Asbury Automotive Group will be exiting its Q auto used-car standalone store business, chief operating officer David Hult said on a quarterly conference call Tuesday morning.
A company spokesperson said via email that the closing process began at its two remaining Q auto stores — which are located in Brandon, Fla., and Tampa — on Monday.
Most likely, Asbury will sell the physical properties. As for the inventory at those stores, the dealer group plans to distribute it to other Asbury stores, the spokesperson said.
The company is “currently attempting to reposition employees to other areas within our organization,” the spokesperson said.
During Tuesday’s call, Hult said the closure of Q auto does not mean the group is slowing down its emphasis on used vehicles.
“With our investments in digital technologies and lead management initiatives, we have reassessed our brick-and-mortar investment in Q auto and made the decision to exit the remaining two locations,” Hult said. “With this decision, we are not decreasing our emphasis on used-vehicle sales.
“Rather, we are focusing our investments and resources on alternative routes to market that we believe will provide a superior return,” he said. “Our attention to the used-car business is evident by the more than 500 basis point-increase in our used-to-new ratio this quarter.”
In the Q&A portion of the call, chief executive officer Craig Monaghan downplayed the financial impacts associated with the used-car standalone store project.
“The financial impact (of Q auto) in the quarter was immaterial; the financial impact going forward of not having Q auto will be immaterial,” he said.
Despite Asbury not being able to pull down “an attractive ROI” from Q auto, Monaghan said the company does not regret making the investment.
“I think it was something that we had to try,” he said.
Monaghan went on to note two primary learnings the retailer took away from the Q auto project.
“One is, it’s all about where you source your inventory,” he said. “And if you’re going to auction to buy a car, you’re the last one with your hand up. And that’s not a situation we wanted to be in. We really have come to the conclusion that we can move our traded vehicles to our stores as effectively or more effectively than we can move them to an off-site location.
“And secondly, we learned that a lot of those buyers are going to be subprime buyers,” Monaghan said. “And that without the captive finance company, running a standalone used-vehicle operation, you are somewhat at a disadvantage.
“We decided strategically that we did not want to be in the business of lending money to used-car buyers,” he said. “And take that all together, we’ve made the decision to exit the business.”