying the massive $35.5 million Q2 loss reported by its U.S. dealerships.
AutoCanada officials cited a number of problems plaguing U.S. operations in 2024, the U.S. Sun reported. The Executive Chairman and CFO mentioned $12.7 million in used-inventory impairment. In simple terms, the current market value of its used cars was far below formal balance sheet entries. Consumer demand and market fluctuations can cause this, for instance. In some cases, a natural disaster or even theft also leads to inventory impairment.
In addition to lowered inventory valuation, executives mentioned high internal dealership expenses in the U.S., such as management and floorplan costs.
The June CDK Global cyberattack made things much worse for Leader Automotive Group. For two weeks, its systems were down, tanking sales and causing a 15-20% blow to expected revenue.
AutoCanada officials also specifically called out its Stellantis dealerships. Stellantis brands marketed stateside include Chrysler, Dodge, Jeep, and Ram. This year, Stellantis suffered such poor performance that the automaker made steep U.S. job cuts, with more possible here and across seas. Shareholders are now suing the OEM over alleged misrepresentation of its financial projections.
Due to what the Executive Chairman called “economic uncertainty,” AutoCanada plans to halt all mergers and acquisitions, stop discretionary spending, and review all unprofitable businesses. That means 18 dealerships in the U.S. are on the chopping block.
