Mergers and Acquisitions

Dealer Solutions North America expands from Canada into 6 states

DETROIT - 

One of Canada’s largest retail automotive M&A consulting firms is looking to gain more business in the United States, choosing a former Audi and Penske executive to lead a growing footprint into six states.

Dealer Solutions North America, specialists in advising on and providing strategies for buying and selling dealerships, has announced its expansion into the U.S.

Leading the offices in the U.S. will be auto industry veteran Russell Hill, who has more than 50 years of experience across multiple sectors of the business. In prior roles, Hill led sales and dealer operations for Audi of America, oversaw a network of dealers for Penske Automotive Group as vice president of northern California and returned to Detroit as vice president of operations for Penske.

Most recently, Hill has launched several successful auto-industry businesses and consultancies.

“We are exclusively dedicated to assisting dealers and investors interested in making the most out of today’s robust market, which is poised for a dramatic valuation shift,” said Hill, who will serve as chief operations officer for Dealer Solutions North America.

“Tax reforms, favorable banking and continued investment by both OEMs and high-tech firms are attracting a new level of domestic and international interest; we expect these factors will continue to fuel increased demand for dealerships among well-funded investors,” he went on to say.

The U.S. offices of Dealer Solutions are in metro Detroit, with consultant offices in Florida, Georgia, Virginia, North Carolina, Connecticut and Michigan.

Founded in 2012 by Farid Ahmad, a career automotive professional with extensive experience in retail, brand and real estate in Europe and North America, Dealer Solutions has advised on the successful closing of more than 150 dealerships amounting to more than $3 billion in value, with nearly 50 transactions pending. Within the past six years, the privately-held company, headquartered in Toronto, has become one of Canada’s largest retail automotive M&A consulting firms.

Dealer Solutions provides full-service, step-by-step guidance and support to acquiring or selling a dealership. The company boasts a proprietary appraisal system that can allow clients to understand the market value and potential for their dealership.

To date, Dealer Solutions has conducted nearly 500 dealership appraisals. And its extensive network of personal relationships can allow buyers and sellers to tap into a wide-ranging group of contacts across Canada and the U.S.

The company's expansion into the U.S. is the result of two years of exhaustive study, with the first new office opening in metro Detroit in late 2017, and dealership listings within the same period.

“Our Canadian-U.S. group is diversified and we are on course for continued growth, which combined with our proprietary process and ability to seamlessly bring buyers and sellers together, allows us to provide more value to clients in both countries,” said Ahmad, who serves as chief executive officer of Dealer Solutions North America.

“Our team of merger and acquisition experts collectively hold more than 30 decades of combined experience in the automotive industry, and we’re thrilled to be in the U.S. market,” Ahmad continued.

To learn more about Dealer Solutions, USADealerSolutions.com.

 

US auto group buys Sonic store in Houston; Canadian group closes on large deal

HOUSTON and OTTAWA - 

Along with Doggett Auto Group’s acquisition of Houston's large Lone Star Ford automotive dealership, the industry has also seen a sizable en bloc purchase of 10 Canadian stores north of the border this week.

Leslie Doggett Industries' affiliate the Doggett Auto Group has acquired Houston's Lone Star Ford store from Sonic Automotive. The heavy equipment dealership group announced Thursday that it purchased the Ford dealership for an undisclosed amount, effective on Tuesday.

At the end of July, Doggett confirmed it will move the store to a lot that is located adjacent to the groups’ John Deere Construction and Forestry headquarters.

“Doggett's outstanding reputation as the leader in customer service and support in the commercial 18-wheeler, industrial and construction equipment industries is going to translate to success in the Ford business,” auto group head Tony Gracely said in a news release. “Doggett has a long history of acquiring units of large public companies and dramatically improving and growing those businesses with their highly-professional and family-oriented approach.”

In addition to 17 John Deere construction and forestry equipment dealerships, Doggett operates four freightliner on-highway truck and vocational truck dealerships, four Link-Belt Cranes dealerships and seven Toyota industrial equipment dealerships across Houston.

The company said “Doggett has become the largest dealership group in North America for three separate first-tiers in the construction equipment and industrial industries.”

Meanwhile, over in Canada, Mierins Automotive Group has agreed to sell 10 of its dealerships and two collision centers to Alpha Auto Group, based in Toronto.

In addition to group co-presidents Lisa Mierins and Arnie Mierins, who will continue holding their roles for a transition period, Mierins Automotive Group also announced that each employee on board prior to the recent acquisition will be offered positions with Alpha Auto.

“Our employees are our family and our communities are our home,” Arnie Mierins and Lisa Mierins stated in the news release. “It means a lot to us to have found a buyer who shares our values and will continue the legacy that our father and our family established over sixty years ago.”

A total 550 employees have had the opportunity to able to retain any existing seniority levels and benefits, according to Mierins Automotive Group.

Alpha Auto Group’s 12 newly purchased facilities are located in cities: Ottawa, Kingston and Brockville.

The new set of stores represent Acura, BMW, Honda, Lexus, MINI, Subaru and Toyota brands.

Furthermore, “The name Mierins Automotive Group will continue to be the holding company brand of the acquired dealerships as well as potential future acquisitions,” the group explained a news release.

Investment group led by CFAA owner acquires ComplyNet

COLUMBUS, Ohio - 

One auction owner is putting compliance where her checkbook resides.

According to a news release sent to Auto Remarketing on Tuesday, an investment group headed by Alexis Jacobs, owner of the Columbus Fair Auto Auction, has acquired ComplyNet, a 25-year-old compliance and risk management consultancy focused on dealers and auto auctions.

The auction community and dealer community alike have benefitted from ComplyNet’s laser focus on the exposures unique to the automotive industries.

“As a third party to the commercial consignor, the auction’s responsibilities are extensive and significant. Columbus Fair has utilized ComplyNet’s services for six years, allowing us to respond to consignors with confidence and to leverage our combined efforts with our garage carrier. When you become a preferred risk, the savings are considerable,” Jacobs said.

“We not only have the most comprehensive approach to risk mitigation, we have an attorney, Adam Crowell, serving as president of the company,” Jacobs continued.

Crowell offered his perspective on compliance, too.

“As regulators continue to expand their focus in the automobile industry — both wholesale and retail — efforts to maintain a compliant operation have become more complicated.  An outsourced compliance service is one of those solutions that makes more and more sense.  Relying solely on someone internally is not a consistent solution,” according to Crowell, who is the managing member of ComplyNet.

“I intend to continue to develop the technical assets while enhancing the library of automotive content,” he added.

ComplyNet performs on-site and online services for automotive customers in 34 states, enhancing compliance and reducing subscribers’ risk.

 “This is a banner day for ComplyNet,” said Phil Troy, the founder of the company, who will continue to serve as the advisory director. “My vision was to provide a risk management and compliance solution tailored not only to the industry, but to the management style of each business. 

“This new investment group brings deep roots in the automobile industry, great management disciplines, and the ability to invest in new solutions,” Troy went on to say.

CDK purchases Progressus Media to grow advertising business

HOFFMAN ESTATES, Ill. - 

CDK Global has acquired Progressus Media to grow the technology and capabilities of its CDK Advertising business.

The company recently announced that the transaction closed for an undisclosed amount earlier this month, and it has also appointed Jen Cole to head CDK Advertising as vice president and general manager.

“We are excited to bring the Progressus Media team into the CDK family,” Cole said in a news release. “Our data-driven solutions, which help to put the right targeted messages in front of consumers at the right time in their shopping journey, combined with Progressus’ advanced technical capabilities, mobile conversion focus and subject-matter expertise, uniquely position us to provide competitive solutions in this rapidly changing market.”

CDK said the addition of team members, technology and products from Progressus can help advance CDK’s growth in social media channels.

Throughout the next several weeks, the Progressus Media team will work on fully integrating into the CDK Advertising business, according to CDK.

The Progressus Media team will remain based at their current office located in downtown Chicago.

Marketing activation platform joins Partner Program

Meanwhile, in other recent CDK news, 1-2-1 Mobile announced Monday that it is the latest company to join the CDK Global Partner Program.

“We are thrilled to join the CDK Global Partner Program,” 1-2-1 Mobile chief executive officer Alon Omer said in a news release announcing the new partnership. “This partnership gives us the opportunity to bring the power of our innovative marketing activation platform to thousands of automotive dealerships nationwide.

“1-2-1 Mobile has already partnered with top-tier automotive groups to transform their marketing campaigns into interactive, mobile-specific engagement tools that provide unprecedented marketing intelligence and ROI,” Omer continued.

1-2-1 Mobile uses engaged customer's mobile phone number to track their journey with an image-based mobile coupon, as well as provide dealers with marketing intelligence per customer.

Marketing intelligence that can be delivered by 1-2-1 Mobile includes information such as the marketing channel, specific promotion and customer's mobile phone number, as well as the location the coupon was redeemed.

Carvana acquires pioneer of 360-degree used-vehicle digital tours

PHOENIX - 

Since Carvana retails used vehicles online, evidently the company wants to make sure its inventory is highlighted in one of the most state-of-the-art ways possible.

According to an announcement distributed on Tuesday, Carvana has acquired fellow technology innovator Car360, accelerating Carvana’s 360-degree photo technology capabilities with 3D computer vision and augmented reality (AR).

More than five years ago, Carvana insisted that Car360 pioneered the 360-degree used vehicle digital tour, showcasing each car’s features and imperfections in high resolution, all powered by proprietary technology and patented photo studios. Officials explained Car360 has taken the concept mobile, enabling app-based photo capture and even more immersive viewing capabilities.

“Carvana and Car360 both believe in the power of putting amazing technology in the hands of the customer so they can make one of the largest purchase decisions of their life with transparency and confidence,” said Ernie Garcia, founder and chief executive officer of Carvana.

“Bringing the Car360 team into the fold, we add even more entrepreneurial strength in computer vision, AR and app-based photo capture,” Garcia continued. “This technology unlocks a number of exciting capabilities that will further our mission to change the way people buy cars.”

An early iteration of Car360 launched in 2012 as a 360-degree panoramic video app called Cycloramic, and at one point became the No. 1 downloaded app on the Apple App Store with more than 20 million downloads.

In 2013, the wildly successful app caught the attention of Mark Cuban on Shark Tank, leading to an initial investment that eventually increased as part of a $3.55 million Series A financing round for Car360 in 2017.

“We have long admired Carvana’s pioneering 360 work, and couldn’t be more excited to team up,” said Bruno Francois, founder of Car360. “Focusing our technology and innovation within the disruptive force Carvana has established in the industry means we can realize the full potential of our technology more quickly, and at significant scale — we’re looking forward to seeing what’s possible, together.”

As one of the first commercially available uses of 3D computer vision, machine learning and AR technology for the automotive industry, Car360 joins Carvana at an exciting time of hyper-growth, when more and more consumers are ditching the dealership to buy online.

“The Car360 mission is to change the way companies capture and tell a car’s story, which aligns perfectly with Carvana’s mission to change the way people buy cars,” said John Hanger, chief executive officer of Car360.

The full Car360 team will transition to Carvana, including Francois, Hanger and chief computer vision scientist Grant Schindler.

Nissan and SiriusXM extend agreement through 2023

NEW YORK - 

Nissan dealers can continue to highlight the benefits of satellite radio in many of the automaker’s vehicles — including certified pre-owned models.

On Wednesday, SiriusXM announced an agreement with Nissan North America that extends the ongoing relationship between the two companies for five more years and through the 2023 model year. Nissan and INFINITI customers will continue to get a three-month introductory SiriusXM All Access subscription — SiriusXM’s most expansive programming package, which includes access to the SiriusXM mobile app — with the purchase of equipped vehicles.

Customers purchasing properly equipped Nissan and INFINITI vehicles will also receive a three-month subscription to the SiriusXM Traffic and SiriusXM Travel Link infotainment services. Certain models and trim levels will include extended infotainment services subscriptions.

Customers who purchase Nissan and INFINITI certified pre-owned vehicles will also continue to receive a three-month introductory subscription to SiriusXM All Access.

SiriusXM Traffic can help drivers avoid congestion before they reach it with detailed information on traffic speed, accidents, construction, road closures and more. SiriusXM Travel Link can deliver timely and helpful information to drivers and passengers including weather, fuel prices, sports scores, movie listings and stock prices.

Additionally, SiriusXM will be standard on all model year 2019 and model year 2020 Nissan Altima and Titan vehicles. 

“We are thrilled to extend our long-term relationship with Nissan North America,” said Christopher Lam, senior vice president and general manager of automotive partnerships for SiriusXM.

“Nissan has always been committed to staying on the leading edge of automotive technology and their dedication to reliability and design has established their vehicles among the most popular on the road today,” Lam continued. “We are proud to continue providing both Nissan and Infiniti customers with the benefit of SiriusXM's exceptional audio entertainment and infotainment services."

Group 1 grows Brazil operations with Toyota market acquisition, Honda store expansion

HOUSTON - 

Group 1 Automotive announced Monday that the company has gained new Toyota sales territory in São Paulo, Brazil and will also relocate one of its top Honda dealerships in the area.

Group 1 built its newly opened T-Drive Toyota Alphaville dealership after purchasing selected assets of the Toyota Alpha Trevo Automoveis store in the western São Paulo suburb of Alphaville.

The new store is Group 1’s fourth Toyota dealership in Brazil and is expected to generate $45 million in annualized revenues.

“Toyota is the largest brand partner for our company overall and we are excited to significantly expand our relationship in Brazil,” Group 1 president and chief executive officer Earl Hesterberg said in a news release.

“We see great growth potential for our existing stores and the new opportunities associated with this acquisition will provide a large Toyota operating footprint for us throughout Brazil's largest city," Hesterberg continued.

Group 1 was recently awarded several additional new Toyota points of representation, according to the company.

Among the four dealerships in the greater São Paulo metropolitan area operated by Group 1, the company said it plans to relocate its Honda dealership located in the suburb of São Bernardo do Campo to expand substantially.

“We have enjoyed great success with the Honda brand in Brazil, even during the severe market downturn,” Hesterberg explained. “The relocation of Honda São Bernardo do Campo to a much larger facility with freeway visibility will likely enable us to double our revenue for this dealership in a fairly short period of time.”

Group 1 operates a total of 17 dealerships in Brazil, which includes BMW, Honda, Jaguar, Land Rover, MINI, Mercedes-Benz and Toyota.

fusionZONE buys dealer website design firm MotorWebs

PACIFIC PALISADES, Calif.  - 

fusionZONE Automotive has made a purchase that it says will help broaden its presence in the single-point dealer and dealer group spaces and make the company one of the Toyota Digital Dealer Solution program’s largest providers.

On Wednesday, the website solution provider announced plans to buy web design company MotorWebs.

Terms of the deal to buy MotorWebs, which specializes in car dealership websites, were not disclosed.

But fusionZONE, founded by husband-and-wife CEO and COO duo of Brett and Karen Sutherlin in 2009, emphasized it has more purchases on tap for the next year-and-a-half.  

As for the latest purchase, fusionZONE plans to open a third office in Seattle (beyond its two current offices in Florida and California). MotorWebs was started in Seattle in 2002 by Ron and Jan Clayton, who are spouses, as well.

fusionZONE plans to retain the MotorWebs staff.

“Ron and Jan Clayton deserve high praise for the amazing business they have built,” said Brett Sutherlin. “Both Karen and I immediately recognized the synergies of this deal, and have had a great time brainstorming with Ron and Jan to find additional areas of value creation for our customers.

“MotorWebs and fusionZONE are aligned in offering the absolute best to dealers in terms of technology and customer support. We immediately knew we could really scale the business.”

Ron Clayton added: “We have been watching the growth of fusionZONE and have been impressed with the high level of satisfaction reported by fusionZONE customers. Seeing the similarities between the two companies made this an easy decision for us.”

 

 

 

Changing retail market prompts some dealers to get bigger or get out

DETROIT - 

Dealership buyers who are seeking economies of scale and scope for their businesses and dealership sellers bent on getting as much as they can for their stores while the getting is good, are strengthening an already active buy/sell market.

Erin Kerrigan, managing director of Kerrigan Advisors, a dealership buy/sell advisory firm in Irvine Calif., said she is seeing more sellers coming to market because they are concerned about future changes in the retail auto business model.

“Electric vehicles have the potential to reduce service and parts revenue; autonomous vehicles could result in the reduction of car ownership; or it’s e-commerce, which could result in a more challenging sales environment or the subscription model, which could change the business model as well,” said Kerrigan. “Some are saying ‘if I can receive the kind of pricing that’s out there for my business, perhaps the most prudent thing to do is to sell today rather than pass along to my sons and daughters a business that may experience a great deal of disruption in the future’.”

Flattening new-vehicle sales and costly factory-mandated facility upgrades give dealers more reasons to call it quits, advisers said.

“Clearly, the consolidation of auto retailing has continued and if anything, picked up the pace,” said Sheldon Sandler, chief executive offi cer of Bel Air Partners, a buy/sell advisory firm in Hopewell, N.J. “We are seeing more business than ever.”

Acquisition activity down in 2017

Though the buy/sell market has been quite active over the last five years, activity was down in 2017, said Cliff Banks, president of The Banks Report, which tracks dealership buy/sells.

About 332 dealerships changed hands in 2017, down from about 354 in 2016; publicly-held dealership groups acquired 23 dealerships last year, down from 39 in 2016, said Banks, whose Banks Report is based in suburban Detroit.

That means privately-owned dealership groups, family offices, private-equity groups and others are active dealership buyers and investors.

For example, in October, GPB Capital, a private-equity firm in New York, through its affiliate, Capstone Automotive Group, acquired “a major equity stake” in Prime Motor Group, which owned “25 dealerships and related businesses” in Massachusetts, Vermont, New Hampshire and Maine, according to an October 2017 press release on GPB Captial’s website.

“Capstone hopes to purchase additional new dealerships in New England under the Prime platform and expand into the Rhode Island market in the coming months and raise its annual revenue to $4.5 billion within the next five years,” the press release said.

In January, Atlanta Falcons wide-receiver Julio Jones opened Julio Jones Kia and Julio Jones Mazda in Tuscaloosa, Ala., where he  was a star player at the University of Alabama.The stores are being managed by the Carriage Automotive Group of Gainesville, Ga.

Public companies lead the way

Still, public companies lead the way when it comes to dealership buy/sells. Lithia Motors, which accounted for most of the buy/sell activity by public groups last year, is off to a robust start this year, as is Group 1 Automotive.

In the first two months of this year, Lithia acquired Honda and Acura dealerships in the Buffalo, N.Y., area; the Day Automotive Group in suburban Pittsburgh and Prestige Family of Fine Cars in Bergen County, N.J.

That’s on top of the 18 stores Lithia acquired and the one it opened in 2017.

“The plateauing new-vehicle sales environment seems to be further accelerating the number of acquisitions available, and we believe 2018 activity may exceed the 2017 total,” said Lithia’s CEO Bryan DeBoer, during the company’s quarterly conference call in February.

In January, Group 1 Automotive acquired Audi and Subaru dealerships in El Paso, Texas, and added a Land Rover franchise to an existing Jaguar dealership in the United Kingdom.

In late February, it announced the acquisition of five dealerships from Robinsons Motor Group, also in the U.K.

Pete DeLongchamps, Group 1 senior vice president of manufacturer relations, financial services and public aff airs, said the company’s dealerships in the U.K. and Brazil are a critical part of its business.

“We think it’s an area of growth; investors want growth,” said DeLongchamps, during an interview immediately following Group 1’s quarterly conference call.

International player wants out

And speaking of international strategies, Pendragon North America Automotive, part of Pendragon PLC, an independent operator of franchise dealerships in the U.K., is among the sellers, said Banks.

Pendragon North America is divesting its five locations in California that sell Jaguar, Land Rover, Aston Martin and Chevrolet, the parent company’s website said. Banks said some buyers from other countries pull out of the U.S. market because the retail automotive business is not as easy as it seems.

Manufacturers that exercise their right of fi rst refusal and real estate that is more valuable than the dealership that sits on it are some potential stumbling blocks, Banks said.

“Some had visions of buying up large numbers of dealerships and then they realized how difficult it is to get transactions done,” Banks said.

Expanded used-vehicle sales are a prominent part of most public groups’ strategy. For example, since January 2017, Penske Automotive Group acquired chains of used-car stores in the U.S. and the U.K. and plans to open three greenfield sites by mid-2019.

This year, Penske Automotive expects its standalone used-vehicle superstore operations to sell approximately 70,000 used cars and trucks and generate over $1 billion.

SinglePoint set to enhance vehicle history and values with repair technology on blockchain

SEATTLE - 

A vehicle that’s running properly certainly can be extremely helpful in ensuring the consumer stays current on the terms of the installment contract.

That potential benefit is why SinglePoint described its recent acquisition of ShieldSaver that expands the company’s blockchain initiatives into the automotive industry “in an exciting way.”

SinglePoint explained via a news release that it is a technology company aimed at disrupting the automotive repair and maintenance industry.

“A trojan horse within the automotive industry, ShieldSaver has unique permissions — through contracts with multiple companies — to enter locations that are typically off limits, obtain critical vehicle data at those locations, and then make contact with vehicle owners regarding needed repairs on their cars,” the company said.

For instance, ShieldSaver indicated that it is able to access vehicles parked in airport lots at Sacramento International Airport, Denver International and others, assess potential repair needs for those vehicles, and then leave information regarding the vehicle’s issues, along with ShieldSaver company contact information, for the vehicle owners.

“This is something that, currently, no other company is able to do,” SinglePoint said.

In addition to this unique ability to solicit repair work where other companies cannot go, ShieldSaver’s services will be further augmented by a blockchain solution currently being developed by SinglePoint. Because ShieldSaver is able to obtain physically verified vehicle data, the implementation of blockchain technology will allow the company to keep an irrefutable record of issues and repairs for those vehicles and provide key insights and analytics into the histories of individual cars. This will help greatly enhance transparency within the automotive industry when it comes to vehicle history.

As part of the acquisition of ShieldSaver, SinglePoint has grown its technology team with an additional five developers who are architecting the blockchain solution.

ShieldSaver set out on a mission to provide an easier and more transparent experience in the consumer auto industry. Collecting data regarding needed repairs and work that has been done on a car provides a better experience for car buyers and sellers all around.

“Buyers will consequently have trust in a car’s history, dealers can more easily assess market value, and banks will have confidence in that value,” SinglePoint said.

“By providing a solution in which all parties, from mechanics to insurance agencies to dealers, can contribute to the history of a vehicle, ShieldSaver will be able to provide a solution secured by blockchain that is accessible and transparent,” SinglePoint went on to say.

SinglePoint management predicted the ShieldSaver acquisition will provide an additional $1.25 million in revenue for 2018. The company has set a total goal of $10 million for the year, which can be achieved through acquisitions and internal projects about to be launched.

In addition to the ShieldSaver acquisition, SinglePoint is excited to announce that it will be expanding its blockchain development capabilities even further with plans to hire another team, which will be focused exclusively on designing and implementing the company’s blockchain solutions in the cannabis, medical and automotive industries.

A number of projects are currently in the design phase and will soon move to development. SinglePoint management plans to have the new team fully running by the beginning of May, “which will dramatically ramp up the launch of projects,” according to the company.

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