Dealer Groups

LHM dealers raise $23,500 in school supplies for Colorado students

DENVER - 

Larry H. Miller Dealerships announced Wednesday that it collected nearly $23,500 in school supplies during the company’s “Stuff for Students” campaign this summer.

 Throughout August, 11 participating LHM dealerships’ stuffed a vehicle with much-needed school supplies.

In partnership with 9News, Volunteers of America Colorado Branch (VOA) and other business partners, the company collected enough supplies to benefit 60,000 students last month.

“We are fortunate to have a great team of partners like Larry H. Miller Dealerships who come together to support 'Stuff for Students' every year,” Volunteers of America Colorado Branch director of volunteer programs Bradley Gulley said in a news release.

“Thanks to the donations from Larry H. Miller Dealerships, their employees, and their customers, families can focus on school and not the financial burden of the cost of school supplies. These contributions will make a real difference in the communities we serve,” he continued.

Since 2015, LHM has donated an estimated $50,000 in school supplies, according to the group.

The cost of school supplies continues to increase and parents can often spend over $900 on supplies for a high school-aged student, according to VOA.

In the counties served by VOA, approximately 23 percent of the 743,255 students live in poverty, compared to the state average of just 14.7 percent, the organization said. 

The supplies from the “Stuff for Students” campaign go to students within more than 15 school districts who are in low-income households or homeless.

Additionally, just before the school year began for students, LHM also gifted a $5,000 grant to Operation Outreach-USA at Coronado Hills Elementary School to provide 450 books. The program aims to improve reading proficiency among students in kindergarten through fourth grade in low income and poor-performing schools.

CarMax kickstarts customer appreciation months for dealers

RICHMOND, Va. - 

As part of CarMax Auctions Customer Appreciation Months for registered dealers, customers can look forward to upcoming events filled with catered meals and giveaways.

Customer appreciation events are set to take place at each of the company’s 73 auction locations throughout September and October.

CarMax Murrieta, the company’s largest auction facility on the West Coast, in Murrieta, Calif., will host its inaugural customer appreciation event on Oct. 30. CarMax opened the new facility earlier this year.

The auction is anticipating an estimated 400 plus visitors to attend the inaugural event, according to CarMax.

“We look forward to celebrating our customers who have supported us since we opened our auctions facility in February,” CarMax Murrieta auction services location general manager Carlos Raygoza said in an email. “We value these relationships and are excited to hold this event in their honor.”

Additionally, CarMax Auctions are open to dealers only, and sales are held in a live, open bidding format.

Click here for a full schedule of events sorted by auction location.

Morrie’s Auto to open 5 new locations in Minn. & Wis.

MINNETONKA, Minn. - 

Morrie’s Automotive Group announced Wednesday plans to expand in the Midwest with the addition of five new locations and six new brands.

The new dealerships, which will be located in Minnesota and Wisconsin, will be opened by the end of 2018.

New locations will include:

  • Volkswagen La Crosse and Audi Lacrosse in La Crosse, Wis.(opening September)
  • Mercedes of St. Paul in Maplewood, Minn. (opening October)
  • Lincoln of West End in St. Louis Park, Minn. (opening January)
  • Jaguar Richfield and Land Rover Richfield in Richfield, Minn. (opening late 2018)
  • West Bend Honda in West Bend, Wis. (opening late 2018)

“Through this expansion we’re not just adding new dealerships, we’re bringing new jobs to our communities, adding trusted brands to our portfolio and introducing the Morrie’s Buy Happy approach of vehicle ownership to car buyers across Minnesota and Wisconsin,” Karl Schmidt, Morrie’s Automotive Group chief executive officer, said in a news release. “Our goal is to enhance the ownership experience and bring an evolved approach to doing business that today’s car buyers expect.”

Morrie’s growth will bring more than 225 new jobs and various development opportunities for current employees, according to the group.

Dealers embrace solar energy technology with SunPower

SAN JOSE, Calif. - 

Solar technology provider SunPower is now working with dealerships across the country to put empty rooftops and parking lots to better use with cost-saving, high-efficiency solar energy systems.

In addition to producing enough energy to significantly curtail dealership's electricity costs, SunPower said systems serve a dual purpose because solar panels can also protect what’s beneath them, such as roofs or a fleet of vehicles.

"It's no surprise that an increasing number of auto customers find solar to be a reliable, effective way to reduce electric bills while freeing up operating capital and improving their environment with emission-free energy," SunPower executive vice president Nam Nguyen said in a news release. "Through relentless innovation, SunPower has created smart, simple, and cost-effective solar systems that allow businesses in any industry maximize their investment, earning more savings over time."

In Minnesota, SunPower dealer Energy Concepts sold, designed and installed 454 kilowatts of solar across 10 locations of Luther Auto Group.

The group’s combined installations are projected to generate more than $2.1 million in electricity cost savings over 25 years, according to SunPower.

"Solar just makes good business sense in today's energy environment, and has become integral to many of our facilities' energy-efficient designs," said Linda McGinty, vice president of real estate at Luther Auto. "Over the last five years, we've worked with Energy Concepts to install over 450 kilowatts of high-efficiency SunPower solar at 10 of our dealerships across Minnesota, and have seen significant energy savings as a result."

Covert Auto of Texas currently has 125.6 kilowatts of solar installed on the roofs of the group’s Ford and Chevy dealerships in Hutto.

SunPower said the systems are expected to yield over $500,000 in energy savings over 25 years and meet 53 percent of Covert Auto’s current electricity needs.

Additionally, in Colorado, SunPower dealer Independent Power Systems installed more than 50 kilowatts of rooftop solar at Boulder Nissan.

When combined with the dealership's recent upgrade to LED lighting, the system currently meets 20 percent of Boulder Nissan’s electricity needs. The system is expected to generate $384,000 in energy savings over 25 years, according to SunPower.

"It's inspiring to help auto dealers see a return on their solar investment in five to seven years, with some becoming cash-flow positive in as little as one month," said Ryan Ferrero, chief executive officer of Ignyte Lab which partnered with Independent Power Systems. "When we can show auto dealership owners the financial benefits of using renewable energy and adopting sustainable business practices, high-quality solar energy solutions end up selling themselves. And with more than 17,000 new car dealers across the U.S., there's a huge opportunity to help more in the industry save on electricity costs with solar."

In addition to car dealers, SunPower also works with automakers like Toyota. At the Toyota Motor North America's new headquarters in Plano, Texas, the company said it is currently working with Toyota to install an 8.79-megawatt system that is expected to be the state’s largest corporate office on-site solar installation of a non-utility company.

Harvey numbers: 49 inches of rain, 366K new models potentially impacted

CARY, N.C. - 

With now Tropical Storm Harvey taking at aim at Louisiana and other locations inland after dumping 49 inches of rain near Houston, experts from Cox Automotive and Edmunds are looking to project how much this natural disaster is going to impact vehicle sales.

Meanwhile, the National Independent Automobile Dealers Association is organizing a fundraising effort to help people impacted.

Perhaps Edmunds executive director of industry analysis Jessica Caldwell summed up the entire situation when she stated, “Harvey is an unprecedented storm and it’s going to take time to fully comprehend exactly how much it will impact the automakers.

“Texas is the second largest auto market in the U.S. so an event of this magnitude is going to make a dent in sales,” Caldwell continued. “Edmunds estimates 2 percent fewer vehicles will be sold in August due to Harvey, with declines likely continuing into early September.

“In subsequent months we’ll likely see a slight localized bump in sales as the recovery takes hold and people are able to buy replacement vehicles,” she added.

Edmunds estimated there are approximately 366,000 new vehicles on dealer lots in Texas that could be affected by Harvey. Caldwell pointed out many of these vehicles are high-profit trucks and SUVs, “so the automakers will feel a slight pinch, at least in the immediate term.”

Edmunds projected there are between 150,000 and 200,000 units of new inventory that could be affected in the areas hardest hit by Harvey in the Texas cities of Austin, Beaumont, Port Arthur, Corpus Christi, Houston and San Antonio.

Edmunds added that Texas makes up 9 percent of U.S. retail sales and is the No. 1 truck market, accounting for 14 percent of all full-size truck sales so far this year.

To put that metric into perspective, analysts tabulated one out of every five vehicles sold in Texas so far in 2017 was a full-size truck.

Texas is the top sales market for Ford, RAM, GMC, Cadillac and Mitsubishi, according to Edmunds’ data.

Over at Cox Automotive, chief economist Jonathan Smoke uncovered information throughout the company’s portfolio of service providers, including Autotrader, Dealer.com, Dealertrack, Kelley Blue Book, Manheim, NextGear Capital, vAuto and Xtime.  As a result, Smoke indicated Cox Automotive revised its August new-model forecast of 16.6 SAAR to 16.3, based on the hurricane and its aftermath delaying the turns of 20,000 to 40,000 new vehicles.

“However, September will likely get a mild boost from delayed purchases and the beginning of the market’s recovery, driven by the need to replace damaged vehicles,” Smoke said. “That process will likely last months, pushing higher sales in the region in 4Q. We are looking at impact to full-year SAAR. Initial estimates indicate a potential net improvement on full-year sales once replacement sales pick up in earnest.”

Federal officials said on Tuesday that they obtained a reading of 49.32 inches of rain being recorded at a location southeast of Houston. Officials said Harvey is expected to produce additional rainfall accumulations of 6 to 12 inches through Friday over parts of the upper Texas coast into southwestern Louisiana as the storm is projected to move further inland into Tennessee, Kentucky and West Virginia this weekend.

“A Texas-sized storm requires a Texas-sized response, and that is exactly what the state will provide,” Texas Gov. Greg Abbott said. “While we have suffered a great deal, the resiliency and bravery of Texan’s spirits is something that can never be broken. As communities are coming together in the aftermath of this storm, I will do everything in my power to make sure they have what they need to rebuild.”

And NIADA is looking to help with the rebuilding effort.

The NIADA Foundation has established an emergency relief fund to provide a venue for members of the National Independent Automobile Dealers Association to assist fellow dealers and others in the automotive community devastated by the effects of Hurricane Harvey.

Steve Jordan, CEO of NIADA and president of the NIADA Foundation Board of Trustees, said 100 percent of all contributions received will be donated to provide relief from the effects of flooding, help repair property damage and assist with other disaster-related needs attributable to the catastrophic weather event that struck Houston and other areas along the Texas coast.

Jordan said the foundation's goal is to raise $100,000 for the fund.

Donations will be made in collaboration with the Texas IADA – NIADA’s state affiliate – and will be considered on a case-by-case basis as identified through the collaborative disbursement relationship.

“We are committed to helping our friends and colleagues in the automotive industry get through this trying time,” Jordan said. “Our thoughts and prayers go out to all those affected or displaced by this massive storm.”

The NIADA Foundation is a non-profit 501(c)(3) charitable organization that serves as the focal point of NIADA’s charitable efforts and coordinates the association’s charitable giving. Individuals can contribute by going to this page.

While region residents still are dealing with the storm, Smoke uncovered that they aren’t necessarily shopping for or taking delivery of vehicles.  

Since the storm came ashore this past weekend, Smoke noticed Dealer.com websites in the market have seen an almost 40-percent drop in vehicle shopping research compared to the previous weekends in August.

“This is a significant number as Dealer.com powers over 60 percent of dealer websites,” Smoke said.

Smoke noticed an even steeper drop in Dealertrack business within where Harvey dumped rain.

“Our Dealertrack credit application system has experienced a roughly 80-percent drop in activity in the affected area. Since most cars are financed, that’s an 80-percent drop in business since the storm came ashore Friday,” said Smoke, who also pointed out that 80 percent of U.S. franchised dealers use Dealertrack to submit credit applications electronically to finance companies.

Activity intensifies as more buyers, sellers enter market

FORT LAUDERDALE, Fla. - 

A day after Kerrigan Advisors shared its latest report about dealership buy/sell activity, Haig Partners released its own analysis on this topic on Tuesday, explaining how action ramped up in the second quarter after getting a bit of a slow start at the beginning of the year.

The Haig Report indicated the number of dealerships sold in the U.S. during the second quarter increased to 66 rooftops from 62 rooftops during the same timeframe last year.

Year to date, Haig Partners calculated the number of dealerships sold in the U.S. has declined 17 percent from the same period in 2016, from 175 to 146, due to a particularly weak period of dealership sales in Q1.

While the total number of rooftops trading hands declined during this period, the firm insisted the amount of money spent by the publicly traded retailers on dealerships in the U.S. has increased sharply in 2017.

Through June 30, the report noted the publicly traded retailers had spent $538 million on U.S. dealerships, an increase of 91 percent from the $282 million spent in the same period in 2016.  

Lithia Motors was the most active of the publicly traded companies and continues to target underperforming large platforms in different parts of the U.S.

The report also highlighted profits at privately owned dealerships for the 12-month span that ended June 30 softened by 2.1 percent versus a year earlier to rising costs. 

Values of privately owned dealerships also fell 2.1 percent during this period, according to the Haig Report. Haig Partners’ franchise blue sky multiples were unchanged in Q2 from Q1.

Continuing the trend from 2016, the firm mentioned demand for dealerships shifted from luxury brands to mainline import and domestic brands that are heavier in trucks and SUVs. Purchases of luxury dealerships comprised 13.7 percent of transactions in Q2, down from 16.6 percent in Q2 2016.

Other key findings from the latest Haig Report include:

—Macroeconomic indicators such as GDP, interest rates, employment, number of miles driven and consumer sentiment remain highly favorable for dealers.

—Other trends such as used-vehicle pricing, incentive spending by the OEMs and rising inventories are growing less favorable to dealers.

—Total sales, including fleet, fell by 2.9 percent through July, although recent months have been steady. Average retail SAAR is down 1 percent so far this year.

—Declines in new and used gross profits per vehicle are being offset by gains in F&I and fixed operations.

—Sales and gross profits continue to increase at dealerships, but expenses are rising faster.

—The average dealership pre-tax profit over the last 12 months was $1.436 million

—Average estimated blue sky value per dealership dipped 2.1 percent from the end of 2016 to $6.91 million.

—Public auto retailers are spending more of their capital on acquiring auto dealerships in the U.S. than last year.

—Private equity firms and family offices continue to make substantial investments in auto retail.

—Acquisitions of dealerships, even in declining periods, can still provide a better return on investment than other assets classes.

Haig Partners president Alan Haig said, “As we expected, the sharp drop in the first quarter of the year has been offset by a strong Q2 and we are expecting robust conditions for the rest of the year. There are many buyers and sellers in the market and deal financing remains readily available.

“These are good conditions for buy-sells, so long as sellers understand that their leverage is more limited than in the past,” Haig continued. “Buyers have many options and are increasingly concerned about future profits. They are less likely to chase deals or pay big premiums. 

“If dealers want to sell their dealerships they will likely need to accept today's offer since tomorrow’s offer could be lower,” he went on to say.

Haig Partners is seeing these conditions in its current engagements that include domestic, import and luxury dealerships that range from Florida to New York to California.  The firm has closed dealership transactions with a value of over $3.6B over the past 20 years.

The Haig Report is published each quarter and is based on data gathered from many public sources, as well as interviews with leading dealer groups, and bankers, lawyers and accountants who specialize in auto retail. Included in each edition are Haig Partners’ blue sky multiples that serve as a gauge for franchise values.

You can also download the full report. 

11 overall trends around dealer buy/sell activity

IRVINE, Calif. - 

Kerrigan Advisors’ newest Blue Sky Report highlighted a notable willingness by dealers to take on minority and majority equity partners along with eight other trends involving buy/sell activity through the first half of 2017, which the firm classified as high.

According the report released on Monday, Kerrigan Advisors also expects activity during the second half of the year to surpass the first half, resulting in the fourth year in a row of more than 200 transactions.

Erin Kerrigan, founder and managing director of Kerrigan Advisors said in a news release, “2017 is on pace to be a record year for equity partner investment structures.

“We think this shift in buy/sell activity is mostly due to the increasing size and complexity of the dealership groups coming to market,” Kerrigan continued. “In addition, dealers are attracted to the opportunity to remain involved in the business post-transaction, while also taking some chips off the table.”

The report noted key data and analysis from the first half of this year included:

• 101 dealership buy/sell transactions completed in the first half of 2017, compared to 106 transactions during the first half of 2016.

• Multi-dealership transactions represented 25 percent of completed transactions in the first half of 2017. Those transactions saw a 23-percent rise in the number of franchises represented per transaction.

• Public retailers increased spending 61 percent in the first half of 2017, compared to the first half of 2016.

• Domestics’ share of the buy/sell market remained at 44 percent, while non-luxury imports saw their share of the buy/sell market increase to 39 percent.

• Toyota, Honda and Subaru dealerships enjoy high buyer interest with consistently high profitability.

• Amongst the publics, Lithia Motors and Penske Automotive Group have acquired 21 U.S. dealerships.

• The private sector acquired 93 percent of the franchises sold.

• Dealership real estate prices and rents rose slightly as compared to 2016

“We see resilience in the buy/sell market,” Kerrigan said. “Even though SAAR is down, it remains within a historically high range. Auto sales in the first half of 2017 were actually 5 percent higher than the trailing five-year average, and dealerships remain highly profitable.”

The report also identified three other key trends moving forward into the third and fourth quarters of this year, including:

• Dealers take on majority and minority capital partners.

• Reinsurance profits increasingly factor into buy/sells.

• Retiring key operators prompt some dealers to sell.

“One of the more interesting trends we see moving into Q3 and Q4 of 2017 is retirement-driven transactions, but not necessarily in the way you think,” said Ryan Kerrigan, managing director of Kerrigan Advisors. “When a key lieutenant retires, that’s prompting some older dealers to sell, versus finding a replacement.

“As a result, the retirement of key management, in combination with the aging of the dealer body, is increasingly prompting older dealers to sell,” Kerrigan went on to say.

Kerrigan Advisors is deeply involved in the buy/sell market having advised on the sale of 59 dealerships, including four of the Top 100 dealership groups in the U.S. Most recently, Kerrigan advised on the sale of Downtown LA Auto Group to Lithia Motors.

The Blue Sky Report, a Kerrigan Quarterly, is published four times a year and includes Kerrigan Advisor’s signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. The multiples are based on Kerrigan Advisors’ view of franchise values in the current buy/sell market and can be applied to adjusted pre-tax dealership earnings to estimate blue sky value.

To download the report, go to this website

Asbury announces next CEO

DULUTH, Ga.  - 

David Hult will be the next president and chief executive officer of Asbury Automotive Group.

The retailer announced Tuesday afternoon that Hult, who has been executive vice president and chief operating officer since November 2014, is set to succeed Craig Monaghan on Jan. 1.

Hult will also have a seat on Asbury’s board of directors. Monaghan will become vice chairman of the board on Jan. 1 and hold that position until the Asbury’s 2018 annual meeting of stockholders.

Additionally, Monaghan will be non-executive special advisor to the company until he retires on April 30, 2019.

“We are thankful to Craig for his dedication to Asbury since originally joining the company in 2008,” Asbury chairman of the board Thomas DeLoach Jr. said in a news release.

“Craig is responsible for significant growth and value creation at the Company, and we appreciate his willingness to continue to serve Asbury in a transitional role following his retirement as president and CEO,” DeLoach said. “David has already contributed greatly to the growth of the company, and the board is unanimous in its belief that David is the ideal next chief executive for Asbury.”

Hult’s three-plus decades in the car business includes senior positions with Asbury, RLJ McLarty Landers Automotive Holdings, Group 1 Automotive and Penske Automotive Group.

“I am excited to lead the company and our 8,000 associates and look forward to driving further growth for the company,” Hult said in the news release. “I want to thank the board of directors of the company for providing me this opportunity. Craig has served as a wonderful mentor since I joined the company. I look forward to his continued advice and counsel as we work to ensure a smooth and successful transition.”

Monaghan said in the release: “I am delighted that the board has promoted David to president and CEO of the company. I look forward to continuing to work with him to execute Asbury’s business strategy and deliver long-term value to stockholders and other stakeholders.”

Car-buying events effective sourcing strategy for AutoNation USA

FORT LAUDERDALE, Fla.  - 

When a dealership group opens up standalone used-car stores, one of the questions that ultimately comes up is, “Where will the inventory come from?”

At AutoNation, the retailer has found some initial success in hosting car-buying events at its AutoNation USA used-car store in Houston.

The dealer group — which also has an AutoNation USA store in Corpus Christi, Texas — had held two “We’ll Buy Your Car” events at the Houston store, chief operating officer Lance Iserman said during AutoNation’s Aug. 2 quarterly earnings call.

Iserman, who is also the group’s executive vice president of sales, said AutoNation was able to acquire high-quality vehicles during those events, calling it a “good source” for the retailer to obtain inventory going forward.

Within the AutoNation franchised stores, three-quarters of used-car inventory comes from trade-ins, with 15 percent coming from auctions and 10 percent generated via off-lease, Iserman said.

As far as how that will translate to AutoNation USA stores, he noted that, obviously, standalone used-car stores don’t have that capacity to acquire off-lease, but AutoNation hopes to ramp up its “We’ll Buy Your Car” strategy.

“Currently, our inventory is a mix of auction purchases, vehicles from our franchised stores and our ‘We’ll Buy Your Car’ events,” Iserman said of AutoNation USA. “And that will be less dependent on our franchised stores as we move forward.”

More details on AutoNation USA

Sharing some overall thoughts on AutoNation USA, AutoNation chief executive Mike Jackson said: “This is an overarching approach where it’s one brand, including the franchised business and the extension into the USA stores, all with a one-price system.

“(It’s) very challenging, complex to create, as we talked about, but I think it will be very compelling, once we successfully implement it …  AutoNation Parts and AutoNation Accessories are crucial to being able to do higher volume with better margins, with lower reconditioning costs and still put a frontline, outstanding vehicle (on the lot).

“Knowledge of the marketplace for our pricing system, including the auctions, needs to be there,” Jackson said. “So I think we have it pretty well thought through.”

Overall used-car results

Through six months of 2017, used-vehicle retail revenue for the dealer group is up 2 percent at $2.29 billion, while overall used revenue (which includes wholesale, as well) is down 2.4 percent at $2.44 billion. 

Retail used-car gross profit is down 17.5 percent at $148.9 million, with overall used gross profit down 13.4 percet at $151.5 million.

Used-car retail sales, however, are up 3.6 percent, with AutoNation having sold 118,874 used units in the first six months of 2017. 

In the company’s earnings press release, Jackson specifically addressed used-car margins. In the second quarter, gross profit per used vehicle retailed was $1,270, down from $1,531 a year ago.

For the first half, it fell from $1,572 to $1,253. 

“Our pre-owned margins declined due to implementation challenges with our centralized One Price strategy during the quarter,” Jackson said in the news release. “However, we’ve taken decisive action to resolve those issues by realigning our leadership and structure to fully realize the opportunity of our brand extension strategy.”

In general, Jackson said during the call he expects growth in the retailer’s overall used-car business in 2018 through acquiring, reconditioning and selling used cars — and doing so at right price.  AutoNation USA is still a relatively small piece of that overall used-car business, he said, so its operational impact reflects as much. 

Asked why he is confident that the performance of the core used-car business will improve next year, Jackson said: “We’re absolutely thrilled with the customer response to One Price. It’s attracted tremendous traffic — new buyers — and they really express how much they like the process. 

“We also see our ‘We’ll Buy Your Car’, which will be a very attractive source of vehicles, ramping up very nicely,” he said. “We know we’re going to have parts at a much more attractive price.

“So, I have good consumer response, building good sourcing to attract cars, good capability to recondition on a lower-cost basis. That gives me confidence we can grow the business profitably.”

 

 

Group 1 opens 13th Audi store

HOUSTON - 

Group 1 Automotive announced Tuesday that the company has acquired a new Audi dealership in Fort Worth, Texas.

The addition of the new Texas dealership brings Group 1‘s portfolio of Audi dealerships to 13.

Group 1 currently owns Audi dealerships in Florida, Massachusetts, South Carolina, Texas and the United Kingdom.

"We are delighted to expand our relationship with Audi in the United States and strengthen our luxury brand representation and overall retail portfolio in the greater Dallas-Fort Worth metropolitan area," Group 1 president and chief executive officer Earl Hesterberg said in a news release.

The company estimates that the new Audi store will generate $55 million in annual revenues.

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