Sonic Automotive said Tuesday it has purchased Sun Chevrolet in Chittenango, N.Y., following its acquisition of three Used Car King pre-owned stores from same group back in December 2020.
Joe Caputo founded Sun Chevrolet in 1979. He and son Todd Caputo ran that store along with the three used-car standalone stores in Central New York.
Todd Caputo, president of Sun Chevrolet, has moved into a leadership position with EchoPark Automotive, which is Sonic’s line of pre-owned stores.
Sun Chevrolet is Sonic’s sixth Chevy store and its 111th franchise location overall.
“We’re thrilled to welcome the team from Sun Chevrolet into the Sonic family,” Sonic and EchoPark chief executive officer David Smith said in a news release. “The culture that Joe and Todd Caputo built at Sun Chevrolet aligns with the guest and teammate experience standards we set forth at Sonic Automotive, making the team a perfect addition to our company.”
Sonic and EchoPark president Jeff Dyke said: “We’re excited to start a new year by expanding our footprint once again. We have tremendous respect for the Chevrolet brand and look forward to continuing the work Joe, Todd and the Sun Chevrolet team established to deliver an exceptional brand promise to guests in the Central New York region.”
Added Todd Caputo: “It’s an honor and a privilege for our family to become a part of the Sonic family. We look forward for years to come to continue serving our guests in Central New York.”
Canada’s Knight Automotive enters U.S.
In another dealership M&A move, Canada-based Knight Automotive Group has expanded to the U.S., purchasing California’s Sunrise Ford of Fontana and Sunrise Ford of North Hollywood from the Bruncati family, according to a news release from Performance Brokerage Services.
Knight Automotive Group has 14 stores throughout Western Canada, and now counts Southern California in its footprint.
“The entire Performance Brokerage team was excellent to work with,” Braeden Mueller of Knight Automotive Group said in a news release. “We continued to be in touch over the years and they worked with our group to find the right fit on our first acquisition in the United States. Knight Automotive Group looks forward to working with Performance Brokerage on future acquisitions.”
James Bruncati, owner of the Ford stores, added: “The team at Performance Brokerage did a phenomenal job. Jonathan Forgy did a great job of building a comprehensive packet, and Jason Stopnitzky did a great job at finding the right buyer. They found a buyer that fit very well with the culture we built.
“Kevin Knight and Braeden Mueller from Knight Automotive were a pleasure to deal with and I feel they will do extremely well in the future. Thank you to the whole team at Performance Brokerage Services.”
Dealers give back
On the philanthropic front, Signature Auto Group — a car leasing company with locations in Brooklyn, N.Y. and Fort Lauderdale, Fla. — said it is taking 5% of the proceeds it makes this month and donating it to the Bronx Fire Relief Fund in the aftermath of a deadly Jan. 9 apartment building fire in the New York borough.
“Our entire team is extremely saddened by the loss of life and families torn apart due to this tragic fire in the Bronx,” says a spokesperson for Signature Auto Group said in a news release. “We figure that the least we can do is humbly donate 5% of our January proceeds to support anyone impacted by the Tremont fire.”
Donations to the Bronx Fire Relief Fund can be made here: https://www1.nyc.gov/site/fund/initiatives/bronx-apartment-building-fire.page
Elsewhere, Ed Morse Automotive Group — which was the official automotive partner of college football’s Lockheed Martin Armed Forces Bowl in Fort Worth, Texas — gave a new car to a Purple Heart recipient during halftime of the bowl game.
The name drawn from the hat with nearly 100 Purple Heart recipients was Ken Watterson, who is president of Veterans Resource Center in Dallas. Watterson served two tours in Vietnam, receiving a Purple Heart after an injury in 1968. He helped launched the Homeless Veterans Service of Dallas, Inc., in 2004.
The vehicle given away was a 2021 Chevrolet Silverado Crew Custom in Satin Steel Metallic.
“From its inception over 75 years ago, our company has proudly supported veteran and military organizations. What an honor it is to be part of the Armed Forces Bowl, such a cool and impactful event that extends beyond the Dallas area,” Ed Morse Automotive Group chairman and CEO Teddy Morse said in a news release. “It was a blast hanging out with all of those inspiring Purple Heart recipients and getting to know Ken Watterson, a true hero.”
The second half of the year has begun with a flurry of news of moves in the dealership buy-sell space, including the closing of Asbury Automotive Group’s purchase of certain assets of Park Place Dealerships.
That deal, which was announced back in December, nearly scrapped in March before being revitalized in July and closing in August, has certainly been the largest and perhaps most significant in the industry.
But there’s been a buzz throughout the space in recent weeks, be it from publicly traded dealership groups or outside interests — including Hollywood.
Over the course of July 7 to Aug. 4, Lithia Motors made four announcements regarding dealership purchases it made throughout California, Texas and Oregon.
Meanwhile, it was also announced in July that actor/producer Mark Wahlberg and his business partner, Jay Feldman, had purchased two dealerships in Columbus, Ohio from the Haydocy family: Haydocy Buick GMC and Haydocy Airstream & RV, which have been renamed Mark Wahlberg Buick GMC and Mark Wahlberg Airstream & RV.
About a month later, the pair purchased another store in town (Jack Maxton Chevrolet), which is renamed Mark Wahlberg Chevrolet of Worthington.
And then, of course, the Asbury-Park Place deal closing.
The Presidio Group, an investment bank specializing in retail automotive and related M&A transactions, was the exclusive M&A advisor to Park Place in the Asbury deal.
Not only was the Asbury deal one the largest dealership buy-sell transactions ever, it was Presidio’s second in the Dallas-Fort Worth market in the month of August.
Auto Remarketing caught up with Brodie Cobb, founder and CEO of The Presidio Group, in early August to discuss the increased activity in the dealership buy-sell space.
Part of the reason for the uptick in activity, he said, is just the natural cycle of career progression, which impacts auto retail just like any other sector.
And transactions that were initially slated to close in the spring months were delayed amid the COVD-19 pandemic. That has since begun to open back up in a big way.
“We had a number of transactions that were scheduled to close in March, April and May, and all of those transactions got delayed,” Cobb said in the early August interview. “And several of them have closed since and we have more coming in the next few weeks.
“I would say that’s probably true with others, so that’s why you’re hearing about transactions that got delayed. We closed one transaction in March, April and May. So, for those three months, we had a couple of billion dollars’ worth of transactions scheduled to close and we only got one closed in that whole period of time,” he said. “But by the end of August, we will have more than $2 billion worth of transactions closed (year-to-date).”
Another driver for buy-sell gains in just how attractive the auto retail space can be for investors, as it presents a “good return on invested capital,” Cobb said.
“We’re getting a lot of calls from deep-pocketed capital that’s sophisticated,” he said. “Some are already in the auto retail business, i.e. they own dealerships and they have assets already. And then some who don’t and would like to. And we’re seeing more of that than ever.”
That was evident in the Park Place sale process, as “a lot of new and very interesting, intriguing potential buyers in the marketplace that we had not seen before” emerged, Cobb said.
In general, and not specific to the Park Place deal, one of the outside entrants who are interested in the dealership buy-sell space includes private-equity groups.
“The ones that we tend to focus on are those who have a little longer duration investments. And so, what I mean by that is, that their hold period in that investment is longer than maybe average private-equity firm,” Cobb said.
“And then the other entrant that is really come into the space are billion-dollar-plus family offices who have diverse holdings that have identified auto retail sector as one that could produce an attractive return on invested capital,” he said. “And it is, in fact attractive.”
Speaking of attractive, the area of the U.S. where Presidio advised on recent deals is certainly a hot spot: Texas.
In July, it was announced that Park Place Dealerships completed the sale of Jaguar North Austin and Land Rover North Austin in Austin, Texas, to Sewell Automotive. Both Park Place and Sewell are Texas-based groups.
Lithia’s most recent purchase was of four John Eagle Dealerships locations in Dallas and Austin.
“Texas is super hot. It’s a very business-friendly place. It’s booming. Dallas-Fort Worth, I think, is still No. 1 (relocation) market in the country. Corporations are relocating there, not the least of which was Toyota years ago,” Cobb said.
“There’s no state income tax … it’s a very, very strong, large market, growing market,” he said. “It’s incredible. It’s been attractive for a long time, but it’s probably even more attractive today than ever.”
And perhaps the same could be said for dealership buy-sell, in general.
Asbury Automotive Group’s deal to purchase Park Place Dealerships is back on, with revised terms from the previously announced agreement in December, the retailer announced Monday.
More details and an update on that transaction can be found below.
In other dealer group M&A news, Lithia Motors said Tuesday it has acquired Smolich Chrysler Jeep Dodge Ram and Nissan dealerships in Bend, Ore.
Lithia, which is headquartered some three hours away in Medford, Ore., said the acquired stores are likely to pull in steady state annualized revenues of $100 million.
“As the automotive retail environment continues to show significant sequential improvements, we have restarted acquisitions, completing the first two pending acquisitions,” Lithia president and chief executive officer Bryan DeBoer said in a news release.
“Growth of our network is the foundation to the fulfillment of our current and future brand promises, regional logistics plan and ability to provide competitive customer offerings through all six business lines.”
A recap of operational results from Asbury and Lithia can be found in this story.
Asbury’s Park Place purchase
In Monday’s news release, Asbury said it signed a definitive agreement to buy certain assets of Park Place. The price was $685 million of goodwill and roughly $50 million for parts, fixed assets and leaseholds, outside of vehicle inventory.
The deal was initially announced in December. At the time, Asbury announced it had come to an agreement to buy certain assets of Park Place for $1 billion in cash, excluding vehicle inventory.
Amid the uncertainty around COVID-19, Asbury “had to step away” from the deal in March, but the rebound in recent months has allowed the group to “proceed with a more refined deal under more flexible and favorable terms,” Asbury president and CEO David Hult said in Monday’s news release.
“We are pleased our business model and performance allowed us to navigate the current environment and re-engage on a highly strategic acquisition that will make us an even stronger company. We have seen our new and used volume sequentially improve each week in May and June with higher profit per vehicle. We have also seen our parts and service business improve in June as the economy gradually opens-up,” Hult said.
“Strong May and June performance, along with cost restructuring efforts, have driven higher profitability and cash flow, giving us conviction to move forward with a revised Park Place acquisition,” Hult said. “In March, we had to step away from the transaction due to lack of visibility around COVID-19, but after seeing the rebound off the April low, we can proceed with a more refined deal under more flexible and favorable terms.”
As far as the operating assets Asbury is acquiring from Park Place, those include 12 new-car franchises in the Dallas-Fort Worth market, the Park Place auto auction and two collision centers.
The retailer expects the transaction, which is subject to customary closing conditions, to close in the third quarter.
“Park Place is highly regarded as one of the best and most efficient operators of luxury stores in the industry. Their portfolio of stores comes with a strong base of loyal clients and long-tenured team members throughout the high growth Dallas/Fort Worth market,” Hult said. “This acquisition will enhance our total portfolio and add approximately $1.7 billion in expected annualized revenues. We are thankful to all of our employees who have worked so hard over the last few months to manage through this pandemic.
“The talent in our organization and the resilience of the dealer model have put us in a position to acquire Park Place and become a more diversified company.”
