Asbury Automotive Group announced its second quarter results on Tuesday, reporting a total of 21,685 used cars retailed during Q2, up from 20,263 sold during the same period of last year — for a 7-percent spike in used sales. Total new-vehicle sales came in at 26,069, up from 25,131 compared to the same time in 2017.
And the dealer group was making a bit more on most new and used vehicles sold, as well, according to the second quarter results. The average selling price of a used vehicle retailed in Q2 was $21,715, up from $21,231 in Q2 2017. On the new side, the average selling price was $35,625, up from $35,132.
The company reported net income of $43.2 million, and adjusted net income of $42.7 million. This is up from $31.9 million in net income and adjusted net income of $33.2 million during the same quarter of 2017. For the first half of the year, Asbury reported revenue totaled $3.33 billion, representing an increase of 5 percent over the same period of last year, as well as reported net income of $83.3 million, compared to $65.9 million last year.
The dealer group, like many publicly traded companies, experienced some easing of tax burdens this year. Asbury leadership announced that as a result of the tax legislation passed in December of 2017, the tax rate in the second quarter of 2018 for the dealer group was 26 percent, compared to 38 percent in Q2 of 2017.
As far as noteworthy news from Asbury from this past quarter past quarter, dealer group bought a Chevrolet dealership in the Atlanta market, which it expects to generate about $120 million in annual revenue. The dealer group also repurchased 20 million of common stock.
"In a healthy SAAR environment, we grew revenue 6 percent despite, continued margin pressure. We also improved our SG&A as a percentage of gross profit by 90 basis points and maintained our industry-leading operating margins while further investing in our omni-channel capabilities," said David Hult, Asbury's president and chief executive officer.
"We continued with our balanced approach to capital allocation, repurchasing $20 million of our common stock and acquiring a Chevrolet dealership and a Toyota dealership in the Atlanta market,” he continued.
Breaking down some same-store stats that illustrate Asbury’s performance, new-vehicle revenue increased by 3 percent, while gross profit fell by 3 percent in Q2. Used-vehicle revenue was up even more, with an 8-percent hike. Same-store used vehicle gross profit also increased by 2 percent. For same-store numbers, finance and insurance review and gross profit were up 5 percent, while parts and service revenue remained flat.
Stay tuned to Auto Remarketing for more news from Asbury’s second quarter performance stemming from their quarterly conference call.
The National Automobile Dealers Association highlighted that the keynote speaker sessions are among the numerous attractions of NADA Show 2019, which returns to the newly renovated Moscone Center in San Francisco from Jan. 24-27.
The 2019 speaker lineup includes:
• Jan. 25: Wes Lutz, 2018 NADA chairman, and Kat Cole, FOCUS Brands’ chief operating officer and president for North America
• Jan. 26: Charlie Gilchrist, 2018 NADA vice chairman, and Dana Carvey, Emmy Award-winning actor and comedian
• Jan. 27: Inspirational speaker Major Dan Rooney, a decorated U.S. Air Force fighter pilot, professional golfer and philanthropist
In addition to the keynote speakers, NADA pointed out that what it classifies as the four-day “Automotive Industry Event of the Year” includes educational workshop sessions, dealer franchise meetings, an expo with more than 500 top-industry exhibitors and many networking events.
Attendee registration and hotel selection open on Monday. For more details, visit NADAshow.org.
Lithia Motors announced its first-ever chief technology and innovation officer on Monday, appointing former Massage Envy franchising executive George Hines to the role.
Hines, who was chief innovation officer for the wellness brand before joining Lithia, has experience in similar innovation and tech positions throughout retail, ecommerce, hospitality and live event marketing.
His tech career began with Ernst & Young and Deloitte Consulting.
“We’re excited to have George’s digital expertise to improve our customer and team member experiences, drive innovation and expand our revenue base,” Lithia president and chief executive officer Bryan DeBoer said in a news release.
He added: “This is an exciting time for our company and the automotive industry. George's ability to deliver customer experiences online and by leveraging a nationwide network of locations will complement our existing strengths and accelerate innovation.
“With the second largest owned vehicle inventory in the nation and service and delivery infrastructure that touches over 80 percent of the country, we look forward to his influence in further unlocking our potential,” DeBoer said.
With a purchase set to close Monday, Zeigler Automotive Group has acquired its fourth Ford store and 26th dealership overall.
The Midwestern dealership group said Friday it has officially bought McCarthy Ford of North Riverside from the LeFevour family, which purchased the store in February 2017.
The dealership had been Joe Rizza Ford for nearly 40 years.
Its new name will be Zeigler Ford of North Riverside.
The companies made the deal in May.
The closing date is Monday and the store is scheduled to reopen on Tuesday as part of the Zeigler group.
Privately owned Zeigler Automotive Group was founded in 1975, and has 71 franchises and 26 locations throughout Illinois, Indiana and Michigan.
“We feel that this store has great potential. With everything we know about this business and with the community's support, we can really make this a successful store,” Aaron Zeigler, the group’s president, said in a news release.
McCarthy Ford’s current staff will be retained, Zeigler said. However, Val Kholodovsky will come in as general manager.
HGreg.com has confirmed plans to open a new North Miami location this summer — the company’s third pre-owned car dealership.
Plans for the new store come just months after the company announced the opening of its HGreg.com Broward location in February.
HGreg now has a total of four locations across Florida: its three used-car dealerships, along with the HGreg LUX boutique location for luxury vehicles, in Pompano Beach.
There are a total of 65 both full and part-time jobs positions available at the new location, and HGreg is currently accepting applications for sales, customer service, automotive, finance and multiple other positions, according to the company.
“HGreg.com is much more than a car dealership group,” HGreg chief operating officer Fade Bouras said in a news release. “We’re a closely-knit family of professionals who are simplifying the car buying experience and ensuring a seamless customer experience.
“We’ve built a business that can tailor to traditional car purchasers as well as to those who prefer to shop mainly online. We are looking for people who have a passion for growth, technology and want to share in our vision for change,” Bouras explained.
Located at 8101 N.W. 7 Avenue in Miami, the new dealership can store up to 600 vehicles, according to HGreg.
Once again, Larry H. Miller Dealerships hosted group employees, vendors and business partners on the golf course to support its charitable arm Larry H. Miller Charities on Tuesday.
Not only did 54 foursomes come out to compete, this year’s 2-day LHM Golf Classic tournament raised $400,000 for the dealership group’s charity program.
Following an opening dinner and silent auction held at Salt Lake City’s Tuscany restaurant on Monday evening, LHM invited tournament participants to go head to head at the Hidden Valley Country Club in Sandy, Utah.
“The proceeds from the Larry H. Miller Golf Classic make a monumental difference in allowing us to give back in the communities where we do business,” group executive vice president of corporate affairs and Miller family philanthropy Jay Francis said in a news release. “This fundraiser is about one-third of the giving we will do this year and will allow us to make a real difference in our communities.”
The LHM Charities organization particularly aims to gift funds to groups and programs that support health and education initiatives for women and children in need, LHM explained.
Last year, 90-plus nonprofit organizations located across seven different western states were able to benefit from the $350,000 raised during the 2017 tournament.
Over $1.5 million in funds have been raised since LHM held its inaugural golf tournament for charity in 2012, and LHM Charities has given more than $8 million in support of several nonprofit organizations, according to the dealership group.
In its Dealer Sentiment Index for the second quarter, released Monday, Cox Automotive found that franchised dealers continue to be happy with their used-car sales, and they feel better about used than they do about new-car sales.
Meanwhile, independent dealers are feeling a bit of an inventory pinch, which has diminished some of their positive sentiment on used-car sales.
The overall sentiment index for used-car sales (franchised and independent dealers combined) was 55 (out of 100) in the second quarter, relatively steady with the reading of 56 in the first quarter, according to the report.
The sentiment index for used cars among franchised dealers registered a 72, up from 69 in Q1. Not only does this suggest that used sales continue to be a “bright spot,” for franchised dealers, but it also shows these stores are “more positive on used-vehicle sales in Q2 than they were in Q1 and more positive on used than new,” Cox Automotive said.
The index on pre-owned sentiment for independents dropped from 52 to 50, though, with inventory constraints probably driving some of that.
“In Q2, the used-vehicle inventory sentiment for independents dropped to 45, down from 58 in Q1. Likewise, ‘Limited Inventory’ moved up to number two from number four last quarter as a top factor holding back business for independents,” Cox Automotive said.
The company cited an anonymous independent dealer in the survey saying: “(The market) is weak for dealers like me that sell late-model, low-mileage pre-owned vehicles because the new dealers in my area have substantially increased their used-vehicle inventory. They are better equipped to obtain financing for their customers than I am.”
Used-car sales slow some, remain strong in early 2018
There were considerably fewer used-car registrations in the first quarter than in the same period of either 2017 or 2016, according to data from Experian Automotive, but the retail market for pre-owned vehicles still appeared to be robust in the opening months of 2018.
In the May 2018 Manheim Used Vehicle Value Index released earlier this month, Cox Automotive estimated that there was a 1-percent year-over-year dip in retail used-car sales for May; however, it pinpointed the annualized rate to be 1 percent stronger.
Cox calculated the used-car SAAR at approximately 39.7 million for the month — the same as April — which was the strongest rate to date in 2018.
In an Industry Update that was released May 21, Cox Automotive said April had approximately 2-percent fewer used-car sales than the same month a year earlier.
But that was due largely to last month having two fewer selling days than April 2017, the report stated.
In the first four months of 2018, year-to-date certified pre-owned car sales had climbed 2 percent, even though there was a 5.7-percent year-over-year decline in April’s sales, according to Cox Automotive. And, again, the 39.7 million SAAR in April — a rate that repeated in May — was the year’s strongest.
Meanwhile, Edmunds released a forecast in late May calling for 3.4 million used-car sales that month, which would have been down from 3.5 million in April. However, the pre-owned SAAR for the month (39.3 million) was likely to pace ahead of April’s (39.2 million), according to Edmunds.
According to the Experian Automotive Quarterly Briefing outlining market-share and vehicle registration trends from Q1, there were 10.7 million used-car registrations during the opening quarter of 2018.
That’s down from 11.4 million in Q1 2017 and 11.1 million in Q1 2016.
But it beats the 10.5 million in the first quarter of 2015 and the 10.2 million in the same period of 2014.
One of the largest public dealer groups is trying to help Floridians heal after a tragic school shooting back in February
On Monday, AutoNation announced that the company is making a $250,000 donation, through the Broward Education Foundation, to the Marjory Stoneman Douglas Victims' Fund.
AutoNation associates across the country responded to a request from Mike Jackson, the company's chairman, chief executive officer and president, to support the South Florida high school. Jackson also serves on the steering committee overseeing the allocation of the Marjory Stoneman Douglas Victims' Fund.
Contributions by associates were matched by the company.
“I was deeply touched by the response of our associates from coast to coast to the horrific events of February 14. Thirteen AutoNation locations, including our headquarters are in Broward County,” Jackson said.
“Parkland is home to many of our associates and their children, who attend MSD. The outpouring of support from our associates from all over the country, shows this tragedy has hit home for all of us,” he continued.
In solidarity with the victims and their families, AutoNation has partnered with Rick Case Automotive Group, to garner additional support for the MSD Victim’s fund from fellow members of the Florida Automotive Dealers Association.
Rita Case, Rick Case Automotive Group’s chief operating officer said, “Mike Jackson and I may be competitors in business, but right now we've put our business concerns aside and have united to help our devastated community heal from this tragedy.”
The Marjory Stoneman Douglas Victims' Fund has collected more than $8 million and will continue to receive donations through June 30.
Ken Garff Automotive Group now owns Utah’s former Henry Day Ford dealership, and further west Rairdon Automotive Group recently acquired a Honda store in Marysville, Wash., from the O'Brien Auto Group.
Ken Garff Automotive announced Monday that the Day family is departing from the automotive business after 84-plus years.
“We wholeheartedly welcome the Henry Day dealership, its employees and customers into the Ken Garff family,” Garff Enterprises chief executive officer John Garff said in a news release. “We know each other well, and our businesses complement each other perfectly.”
According to Garff, there aren’t any arrangements to make staffing cuts at the newly acquired store. “We have no plans for a reduction in force,” he explained. “Instead, we see growth opportunities as we combine strengths and services of both companies to benefit our customers.”
In addition to changing the former Henry Day Ford dealership’s name to Ken Garff West Valley Ford, the store will supply costumers with increased vehicle options, as well as offer GarffCare and its AdvantageCare pre-paid vehicle maintenance package.
“We are excited to join teams and continue to bring excellent service to our customers,” said Ken Garff West Valley Ford general manager Winston Bennion. “The West Valley community is wonderful, and we will continue to deliver the excellent service they have received from Henry Day's team.
“Our teams are all still in place, so customers can continue receiving the superior service they've always expected,” said Bennion.
Meanwhile, the Washington State dealership that Rairdon Automotive purchased from O'Brien Auto at the end of May is the group’s 11th location.
Now named Rairdon's Honda of Marysville, the newly acquired store is also the group’s third Honda dealership, joining Rairdon Automotive’s Honda of Burien and Honda of Sumner.
“We founded our company 25 years ago in the Smokey Point/Marysville market,” said Greg Rairdon, founder and CEO of Rairdon Automotive Group. “It’s a great opportunity for us to add our third Honda dealership where we got our start.”
Vehicles aren’t the only industry merchandise that recently rolled over the curb in the Atlanta market.
Haig Partners represented Ken Page and Scott Smith, principals of Automotive Associates of Atlanta (AAA), in the sale of two of their six Atlanta dealerships to Asbury Automotive Group and Jim Ellis Automotive Group.
Asbury has acquired Toyota of Union City, and Jim Ellis Automotive has acquired Cobb County Kia.
“We are excited to bring Toyota of Union City into our Nalley platform in metro Atlanta,” Asbury chief executive officer David Hult said. “We will be able to take advantage of Nalley’s strong market presence, its leadership and great people in the stores that really generate great returns.
And we have a high-performing store in Nalley Honda just across the street,” Hult added.
Smith explained why he made this move.
“We have been very proud to represent Kia and Toyota in the Kennesaw and Union City communities,” Smith said. “These transactions have allowed me to refinance and fund my acquisition of the remaining Atlanta locations from my long-time partner and good friend Kenny (Page).”
Page Automotive Group and Automotive Associates of Atlanta will maintain ownership of dealerships in Florida, Maryland and Georgia.
“Haig Partners was able show us the value of approaching multiple targeted buyers to generate the value required to make this dream come true,” Page said. “Haig Partners found us great partners that will provide our employees with new opportunities and will represent the local markets well.
“Both Scott and I believe the team at Haig Partners was highly instrumental in managing the negotiation process and bringing the transactions to a conclusion. I am very happy for Scott in his new endeavor and look back on our years as partners with great fondness.”
Nate Klebacha and Kevin Nill of Haig Partners were the financial advisers to Page abd Smith. Stephen Dietrich of Holland and Knight served as legal counsel for the Cobb County Kia transaction, and Robert Bass of Bass Sox Mercer served as legal counsel for the Toyota of Union City transaction.
“Scott and Kenny asked us to help simplify their Atlanta operations, and we presented them with multiple solutions. Ultimately their choice to sell the Toyota and Kia locations was based upon what was best for their employees and the markets they served. We would like to congratulate Jim Ellis and Asbury for acquiring dealerships in the robust Atlanta market,” Klebacha said.
Nill added, “Unlike many situations where a buyer acquires all of the dealerships, this opportunity made more sense to identify and execute transactions with separate buyers. While adding complexity, it generated the funds necessary for Scott to acquire the group’s Atlanta Nissan dealerships.”
The team at Haig Partners has been involved in the purchase or sale of 14 Atlanta area dealerships and more than 280 dealerships nationwide.
Asbury now has 81 stores representing 29 brands in nine states.
Jim Ellis Automotive Group is an Atlanta-based dealership group with 14 stores representing 13 different franchises.
