Welcome to the Daily 5 report for Thursday, March 20.
Carvana Co., the behemoth national used-car retailer, is dipping its toe into the new-car business. They're calling the Feb. 28 acquisition of Jerry Seiner Chrysler-Dodge-Jeep-Ram in Casa Grande, Ariz., a "small test in a single market." The transaction didn't even yield a press release from the publicly traded company, meaning it wasn't big enough to merit a formal announcement.
So why do it? Here's the official Carvana statement our reporter C.J. Moore received when she asked for comment:
"We're always experimenting and this is a small test in a single market. We are excited to join the Stellantis network and our focus in this test will be learning how to provide great customer experiences at a franchise dealership — we don't expect it to have any noticeable impact to our results for the foreseeable future."
Moore's story today goes into more details about this "experiment," but so far the idea hasn't created much excitement from analysts and shares in Carvana have been fairly stable so far in March.
CarMax, the nation's No. 1 used-car retailer, once owned franchised dealerships but got out of the business in 2021 to stay focused on its core used-vehicle retail operations.
One analyst report said Carvana should do the same thing. Evercore ISI's analysts wrote that Carvana ran into trouble after the COVID-19 pandemic in part because it undertook several revenue capture opportunities that complicated its execution and focus.
"Our advice would be to stay laser focused on the consumer and adding value via their core used retail model," ISI's report said.
While Carvana experiments with new-car dealerships, AutoCanada is getting out of its U.S. retail business following a strategic review, as reported today by Automotive News Canada.
Executive Chair Paul Antony said in our story that efforts are "ongoing to secure a buyer" for the 10-location U.S. unit known as Leader Automotive Group. All the stores are in Illinois and most in the Chicago area.
"We think that the desirability for these assets will be strong, and we've made a decision to move on from the U.S. market," he told analysts on a conference call.
In other dealership acquisition news, Lithia Motors Inc. is getting out of West Virginia, selling three stores in Morgantown, near the Pennsylvania border, to Atlantic Coast Automotive Group, of Miami Lakes, Fla., according to our story today. Lithia declined to comment on why it sold the stores that it acquired in 2019, but Morgantown is home to West Virginia University, which has been cutting back on faculty and programs for the last few years.
Look for more dealership acquisition news in our report tomorrow.
Meanwhile, Reuters reported this afternoon that General Motors and Hyundai Motor Co. are expanding talks about sharing certain vehicles in various markets. Hyundai would share two electric commercial van models with the U.S. auto giant, the report said. In return, GM might provide Hyundai with pickups to sell under its own brand in North America. The story cites a source familiar with the talks and Hyundai documents reviewed by Reuters.
Finally, here's a word you rarely see in stories about UAW contract talks: Decertification.
The UAW organized the Volkswagen plant in Chattanooga a year ago, but there still is no contract. As Mike Martinez reports today, talks have dragged on for six months, and if the UAW fails to secure a labor contract by April 30, workers could call for a decertification vote to potentially boot out the union.
While labor experts say that's unlikely — there's no precedent for the UAW being removed from a U.S. automotive assembly plant — the specter of decertification could put more pressure on union bargainers to reach a deal, our story says.
"If it were a robust threat ... that might change the calculation," Marick Masters, a labor expert at Wayne State University in Detroit, told Automotive News. "But I think it's doubtful decertification would be a viable option."
That's it for now. Have a great rest of your day.
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— Philip Nussel, online editor
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