Dealer Groups

Sonic sets used retail record, turning nearly 31K units

CHARLOTTE, N.C. - 

As Asbury Automotive Group chose to leave its standalone used-car store business, Sonic Automotive’s dedicated used-vehicle rooftops are adding so much to its performance that the company is expanding the segment.

Sonic highlighted on Friday that it retailed a record number of used vehicles during the second quarter, turning 30,536 units that contributed $40.0 million in gross profit.

Of that Q2 figure, Sonic’s standalone used stores — EchoPark — retailed 2,049 units, up 80.4 percent over the prior year quarter. As a result, Sonic announced that it is accelerating an expansion of an additional 15 EchoPark stores by the end of 2018.

“Given our performance at EchoPark, we are accelerating our expansion into the Carolinas, Florida, Georgia and Texas markets. Our Colorado stores were cash flow positive in the quarter. Currently, we have more than 15 locations in the aforementioned markets that will break ground in 2017 and 2018,” Sonic executive vice president of operations Jeff Dyke said in a news release.

Sonic shared plenty of other noteworthy accomplishments, including:

—All-time record quarterly fixed operations gross profit of $173.1 million, up 2.9 percent over the prior year quarter

—Record Q2 F&I gross profit and gross profit per retail unit of $86.9 million and $1,379, respectively

—Record Q2 total gross profit of $360.6 million, up 2.1 percent over the prior year quarter

On the new-car side, Sonic retailed 32,466 units during the second quarter, down from 33,229 units a year earlier.

“The new-vehicle retail sales environment continues to be challenging in Houston and across certain brands,” Dyke said. “Our exposure to BMW, coupled with economic conditions in Houston's energy corridor, pressured sales and profitability in the second quarter. 

“On a same-store basis, our new vehicle unit sales declined 3.0 percent compared to the prior year quarter,” he continued. “This decline was slightly higher than the overall SAAR decline of 2.9 percent.”

Dyke then turned back to where Sonic thrived during the second quarter.

“Other parts of the business, however, continue to experience growth. We were able to grow used vehicle, fixed operations and F&I (finance and insurance) gross profit during the quarter, which is a testament to the dealer operating model,” Dyke said. 

“In addition, our operations and financial management teams have been busy during the quarter adjusting our cost structure in various areas to compensate for increased competition that has pressured margins,” he went on to say. “We expect this highly competitive retail landscape to continue and possibly intensify over the next several quarters as dealers balance volume and gross per unit expectations.”

Sonic also reported that net income from continuing operations for the second quarter came in at $12.3 million, or $0.27 per diluted share. These results include charges related to fixed asset impairments, weather-related physical damage costs, legal matters, and charges associated with closing and relocating stores. 

“Our activities in the quarter continue to support our long-term growth strategies,” Sonic chief executive officer Scott Smith said. “During the second quarter, we opened our new open point Audi store in Pensacola, Fla., and our sixth EchoPark store in Colorado. We believe these investments will offer strong earning streams as the underlying businesses mature. 

“Year to date, we also invested approximately $30 million returning capital to stockholders through dividends and share repurchases,” Smith continued. “Our facilities teams have been extremely busy as well, evidenced by the $121 million invested in capital expenditures during the first half of 2017. 

“We are committed to offering the best customer buying experience in the industry, which includes state-of-the-art facilities at both our franchised dealerships and EchoPark stores,” he went on to say.

Group 1 sets F&I gross profit per unit mark

HOUSTON - 

Group 1 Automotive established a new record gross profit per unit through its F&I department during the second quarter. But softened used- and new-vehicle sales in areas where the bulk of its dealerships are located — Texas and Oklahoma — left a significant impact on the dealer group’s top-line performance.

According to its latest financial statement released on Thursday, on a same-store basis, the company’s U.S. revenues came in at $2.1 billion in Q2, a year-over-year decrease of 2.7 percent. Total same-store gross profit was essentially flat. Group 1 explained the revenue decrease reflects 5.7 percent and 4.9 percent declines in same-store retail new and used unit sales, respectively.

Group 1 stores retailed a 25,202 used vehicles in Q2, down from 26,856 units during the same quarter a year earlier. The dealer group wholesaled 2.4 percent more vehicles in Q2, sending 9,701 units through those channels. That’s up from 9,476 units in the year-ago period.

As mentioned, Group 1 stores generated a 5.4 percent or $86 increase in F&I gross profit per unit to post a new company record at $1,688.

And while U.S. same-store parts and service revenue increased 5.6 percent, “these factors were not enough to offset ongoing weakness in vehicle sales in our energy-price-impacted markets. Combined new and used sales dropped 7 percent in the quarter for our Texas and Oklahoma stores,” said Earl Hesterberg, Group 1’s president and chief executive officer.

“Our single largest market of Houston was extremely volatile in the second quarter, with Houston total industry auto sales dropping 24 percent in June after an increase in May,” Hesterberg continued. “Group 1's Houston sales only decreased 12 percent in June, but this is indicative of the headwinds we continue to face in much of Texas and Oklahoma.”

In other company news, Group 1 also announced it has acquired its first Jaguar and Land Rover dealerships in the U.S., which are located in Albuquerque and Santa Fe, N.M. Management indicated the stores have projected annualized revenues of $40 million.

The addition of these two stores expands the company's global network to seven Land Rover and seven Jaguar franchises. The dealerships, which operate as Jaguar Land Rover Albuquerque and Land Rover Santa Fe, are the only Jaguar and Land Rover dealerships in the state of New Mexico, and expand the company’s presence to 15 states in the U.S.

Data analytics provider enhances reporting software to save dealers time & clicks

PLEASANTON, Calif. - 

Dashboard Dealership Enterprises has redesigned its business analytic reporting suite for increased functionality using input from dealer clients.

Executive Eye 3.0, the latest version of Dashboard’s flagship product, offers a variety of graphic display options designed to help dealers easily navigate the program.

New visual enhancements include updated colorful themes, more white space and increased organization.

"Reporting has always been clunky, time consuming; often it’s difficult for dealers to understand how numbers translate into actionable data," Dashboard Dealership Enterprises chief executive officer Josh Blick said in a news release. "Executive Eye 3.0 is a groundbreaking tool that completely changes the paradigm of how a business analytic reporting tool can be used. Instead of spending time compiling reports, managers instantly have actionable data at their fingertips."

In beta testing, Executive Eye 3.0 exhibited a 30 percent increase in dealership usage compared to an average usage of 2.0, according to Dashboard.

The suite’s direct messaging capabilities allow dealers to communicate directly with Dashboard's customer support and other users. The messaging tool’s reports, alerts and comments can all be shared without the need to compose emails outside of Executive Eye.

Additionally, Executive Eye’s Consolidated Doc report allows dealers to instantly combine documents from individual stores into a single report.

Dealers interested in performance comparison can also view key performance indicators from each of their stores side-by-side.

Executive Eye 3.0 is mobile-friendly across all platforms and devices. A mobile application download is not needed to access the software on a mobile device.

Asbury to discontinue Q auto used-car business

DULUTH, Ga.  - 

Asbury Automotive Group will be exiting its Q auto used-car standalone store business, chief operating officer David Hult said on a quarterly conference call Tuesday morning.

A company spokesperson said via email that the closing process began at its two remaining Q auto stores — which are located in Brandon, Fla., and Tampa — on Monday.

Most likely, Asbury will sell the physical properties. As for the inventory at those stores, the dealer group plans to distribute it to other Asbury stores, the spokesperson said.

The company is “currently attempting to reposition employees to other areas within our organization,” the spokesperson said.

During Tuesday’s call, Hult said the closure of Q auto does not mean the group is slowing down its emphasis on used vehicles.

“With our investments in digital technologies and lead management initiatives, we have reassessed our brick-and-mortar investment in Q auto and made the decision to exit the remaining two locations,” Hult said. “With this decision, we are not decreasing our emphasis on used-vehicle sales.

“Rather, we are focusing our investments and resources on alternative routes to market that we believe will provide a superior return,” he said. “Our attention to the used-car business is evident by the more than 500 basis point-increase in our used-to-new ratio this quarter.”

In the Q&A portion of the call, chief executive officer Craig Monaghan downplayed the financial impacts associated with the used-car standalone store project.

“The financial impact (of Q auto) in the quarter was immaterial; the financial impact going forward of not having Q auto will be immaterial,” he said.

Despite Asbury not being able to pull down “an attractive ROI” from Q auto, Monaghan said the company does not regret making the investment.

“I think it was something that we had to try,” he said.

Monaghan went on to note two primary learnings the retailer took away from the Q auto project.

“One is, it’s all about where you source your inventory,” he said. “And if you’re going to auction to buy a car, you’re the last one with your hand up. And that’s not a situation we wanted to be in. We really have come to the conclusion that we can move our traded vehicles to our stores as effectively or more effectively than we can move them to an off-site location.

“And secondly, we learned that a lot of those buyers are going to be subprime buyers,” Monaghan said. “And that without the captive finance company, running a standalone used-vehicle operation, you are somewhat at a disadvantage.

“We decided strategically that we did not want to be in the business of lending money to used-car buyers,” he said. “And take that all together, we’ve made the decision to exit the business.”

Enhanced online used-car parts marketplace launches

FLORENCE, Ala. - 

PartCycle Technologies recently introduced an upgraded online used-car-parts platform (PartCycle.com) designed to give dealers an efficient way to get the parts they need for their service/parts customers.

The company offers an online recycled auto parts marketplace. 

In a news release, the company gives the example of University Toyota in Tuscumbia, Ala.,  which since integrating PartCycle into its service operations, has been able to make more service transactions.

The dealership credits PartCycle’s offerings for its recent growth because they have been able to get quality low-cost OEM parts options, and that pleases customers.

"We see customers who need to fix their car, but simply cannot afford the new part cost," University Auto Family fixed operations director Owen Kilmury said in a news release.

"Some customers have had to forego the recommended repair service because of part cost. PartCycle allows a dealership to retain a customer that we otherwise would have lost due to the price of certain new parts. The customer gets a quality part, at a fraction of the price, and the dealership retains a customer that otherwise would have been lost," he said.

PartCycle currently has over 4 million parts in stock and carries an inventory sourced from 55-plus professional automotive recycler locations across the U.S.

"We get all the options we need in a single PartCycle search," said parts manager Chris Britt of University Toyota. "I've spent the better part of a day just waiting on callbacks for parts, but with PartCycle I find what I need quickly and easily, then can include those options in customer quotes. Then they can get what they need for their vehicle."

Additionally, PartCycle currently offers free shipping, standard 180-day warranty coverage and 30-day returns on all parts.

eAutoAppraise enhances valuation transparency with Black Book

LAWRENCEVILLE, Ga. - 

Black Book now serves as the trade appraisal engine for eAutoAppraise, an online trade-in solution fitted with vehicle shopping features designed to lead dealers to more successful sales transactions.

All eAutoAppraise dealers can now provide customizable value ranges on specifically tailored vehicle questions powered Black Book values.

Ranges are narrowed down following a series of questions answered by the customer about the details of their vehicle trade.

"We're excited to partner with eAutoAppraise, a superior online appraisal engine that offers dealers a chance to close more deals quicker, and make strong profit margins," Black Book senior vice president of sales Jared Kalfus said in a news release. "An accurate valuation on a trade is a key component to the car-shopping experience, and customers that come equipped with a more narrow number in mind have a better experience at the dealership."

Additionally, eAutoAppraise’s office suite also offers dealers values, special offer banners and direct mapping to specific dealerships for geo-targeting.

"Our mission is to provide dealers with the best leads possible for increased sales, and to serve as the catalyst for simple vehicle sales transactions," Barry Brodsky, managing partner of eAutoAppraise, said in the release.

"The vehicle trade appraisal component is extremely crucial to any new vehicle transaction, and with Black Book powering our valuation process we're confident that we can offer up an experience that will increase customer satisfaction online and at the dealership," he said.

Sheehy raises $285K for American Heart Association

FAIRFAX, Va. - 

Sheehy Auto Stores recently announced that it raised a record donation of $285,000 to give the American Heart Association this summer.

The company made the donation as part of its annual Sheehy 8000 campaign, a community-wide effort from May 12 to July 5, where Sheehy dealerships sold a combined total of over 8,000 new and used vehicles in efforts to raise the annual donation.

In addition to raising funds and awareness for the American Heart Association, the 54-day campaign also included community events such as heart-healthy cooking, food and CPR demonstrations.

"This year was a milestone for us and we are grateful for the support from our customers, communities and team members that have made this campaign such a success," Sheehy Auto Store president Vince Sheehy said in a news release.  "We are proud to support such a great organization that does so much to educate and help prevent the risk of heart disease and stroke."

For several years, Sheehy has also been a sponsor and active partner at the American Heart Association’s National Walking Day event held on the first Wednesday in April at Springfield Town Center. 

Additionally, this year, each of Sheehy's dealerships hosted individual step challenges between employees on the day of the event, according to the company.

"We are so grateful to the Sheehy Auto Stores family, their partners and customers for another record-breaking year,"  Michelle Nostheide, vice president of the American Heart Association, said in the release.

"The funds and awareness raised during the Sheehy 8000 will go a long way in furthering our life-saving mission in our communities," she said.

Last year's annual campaign, the Sheehy 7000, raised $225,000 for the charity. According to Sheehy, it has collected a total of over $40 million on behalf of both community and non-profit organizations since its inception.

Cox presents Rising Star Award to 1st woman

ATLANTA - 

In partnership with the National Association of Minority Automotive Dealers, Cox Automotive awarded its Rising Star Award to a Kentucky general manager, in honor of her leadership and commitment to both the automotive industry and her community.

Chosen for the award is Wadette Bradford of Martin Kia, in recognition of her work expanding the brand recognition and profit margins of both new and well-established dealerships.

Cox Automotive senior vice president of talent, diversity and culture Nicole Ashe presented Bradford with her award at the NAMAD annual meeting awards dinner in Miami on Thursday.

In her role as general manager, Bradford has increased inventory turns, developed innovative digital marketing campaigns and increased service gross profit, according to Cox Automotive.

“On behalf of Cox Automotive and in partnership with NAMAD, I am honored to recognize Wadette for her phenomenal achievements in automotive,” Ashe said in a news release. “Wadette is aspiring to be a franchise dealership owner-operator, and with her enthusiasm and passion for the automotive industry, I am confident that she will achieve that goal.”

Prior to Martin Kia, one of Bradford’s significant career achievements was building an enterprising partnership with business leaders around Lexus of Huntsville, an Alabama dealership where she began her career.

Under the leadership of her first mentor, Ellenae Fairhurst, Bradford established a client relationship to secure a multimillion-dollar contract which resulted in record pre-owned gross profit and unit sales, according to Cox.

“I am honored to be the first woman to receive this prestigious award,” said Bradford. “My role model, Mrs. Ellenae Fairhurst, a Lexus dealer in Alabama, gave me the foundation for my success with my first management job, for which I will be eternally grateful. Ms. Amber Martin’s keen business acumen to recognize talent afforded me the opportunity to sharpen my skills as general manager with the Martin Management Group. As we continue to surge forward growing the business, claiming new market share, increasing our support of the community and our profitability, my hope is to inspire other women to join the automotive industry.”

Bradford was chosen for the Rising Star Award based on nomination criteria such as being an NAMAD member under the age of 40 showing proven leadership qualities in the automotive industry.

She is a member of the Kentucky Auto Dealers Association, the American International Automobile Dealers Association Rising Dealers Network and NAMAD NextGen. In Frankfort, Ky., she participates in the Kentucky Auto Dealers Association’s Lobby Day which aims to educate legislature about issues that affect consumers, dealers and their employees.

Bradford also lobbies in Washington, D.C., on Capitol Hill with the American International Automobile Dealers Association.

Additionally, in her community, Bradford is a member of the Bowling Green Chamber of Commerce Young Professionals and United Way.

In 2010, Bradford graduated from the National Automobile Dealers Association Academy at the top of her class.

She holds a bachelor’s degree from Alabama A&M University and a master’s degree from the University of Alabama in Huntsville.

In Bradford’s honor, Cox Automotive is donating $5,000 to one of its national diversity partners chosen by her.

She chose the National Urban League, a non-profit organization with a mission of empowering African-Americans through economic self-reliance, parity, power and civil rights.

NY asset management firm acquires 10-store Pittsburgh dealer group

NEW YORK - 

Another large dealership group in Pittsburgh is going through a change in ownership.

A little more than a month after Lithia Motors expanded its operations by securing Baierl Auto Group, GPB Capital announced on Monday that the New York-based asset management firm has acquired a majority stake in Kenny Ross Automotive Group, which operates 10 dealerships in the Pittsburgh metropolitan area.

GPB Capital purchased the majority ownership as part of a recapitalization of nine of Kenny Ross Automotive Group’s dealerships. Terms of the deal, which closed on June 27, were not disclosed.

“Kenny Ross Automotive Group has a meaningful history and solid reputation in Pittsburgh, and their successful dealerships serve as the ideal platform for us to grow our industry presence in western Pennsylvania,” said Manuel Frederico Vianna, managing partner with GPB Capital.

“The franchised auto dealer industry was the largest retail business in the U.S. in 2016, and we are eager to begin working with the Ross family to maximize the potential of these franchises,” Vianna continued in a news release.

The Kenny Ross Automotive Group portfolio includes franchises representing Buick, Cadillac, Chevrolet, Ford, GMC, Mazda, Nissan, Subaru and Toyota.

“Our family has been privileged to serve our friends and neighbors in Pittsburgh for more than 60 years, and we look forward to working closely with GPB Capital to achieve our long-term goals as we enter the next phase of our growth,” said Jimmy Ross, chairman of Kenny Ross Automotive Group.

“GPB Capital is a natural partner for us because their team shares our commitment to our customers, our business, and meeting the needs of local customers and families,” Ross added.

Jeff Lash, Brian Marshall, Brian Brown and Stephen Jones of GPB Capital led the transaction on behalf of the firm. The Presidio Group provided M&A advisory services to Kenny Ross Automotive Group through its wholly owned investment bank, Presidio Merchant Partners.

Jimmy Ross has led the company his father founded in 1954 through 16 dealership acquisitions, and has accumulated more than 40 years of automotive retail experience in the Pittsburgh market.

“We look to partner with proven portfolio companies in order to provide capital and management expertise that enable them to achieve the next level of growth and profitability," said David Gentile, founder and chief executive officer of GPB Capital.

“We focus on income-producing private equity, and Kenny Ross Automotive Group’s proven management team and successful track record are great examples of the key acquisition criteria we look for in every deal that we pursue,” Gentile went on to say.

Lithia’s move was of a similar scale as Baierl operated Acura, Cadillac, Chevrolet, Ford, Honda, Kia, Subaru and Toyota franchises.

Lithia anticipates used-car growth from Q2

MEDFORD, Ore.  - 

Based on preliminary results released Wednesday, Lithia Motors is expecting its same-store used-car unit sales to have increased 4.6 percent in the second quarter.

Meanwhile, Lithia is anticipating a 3.8-percent to 4.1-percent increase in used-vehicle retail same-store sales.

All this part of a quarter where early indications have Lithia’s net income finishing between $51.5 million and $53 million in the second quarter (compared to $51.4 million a year ago) and revenue projected to reach somewhere between $2.425 billion and $2.475 billion, according to the company.

The retailer may also broaden its presence soon.

“We grew revenue and adjusted earnings per diluted share by double digits as our results exceeded our internal projections in the second quarter. Our store leaders continue to modify their tactics in this dynamic market and produced strong results in retail used vehicle sales, service and parts and F&I,” Lithia president and chief executive Bryan DeBoer said in a news release.

“The acquisition market remains active and we believe this is an opportune time to access additional capital for growth,” he said. “We seek greenfield-like returns on our acquisition targets and anticipate further activity in the near future.”

A full run-down of the forecast can be found in the news release from Lithia.  Complete results will be announced on July 28.