“The Mailman” now is delivering Toyota, Ford, Lincoln and Chevrolet vehicles in Arkansas.
Karl Malone, who had that nickname while playing basketball in the NBA for 19 years, grew his business this week with the Karl Malone Auto Group by acquiring three new-vehicle franchises in El Dorado, Ark.
According to a news release, the Teague stores — including Teague Toyota, Teague Ford/Lincoln and Teague Chevrolet — are now Karl Malone Toyota of El Dorado, Karl Malone Ford/Lincoln and Karl Malone Chevrolet, respectively.
“They are proud to continue the tradition of excellence that the Karl Malone name brings in customer service and pricing,” the group said in a news release that also mentioned Malone also owns and operates Karl Malone Toyota of Ruston, La.,
With the addition of the Teague stores, Malone owns 10 dealerships, including powersports and automotive, and a body and paint shop in Utah.
Malone is a familiar celebrity in both Louisiana and Utah.
He grew up in the Bayou State and played college basketball at Louisiana Tech. Malone then played in the NBA for 19 years.
Malone made 14 All-Star appearances, 11 All-NBA first-team selections, four all-defensive nods, two league MVPs, two All-Star MVPs, all while with the Utah Jazz. He also earned two Olympic gold medals, the first with Michael Jordan, Magic Johnson, and the “Dream Team” in 1992.
In 2005, Malone announced his official retirement from basketball.
Earlier this year, Malone partnered with Jeff Teague, owner of the Teague automotive dealerships, as they donated $20,000 to a fund they started to help the victims of a recent refinery fire.
There’s not been an exotic model quite like this one in a dealership showroom.
During an exclusive event at Holman Motorcars, hosted in partnership with Supercar Rooms Miami, renowned contemporary artist Bradley Theodore transformed a Rolls-Royce Ghost into a one-of-a-kind work of art, adding his trademark colorful flair to this iconic vehicle that the company said embodies the pinnacle of luxury.
The dealership highlighted the Rolls-Royce featuring Theodore’s distinct artistic stylings will be on display at Holman Motorcars in Fort Lauderdale, Fla., for a limited time, and guests are invited to visit the dealership through June 18 to get an up-close-and-personal view of this vehicle.
The prestigious Rolls-Royce Ghost served as Theodore’s canvas for this collaboration with Holman Motorcars. Over the course of two days, Theodore added his contemporary, street-style to the vehicle, evolving the Rolls-Royce Ghost into his latest masterpiece, “creating a truly unique fusion of artistic expression and automotive craftsmanship,” according to a dealership news release.
A staple of the South Florida artistic landscape, Holman mentioned Theodore is best known for his colorful paintings and prints of fashion icons.
Theodore is a multi-disciplinary artist whose iconoclastic approach to art can be found internationally from 10-foot murals on the streets of New York, Tokyo and Milan to sold-out solo exhibits in London.
“Evoking the universality of color, skeletons, and celebrity, Theodore distills figures to skeletal forms, a confrontation that the artist calls ‘an act of living,’ pushing color to express memory, emotion and lived experiences,” Holman said.
A time-lapse video of Theodore’s work on the vehicle is also available here.
For additional information, visit HolmanMotorcars.com. To learn more about Theodore, visit BradleyTheodore.com.
The Charlotte, N.C., area is the heart of NASCAR and home to two of the nation’s largest dealership groups: Hendrick Automotive Group and Sonic Automotive, both of which have deep lineages in the sport through their respective founders, Rick Hendrick and Bruton Smith.
And now another large dealership group whose founder has strong ties to auto racing is taking a spin in the Queen City.
Penske Automotive Group, headquartered in Bloomfield Hills, Mich., and helmed by motorsports legend Roger Penske, said Friday it has expanded into the Charlotte market, buying Mercedes-Benz of South Charlotte, located in Pineville, N.C. This is its first store in the area.
The dealership is Penske’s 26th Mercedes location worldwide and is projected to bring in annualized revenues of $150 million, the retailer said.
“We are thrilled to enter this new market area and we welcome the Mercedes-Benz of South Charlotte team to Penske Automotive Group,” Penske Automotive Group president Rob Kurnick said in a news release.
“With the completion of this acquisition, Penske Automotive Group has now added over $700 million in expected annualized revenue to its operations this year as the company drives to its target goal of achieving $1 billion in earnings before taxes in 2023,” Kurnick said.
Sonic has multiple locations in the Charlotte area, as does Hendrick. Group 1 Automotive has one store in the area, in nearby Rock Hill, S.C.
Pedder Auto Group buys Calif. CJDR store
In other news on the dealership M&A front, Performance Brokerage Services announced on May 29 that Pedder Auto Group has purchased Poway Chrysler Dodge Jeep Ram and Poway Hyundai from Mark Abelkop.
These were the final two stores owned by Abelkop, who is moving into semi-retirement. He worked with Performance Brokerage Services to sell the stores to Pedder, a Southern California-based group owned by David Pedder.
In a news release, Performance Brokerage Services co-founder Jason Stopnitzky, who was the exclusive agent for the deal, said: “It was a pleasure to work with such fine principals during this transaction. David Pedder is a progressive, forward-thinking dealer, who surrounds himself with some of the best talent in the business. I anticipate we will see tremendous growth from Pedder Auto Group in the future. This was a great fit to take over the legacy Mark Abelkop has built in Poway.”
Two of the public auto retailers announced expansions Tuesday, including one involving a standalone used-car store program.
Starting with AutoNation, the group said it has opened AutoNation USA San Antonio, its fourth pre-owned store in Texas and the first of five the retailer is planning to open in the U.S. during 2021.
AutoNation also plans to open USA stores in Austin, Texas, Phoenix and two locations in Denver this year.
“We are excited to welcome Customers to our newest AutoNation USA store in San Antonio. We are also excited to offer employment opportunities to the local market,” AutoNation president Steve Kwak said in a news release.
“Our responsibility is to provide a peerless Customer experience in San Antonio and support the community through our Drive Pink initiative,” Kwak said. “Drive Pink has raised nearly $27 million in the fight against cancer. AutoNation is committed to serving the local communities in which we serve.”
AutoNation now has six USA stores and aims to have more than 130 locations open by the end of 2026.
After adding five total this year, AutoNation plans to add 12 more in 2022. And then the growth in AutoNation USA would really escalate.
As one analyst from the investment community calculated during the retailer’s quarterly earnings call last month, reaching the 130-plus AutoNation store count by the end of 2026 would mean adding at least 27 locations a year between 2023 and 2026.
Speaking of rapid expansion, Lithia Motors & Driveway — one of the most (if not the most) active retailers on the M&A side of the market — has broadened its footprint to Las Vegas with the purchase of three Hyundai stores in the area.
The stores are expected to bring in approximately $225 million in annualized revenues.
"We are thrilled to make a strategic entrance into the Las Vegas market with three of the four Hyundai points in the area, giving us a dominant presence with a dynamic growing brand," Lithia president and chief executive officer Bryan DeBoer said in a news release.
“These franchises are matched perfectly with the local market demographics and further expand the reach and selection of our Driveway offerings by providing consumers transportation solutions wherever, whenever, and however they desire,” he said.
Since announcing a five-year plan in 2020, Lithia has now surpassed $6.9 billion in total expected annualized revenues acquired.
“With a pipeline of over $15 billion in annualized revenues that meet our disciplined hurdle rates under negotiation, our accelerated pace of acquisitions will continue into the coming quarters,” said DeBoer.
“After raising nearly $2 billion of additional capital through concurrent equity and debt offerings earlier this month, we are more confident than ever in our five-year plan of reaching $50 billion in revenue and $50 earnings per share. This transaction was financed using existing on-balance sheet capacity,” he said.
With plans to expand the facility by updating the showroom, adding more service capacity and increasing the display area for new- and used-vehicle inventory, Zeigler Automotive Group announced the acquisition of its 31st dealership this week.
Zeigler finalized a deal with Francis and Ralph Mauro of the International Autos Group to purchase International Subaru of Merrillville, which is being rebranded as Zeigler Subaru of Merrillville.
“With Zeigler on track to continue to grow, as we have done in previous years, adding this Subaru dealership fits perfectly into our expansion strategy, especially given its location,” Zeigler Automotive Group president Aaron Zeigler said in a news release.
The group’s new Hoosier State rooftop is located at 1777 W U.S. 30, in Merrillville, Ind., which is on the border of Illinois and Indiana where Zeigler has enjoyed steady growth during the last 15 years.
“Subaru is a coveted brand that we have long been pursuing to add to our portfolio as an offering to our customers,” Zeigler said.
Additionally, Zeigler confirmed the group will keep the acquired store’s current staff with the exception of Kyle Faiman.
Faiman, previously executive manager of INFINITI of Orland Park, will now become the Zeigler Subaru of Merrillville’s new general manager.
Right after announcing a decision involving dividends, Penske Automotive Group promoted one of its executives who likely is quite involved with the execution of those funds going to shareholders among many other decisions for the company’s finances.
This week, Penske said Michelle (Shelley) Hulgrave, the company’s senior vice president and corporate controller, has been named executive vice president and chief financial officer. According to a news release, the promotion is effective on June 1.
Hulgrave will replace J.D. Carlson, who is retiring effective June 1 from his role as executive vice president and chief financial officer.
Penske recapped that Hulgrave joined the company in 2006 as corporate accounting manager, was promoted to vice president and corporate controller in 2015 and was promoted again to senior vice president in February 2020.
Prior to joining Penske, Hulgrave held various positions for DaimlerChrysler Financial and Ernst & Young.
“Ms. Hulgrave has a strong operational and technical background in finance and accounting and her experience and tenure with the Penske Automotive organization will help maintain the integrity and discipline of our worldwide financial operations, and provide a solid foundation for success,” the company said in the news release.
The company also announced another executive move this week as Penske promoted Aaron Michael to executive vice president of financial services and global risk management while continuing as treasurer.
Michael has served as Penske’s senior vice president of financial services since 2014 and has been the company’s treasurer since 2006.
In this role, Penske explained Michael will continue to manage the company’s capital structure, relationships with lending partners and real estate portfolio. He is also assuming the additional responsibility of oversight for the company’s risk management function.
From 2001 through 2006, Michael was employed by Penske in various finance and treasury roles. Prior to working with Penske, Michael was a commercial lender for Comerica Bank.
“Mr. Michael has been instrumental in reducing the company’s leverage and optimizing its capital structure during the challenging pandemic year,” Penske said.
Perhaps fueled in part by the revenue generated by their used-vehicle departments, two of the publicly traded dealer groups are sharing the financial success with their shareholders.
This week, both Penske Automotive Group and Group 1 Automotive announced plans for dividends.
According to a news release from Penske, the company’s board of directors has increased the group’s dividend by 2.3% to $0.44 per share. Penske said the dividend is payable on June 2 to shareholders of record as of May 24.
“We are pleased to offer our shareholders an increase in the quarterly dividend,” Penske Automotive Group president Robert Kurnick said in that news release.
“Our business achieved record results in the first quarter and our cash flow remains strong. With this increase, the annualized dividend increases to $1.76 per share representing a yield of approximately 2%,” Kurnick continued.
And according to a news release from Group 1, the company’s board of directors declared a cash dividend of $0.33 per share for the first quarter.
Group 1 explained the dividend — which represents an increase of 6.5% or $0.02 per share from the fourth quarter — will be payable on June 15 to stockholders of record as of June 1.
Within days of boosting its retail portfolio by acquiring a pair of Nissan stores in California, HGreg.com turned its focus solely back on used vehicles Monday when it opened its newest storefront in the Tampa, Fla., market.
Situated on a 10-acre property in Hillsborough County, the site in Brandon features a 42,000-square-foot storefront and fulfillment center to go with inventory of more than 1,000 pre-owned vehicles.
HGreg recapped in a news release that it officially purchased the property on March 16 and invested more than $30 million to transform the showroom to its spacious and modern style and layout.
The company also said it is in the final stages of hiring and training a team of 100 full and part-time associates while anticipating the need to fill future positions.
“Tampa is a wonderful gateway to the West Coast of Florida and springboard for our growth plans,” HGreg president and chief executive officer John Hairabedian said in the news release.
“We’re happy to expand our team in the region and to make this property a key part of our plans for servicing our customers up and down the coast — and beyond — through a combination of in-store experience, when convenient, and the digital experience,” Hairabedian continued.
As part of its culture, HGreg reiterated that it offers a concierge-like customer experience that includes same-day delivery, contactless purchasing, payment by bitcoin and a generous customer satisfaction guarantee on every vehicle in the company’s inventory that has passed a rigorous inspection program.
Having had a presence in Florida since 2009, HGreg now owns and operates a network of nine dealerships in the Sunshine State — two franchised stores and seven pre-owned dealerships including HGreg Lux, which focuses on luxury pre-owned vehicles.
“We opened in Florida more than 10 years ago and the growth has been strong,” Hairabedian said. “Customers from across the state have appreciated our customer-first culture, inventory of cars, commitment to technology and the online purchase experience.
“We’re excited at our future in the region and will do everything we can to help customers save more and drive happier,” he went on to say.
To join the team in Florida or elsewhere, potential employees can apply at HGreg.com/careers.
AutoNation currently has five standalone used-car stores.
The retailer wants to have more than 130 AutoNation USA locations open by the end of 2026.
That target store count would include the five existing AutoNation USA stores. The retailer plans to have five additional USA stores finished by late this year, then add 12 more in 2022. And then the growth in AutoNation USA would really escalate.
As one analyst from the investment community calculated during Tuesday’s quarterly earnings call, reaching the 130-plus AutoNation store count by the end of 2026 would mean adding at least 27 locations a year between 2023 and 2026.
“That’s just an expression of our confidence that we really have this combination figured out,” AutoNation chief executive officer Mike Jackson said of the growth plans during Tuesday’s call.
“And not to be repetitive but it's important to brand 1PRICE, digital platform, operating skills, speed to market.”
In thinking of USA stores, Jackson added, “It’s an acquisition point, but a reconditioning center for pre-owned and for speed to market and it's a delivery center. And we're able to build those very cost-effectively and with a very reasonable ramp to profitability.”
Beyond its used-car store growth forecast, AutoNation — like many of its peers, lately — has also flexed its M&A muscle. The retailer announced an agreement Tuesday to purchase 11 stores and a collision center from Peacock Automotive Group. The locations operate in Hilton Head, S.C.; Columbia, S.C.; and Savannah, Ga.
The acquisition would represent annual revenues of approximately $380 million. The deal is expected to close during the summer.
AutoNation USA, by the numbers
Back to the used-car store program: In AutoNation’s investor presentation slides, the retailer said there is a $10 million to $11 million initial capital investment in each USA store.
AutoNation anticipates its pre-owned locations to break even about a year after they open. Initial run-rate is expected after 18 months.
AutoNation forecasts a model USA store to pull in $2.4 million in pre-tax profits each year (or $200,000 a month) at initial run rate.
Breaking that down further, the forecasted monthly average per store at initial run-rate would include projected revenues of $5.5 million and total gross profit of $680,000. With forecasted SG&A costs of $470,000 and projected floorplan costs of $10,000, the monthly pre-tax profit forecast would be the aforementioned $200,000.
And within its five existing USA stores, management has been pleased with the results thus far.
“The performance of the existing stores is outstanding and continues to develop really well,” Jackson said.
The existing USA stores generated more than $3 million in operating profit during the first quarter, management said.
AutoNation has also become quite adept at sourcing used vehicles. Jackson said that 90% of AutoNation’s used-vehicle retail sales are units the group sources itself.
Chief financial officer Joe Lower emphasized during the call that, “the success we've had in procuring vehicles, which is where it all starts. If you go back just a year, 80% of our procurement was self-sourced” compared to 90% in Q1.
“The skills we’ve learned in procuring vehicles, directly from customers, really is a differentiator in the marketplace and something we think we can leverage going forward,” Lower said.
Finding the managers
AutoNation’s next USA stores are set for: Austin, Texas; two locations in Denver; Phoenix; and San Antonio. The latter is expected to open by the end of this quarter.
But as expansion significantly ramps up from 2023 through 2026, AutoNation management was asked about the human capital piece. Getting that many general managers ready to open an average of 27 locations per year for four years is quite the task.
"On the human capital side, we have AutoNation General Manager University, which is an internal development capability that general management within the company is trained and developed,” Jackson said. “High-potential future general managers are identified years ahead of time and go into the development program.
“And the development program has a big component around pre-owned cars. And leading a USA store is something now that's aspired to within the company. Everybody's seen the success that they are,” he said. “And we have a development pipeline of talent that we will promote from within to lead these stores.”
An independent dealership group in business since 1979 just received a majority investment from a value-oriented private equity firm focused on the middle market that manages funds with more than $9 billion of aggregate capital commitments.
On Monday, Crestview Partners announced its investment in AutoLenders, which is headquartered in Berlin, N.J., generating approximately $700 million in annual revenues.
With Crestview’s investment and support, AutoLenders said that it expects to continue to expand its operations throughout the East Coast as the next step toward becoming a “nationwide leader.” AutoLenders already has seven rooftops in New Jersey and Pennsylvania.
Like many public dealer group and large retailers, AutoLenders utilizes an omnichannel platform for buying and selling, allowing its customers to choose between or combine online and in-store shopping experiences. Not only does AutoLenders book leases with super-prime customers, the company said it often retails those off-lease units while leveraging other inventory acquisition options without solely depending on auctions.
“Our strategy has always been for AutoLenders to provide market-leading service and innovative products to our customers,” AutoLenders founder and chief executive officer Mike Wimmer said in a news release.
“By creating a data-driven and customer-centric business, AutoLenders has been able to expand at multiples of the industry growth rate and become a leading player in our geographies,” Wimmer continued.
“We are now at the point where we want to take advantage of the favorable market trends for the automotive retail industry and continue to grow throughout the East Coast with the ultimate goal of becoming a nationwide leader in the fast-evolving previously owned vehicle market,” Wimmer added.
“We are extremely pleased to be partnering with Crestview on this next step of the company’s journey. They are experienced investors with a history of backing businesses poised for growth beyond their core geographies,” Wimmer went on to say.
Dan Kilpatrick is partner and head of financial services at Crestview. Kilpatrick explained why the firm is teaming with AutoLenders.
“AutoLenders sits at the intersection of many of Crestview’s investments across the automotive landscape, in specialty finance companies and behind businesses with rapid dealership expansion strategies,” Kilpatrick said.
“As we have gotten to know the company, it has become clear that the team at AutoLenders is set to thrive in an increasingly digital and dynamic automotive marketplace.,” Kilpatrick continued. “By leveraging proprietary data analytics, coupled with decades of experience from every vantagepoint of automotive retail, AutoLenders is able to nimbly target the right vehicles to profitably finance, buy and sell.”
Crestview partner and co-president Alex Rose also sees AutoLenders being poised for growth.
“Mike and Brad Wimmer and the rest of the AutoLenders team have built a platform which we believe is uniquely positioned to benefit from several favorable tailwinds across this large and resilient, but still highly fragmented market,” Rose said.
“The used-car industry is ripe for disruption and while there are many exciting business models pursuing this opportunity, AutoLenders has built a differentiated business model with advantages which are exceedingly difficult to replicate, positioning it for long-term success,” Rose went on to say.
AutoLenders was advised by UBS Investment Bank and Mayer Brown LLP. Crestview was advised by Gibson, Dunn & Crutcher LLP.
