Lithia Motors completed its third dealership acquisition in less than a month by securing Audi Auto Gallery in Woodland Hills, Calif.
The dealer group indicated on Thursday that the store will be relocated to Calabasas, Calif. and named Audi Calabasas, adding an additional $120 million in estimated annual revenues.
In the middle of September, Lithia expanded its East Coast operations, announcing that it acquired the nine-store Carbone Auto Group that operates in New York and Vermont.
Then before the month closed, Lithia brought on one of the largest franchised dealerships in Wyoming with the acquisition of Greiner Ford Lincoln of Casper, Wyo.
Following the announcement of this Audi store in California, Lithia president and chief executive officer Bryan DeBoer said in a news release, “We are excited to extend our recent cadence of acquisitions by welcoming our new team to the Lithia family. We look forward to providing the community of Calabasas wonderful customer service through its first exclusive Audi dealership.
“This acquisition brings our cumulative 2016 annualized acquired revenue to over $1 billion,” DeBoer continued. “We believe that considerable acquisition opportunities remain that require an equity investment at the low end of our 10 percent to 20 percent of revenue guideline.”
Wyoming might be small in terms of population, but Lithia Motors now has one of the largest franchised dealerships in the state.
Lithia recently acquired Greiner Ford Lincoln of Casper, Wyo., in a move to secure a store that will add an additional $75 million in estimated annual revenues, according to the dealer group.
“We are pleased to welcome the newest members to the Lithia family,” said Lithia president and chief executive officer Bryan DeBoer. As the largest standalone dealership in Wyoming, Greiner is a quintessential example of our Lithia exclusive market strategy. Their proven leadership will serve as a generator of operational talent to expand beyond our current footprint of 152 stores.
“The addition of Greiner Ford brings our 2016 acquisition activity to a cumulative revenue total of nearly $1 billion,” DeBoer continued. “We believe that considerable acquisition opportunities remain and that our entrepreneurial driven model can continue to deliver industry-leading returns on these investments.”
Lithia Motors has expanded its East Coast operations, announcing Tuesday that it acquired the nine-store Carbone Auto Group that operates in New York and Vermont.
Carbone generates an estimated $600 million in annual revenues through an exclusive market strategy, Lithia said, noting in the news release that Carbone gives the group a foundation to expand the exclusive market strategy throughout the Northeast.
“Combined with DCH Auto Group's metropolitan market strategy, this further expands our growth potential across the United States,” the retailer said in a news release.
Lithia plans to optimize the current franchise and operations of Carbone into 13 stores. There will be two stores each of Honda, Subaru and Ford franchises and one store each of Toyota, Chevrolet, GMC/Buick/Cadillac, Chrysler/Jeep/Dodge/Ram, Nissan, Hyundai and BMW.
For 2017, Lithia is looking for Carbone to bring in $0.20 to $0.25 in earnings per share.
Bryan DeBoer, Lithia’s president and chief executive officer, said in the release: “We’re excited to welcome Enessa and Alex Carbone and the entire Carbone team to our family and look forward to sharing best practices to inspire continuous improvement.
“For over 85 years, Carbone has served their local communities in upstate New York. Their reputation and teams they have developed position them well for future growth,” he said. “This adds to our growing pool of entrepreneurial and dynamic store leaders that accelerates our ability to find strong and stable businesses at a pace and return that is typically reserved for green-fielding."
This move follows the grand opening of a Volkswagen franchise in Freehold, N.J., earlier this month. Operating as DCH Volkswagen of Freehold, that store is expected to add $35 million in annual revenues.
In August, Lithia announced the purchase of Kemp Ford in Thousand Oaks, Calif.
Lithia Motors Inc. announces the grand opening of a Volkswagen franchise in Freehold, N.J.
Operating as DCH Volkswagen of Freehold, the store is expected to add $35 million in annual revenues.
“We are pleased to expand our partnership with Volkswagen and to increase our presence in New Jersey, as DCH Volkswagen of Freehold is our fourth store in the Freehold market,” said Bryan DeBoer, Lithia’s president and chief executive officer. “This allows us a greenfield expansion opportunity as we continue to grow our store footprint in both DCH and Lithia markets.”
Lithia Motors purchased DCH in 2014, creating one of the United States' largest dealership chains.
The event-producing year involving Cars.com generated another headline on Wednesday morning as the vehicle-listing website’s parent company — TEGNA — announced it intends to spin-off Cars.com, creating two independent publicly traded companies.
Additionally, TEGNA announced that Gracia Martore, its president, chief executive officer and a member of its board of directors, will retire upon the closing of the spin-off, which is expected to take place in the first half of 2017.
Following the spin-off, officials said Cars.com will remain headquartered in Chicago and will trade under the ticker symbol CARS.
The company emphasized the automotive sector is the single largest and most important vertical for local advertising revenue, and Cars.com is one of the few “proven and established digital solutions of scale” in this market.
TEGNA is anticipating that the planned spin-off will result in a trading multiple for Cars.com that is commensurate with other pure-play digital companies; greater flexibility to pursue merger and acquisition opportunities; and benefits associated with aligning capital structure and allocation with specific business needs and opportunities.
“As an independent company, Cars.com will be able to focus more sharply on its key strategic priorities, including rapid innovation within a growing marketplace and active evaluation and pursuit of acquisitions to open up new, adjacent opportunities,” the company said.
Earlier this summer, Cars.com acquired DealerRater, in a move seen as a way to leverage “word-of-mouth marketing,” according to previous reports in Auto Remarketing.
“The spin-off we are announcing today is the next logical step in our ongoing transformation to best position our market-leading businesses and continues our strong track record of creating value for shareholders,” Martore said in a press release announcing the latest news.
“Spinning off Cars.com from TEGNA will establish two strong, industry-leading companies that are well positioned to compete and to continue to profitably grow in their targeted markets. Each business will have increased strategic, operating and financial flexibility at a time when the broadcast and digital sectors are both rapidly evolving — presenting both companies with a wealth of opportunities,” Martore continued.
“Cars.com will have the flexibility to invest in further organic growth and to participate in the active digital automotive M&A market, and TEGNA will have a strong balance sheet and cash flow to continue to pursue investment in organic growth and opportunistic acquisitions and to provide an optimal mix of capital returns to shareholders,” she went on to say.
“We are fortunate to have strong CEOs for both companies, and we believe this is the right time to separate in order to unlock potential shareholder value both in the near term and over time as they develop independently as two separate pure-play companies,” Martore added.
When the spin-off is finalized, the company said Alex Vetter still will serve as chief executive officer and president of Cars.com, a position he took back in November 2014
Under Vetter’s leadership, Cars.com has grown to approximately 1,300 employees, and the company serves every local market in the U.S. In his years with Cars.com, Vetter has operated in nearly every capacity, spanning product development, customer service, training, operations and sales.
The company also mentioned Vetter has helped establish a vibrant local marketplace for vehicles, enabling e-commerce activities with approximately 20,000 dealers and every manufacturer, all of whom connect with site users on a daily basis. Vetter also serves on the boards of several digital technology companies, including RepairPal.com, a leading marketplace for service and repair.
CareerBuilder strategic review
In connection with the planned spin-off of Cars.com, TEGNA also said it will evaluate strategic alternatives for CareerBuilder, including a possible sale.
CareerBuilder is a leader in human capital solutions that provides services ranging from labor market intelligence to talent management software and other recruitment solutions. It is one of the largest online job sites in the U.S., measured both by traffic and revenue, with a presence in more than 60 markets worldwide.
TEGNA owns a 53-percent controlling interest in CareerBuilder. Minority owners are Tribune Media and The McClatchy Co.
“At this time, there can be no guarantee that any of the options under review will result in a transaction,” officials said.
This week, Walser Automotive Group, one of the largest dealer groups in Minnesota, announced that it has completed the acquisition of Wichita Luxury Collection, a luxury automotive retailer in Wichita, Kan.
Officials highlighted the award-winning Wichita Luxury Collection (WLC) brings 10 luxury brands — including Acura, Audi, BMW, Jaguar, Land Rover, Lexus, Mercedes-Benz, MINI, Porsche and AMG — to Walser’s existing 15 franchises.
“The Wichita Luxury Collection offers a unique luxury experience unlike any other in the retail automotive arena,” chief executive officers Paul and Andrew Walser said. “We’re grateful that the city of Wichita has welcomed us.
“All of these outstanding franchises are new to Walser, so we're excited to offer a much greater selection to both our current and future customers,” they continued.
The group indicated Bobby Cuillo will remain as managing partner of Wichita Luxury Collection and will run daily operations, customer, vendor and manufacturer relationships, and will be responsible for growing the luxury collection brand in and outside of Wichita. Cuillo has been with WLC since 2008 and has been crucial to the addition of the Audi, Land Rover, MINI, BMW and AMG franchises.
After more than 50 years at the helm, Vic Scholfield, Tom Devlin and Steve Hatchett — the other partners of WLC — felt it was time to retire.
“We would sincerely like to thank these great automobile franchises for giving us the honor of representing them in the Wichita area,” Hatchett said. “We would also like to thank our thousands of valued customers for their loyalty and our wonderful employees for their dedication and professionalism all these years.
“We wish the Walser organization and our partner Bobby Cuillo the best in the future,” Hatchett added.
Walser believes ownership of Wichita Luxury Collection will allow it to grow and serve the Wichita community in ways never before possible. WLC will remain a locally run, locally operated business, but with the depth and bench of talent of a much larger entity.
"We are very fortunate that all of our manufacturers have embraced Walser and are excited for this next chapter in the history of our exciting growth,” Cuillo said. "This was a natural fit for us, since both Walser Automotive Group and Wichita Luxury Collection have an extraordinary commitment to customer and employee satisfaction.
“Once again, we will raise the bar on a true luxury experience,” he went on to say.
The Blue Sky Report from Kerrigan Advisors released on Monday highlighted that the number of large, multi-dealership transactions rose by 52 percent year-over-year during the first half of 2016.
Along with seven other key findings from its analysis of the first six months of the year, Kerrigan Advisors found there was a decline in overall transaction activity. However, the firm also noticed the average size of transactions rose significantly.
Laying out the high, average and low multiples for each franchise in the luxury and non-luxury segments for the quarter, the report mentioned seven other key findings, including:
• 32 multi-dealership transactions completed.
• 22-percent increase in average transaction size as average dealership group sold represented more than three franchises.
• 16 percent decline in overall transaction activity.
• Dealership group sellers spurred by retirement, estate planning, lack of a succession plan and rising real estate prices.
• Domestic buy/sell market share increases as buyers attracted to higher return on investment versus imports.
• Private buyers continue to drive the market as publicly traded dealerships’ market caps decline.
• Publicly traded dealerships, as a group, sold nearly as many dealerships as they acquired.
“Many owners of multi-franchise groups, particularly those at or near retirement, are capitalizing on their ability to sell their groups to a single buyer in today’s market,” said Erin Kerrigan, managing director of Kerrigan Advisors.
“Even with the exit of most of the public buyers, private buyers and new entrants remain active and are often attracted to the scale provided by larger group acquisitions,” Kerrigan continued.
“And, while the activity level in the first half of 2016 was lower than the first half of 2015, if annualized it would exceed the number of transactions completed in 2014,” she went on to say.
The report also identified three key trends for the second half of this year, including:
• Transaction sizes will continue to rise.
• Public valuation declines in the first half of the year portend potential private valuation declines.
• The quality of current and future sales may weaken.
“While buy/sell activity declined in the first half of 2016 for the first time since the recession, driven primarily by the exit of most public buyers, we expect the pace of acquisition activity to increase in the second half of 2016, as private buyers and new entrants continue seeking sizable acquisitions and sellers continue to capitalize on attractive valuations,” Kerrigan said.
“But it must be noted that the decline in the public dealership values as noted by The KAR Index may portend a decline in future private values and the quality of industry sales may be weakening, increasing industry risk and resulting in lower dealership earnings,” she added.
The Blue Sky Report is published four times a year and includes Kerrigan Advisors' 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.
The complete report can be downloaded here.
Lithia Motors president and chief executive officer Bryan DeBoer projected it would be “an extremely busy second half” of the year pertaining to the dealer group’s acquisition activity. On Thursday, Lithia backed up DeBoer’s comments when the company shared its second-quarter financial results.
Lithia has acquired Kemp Ford in Thousand Oaks, Calif. The company indicated the store will be renamed DCH Ford of Thousand Oaks and will add $65 million in estimated annual revenues.
“We are pleased to welcome DCH Ford of Thousand Oaks to our team,” DeBoer said. “This store marks the third acquisition for our DCH platform this year and complements our existing operations in southern California.
“We are excited to expand our relationship with Ford and further diversify our brand mix,” continued DeBoer, who now has eight Blue Oval franchised stores in the portfolio. “We remain focused on continued acquisition growth within both rural and metropolitan markets in the future.”
Findlay Automotive Group recently purchased a Jaguar franchise to add to its Land Rover Las Vegas store. The franchise was previously owned by Gaudin Automotive Group, which managed it for nearly 30 years.
The transaction was completed July 1. Financial details were not disclosed.
As the only exclusive Jaguar Land Rover Centre in Southern Nevada, Jaguar Land Rover Las Vegas has become a leading retailer in the western United States.
“This is an extraordinary milestone for the luxury automotive sector in Las Vegas,” Ray DiNardi, general manager of Jaguar Land Rover Las Vegas, said in a news release.
“The addition of the Jaguar brand to our existing Land Rover franchise will allow Jaguar Land Rover Las Vegas to offer the Las Vegas and surrounding communities with our elite fleet of vehicles while delivering the superior customer experience our patrons have come to expect.”
The recent launch of the Jaguar F-PACE helped propel Jaguar Land Rover to its best-ever May, with retail sales jumping 18 percent. This was the company’s fifth consecutive record-breaking month. On the certified pre-owned side, the Land Rover brand sold 1,675 units in June (up 25.7 percent year-over-year), according to Autodata Corp., its best-ever CPO month.
“We couldn’t have acquired this brand at a better time,” continued DiNardi. “The new generation of Jaguar has completely revolutionized the Jaguar lineup. With the additions of the all-new Jaguar XE and Jaguar F-PACE, we are poised for instant growth at Jaguar Land Rover Las Vegas and are confident the brand will continue its radical progression.”
While sales are expected to grow, management has emphasized its continued commitment to philanthropic and civic efforts that support the Las Vegas community.
“We are an active organization in the community, sponsoring the Boy Scouts, The American Diabetes Association and various other charitable organizations,” DiNardi said. “Jaguar Land Rover Las Vegas is also proud to support The Conservation Fund. Our efforts have resulted in planting over 5,000 trees that have offset over 6,400 tons of CO2 to date, and we take great pride in continuing our support for these causes.”
Jaguar Land Rover Las Vegas is located at 5255 W. Sahara Ave. Store information may be found at jaguarlv.com and lrlv.com.
Perhaps it takes a shopper longer to decide which vehicle they want from your inventory than it did for the acquisition of DealerRater by Cars.com to close.
Cars.com announced on Monday that it closed the acquisition of DealerRater, a transaction first announced a week ago.
The companies reiterated that terms of the transaction were not disclosed.
“We are pleased to bring DealerRater into the Cars.com family of industry-leading products and people as we create the largest dealer review platform in the automotive sector,” said Cars.com chief executive officer and president Alex Vetter, who spent time with Auto Remarketing explaining why this deal can impact dealerships.
“With this acquisition, Cars.com has solidified its position as the leader in online automotive reviews and the preeminent authority for car shoppers and owners on what to buy, where to buy and who to buy from,” Vetter continued.
Since Cars.com launched its reviews in 2011, the company has maintained its transparent model for generating consumer feedback, which better serves shoppers and customers. The addition of DealerRater and its review database further strengthens this value proposition.
“We are happy to be joining Cars.com and are proud to share a similar foundation,” DealerRater chief executive officer Gary Tucker said. “DealerRater is uniquely positioned to lead the industry transition to finding not only the right dealer, but connecting consumers with the right person at the right dealer.”
