Top dealers buy stores, time
Largest 125 groups adjust to new-car sales slump; Ark. partners buy to grow
 | Steve Landers Sr.: "We've done a lot of buying during the recession." |
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Steve Landers Sr. was opening a car dealership in Waxahachie, Texas, when he learned that his 3-year-old partnership was No. 31 on Automotive News' list of the Top 125 U.S. Dealership Groups, based on new retail units.
"It's our second here in Dallas," he said during a phone interview last week. "We've done a lot of buying during the recession."
Landers, 56, the experienced dealer in the trio of partners in RLJ-McLarty-Landers Automotive, of Little Rock, Ark., has cash during a recession where hundreds of dealers want to sell. Most other groups in the Top 125 had to hunker down and sell more used cars.
In 2007, Landers and Mack McLarty, President Bill Clinton's former chief of staff, contributed their 10-store, $400 million group to a partnership with Robert L. Johnson, the founder of the Black Entertainment Network. Johnson's contribution was the money to grow.
And grow the group has, despite launching as the bottom fell out of the U.S. auto market. Last year the multifranchise group -- now 18 stores in eight states -- sold 12,046 new vehicles and generated $642 million in revenue.
If the group had reported 2008 sales to Automotive News, it would have ranked No. 74 on that year's list of the Top 125 Dealership Groups.
The ranking depends on dealerships providing the raw data. This year, for example, several groups fell off the list because they did not provide data.
'In acquisition mode'
"We're still in acquisition mode," Landers said. "We'll add another two or three stores this month."
Acquisitions put him on the road virtually all the time, but that's not much of a change for the self-described "hands-on" Landers. "I don't have an office except in airplanes and cars," he said. He credits high-quality staff and dealership leaders with keeping the business moving.
The RLJ-McLarty-Landers group has spread as far north as Baltimore and as far west as Dallas, but Landers prefers dealership sites close enough for him to fly in and out from Little Rock the same day.
"I feel like a juggler sometimes," he said. "When we get them up in the air, we have to keep them from falling."
That's a sentiment virtually everybody on the Top 125 Dealership Groups list can share.
New-car sales reported by the Top 125 plunged 19 percent to 1.7 million vehicles, almost as much as the industrywide 21 percent decline.
Collective revenue for the 125 largest groups plummeted 18 percent to $104.4 billion. Every other Top 125 metric -- used-car volume, fleet sales, even the number of trade-ins wholesaled off -- also declined.
The groups closed 91 of their 2,315 stores, reflecting the economy, franchise rejections by General Motors Co. and Chrysler Group and the shutdowns of the Pontiac and Saturn brands.
Fewer new, more used
Overall numbers suggest many of the 125 largest dealership groups coped with slumping retail new-car sales and their 42 percent fall in fleet sales by selling relatively more used cars and wholesaling off fewer trade-ins.
Collectively, used-car volume dropped only 8 percent, and the number of vehicles that groups sold wholesale dropped 11 percent.
Among the 20 largest groups this year, 18 reported lower revenue than in 2008.
One exception was No. 15 Bob Rohrman Auto Group, of Lafayette, Ind. It increased new-car sales 1 percent and revenue 2 percent to $735 million -- but the group had to add seven dealerships to do so. Still, that was enough to move up seven places, from No. 22 a year earlier.
The other was No. 20 Open Road Auto Group. Its revenue rose 2 percent to $859 million.
There were only two changes among the 10 largest groups.
Sonic Automotive Inc. of Charlotte, N.C. rose one rank to No. 3, moving past Group 1 Automotive Inc. of Houston. And Staluppi Auto Group of North Palm Beach, Fla. overtook publicly traded Lithia Motors Inc. of Medford, Ore. for No. 8.
The Staluppi group's revenue declined only fractionally to $1.7 billion, and the number of stores held steady at 24. But Lithia's new-car sales plunged by a third, revenue fell 26 percent to $1.9 billion and it sold 11 stores.
At the top, there were changes in fortune if not in rank.
AutoNation Inc., of Fort Lauderdale, Fla., is still the largest group measured by new-car retail sales, number of dealerships and revenue. But No. 2 Penske Automotive Group Inc., of suburban Detroit, is closing in quickly.
In 2008, AutoNation led Penske by 84,000 new-car sales, 83 dealerships and $3 billion in revenue.
But last year Penske halted acquisitions during the recession, while AutoNation shed 29 of its 232 dealerships. By year end, the gap between the two had shrunk to 38,607 sales, 54 dealerships and $1.2 billion in revenue.
As usual, CarMax Inc., the used-car specialist that also dabbles in new-car sales, outdistanced the field in used-car sales, wholesaled units and total units. But its new-car sales fell 28 percent, dropping CarMax to No. 37 this year from No. 26 a year ago.
| The Big 10 | |||
| Top 10 U.S. dealership groups, ranked by 2009 retail sales of new units | |||
| Retail sales of new units, 2009 | Change from 2008 | ||
| 1 | AutoNation* | 179,521 | –22% |
| 2 | Penske Automotive Group* | 140,914 | –18% |
| 3 | Sonic Automotive* | 94,005 | –20% |
| 4 | Group 1 Automotive* | 83,182 | –25% |
| 5 | Van Tuyl Group | 71,309 | –22% |
| 6 | Asbury Automotive Group* | 62,833 | –25% |
| 7 | Hendrick Automotive Group | 52,305 | –13% |
| 8 | Staluppi Auto Group | 39,286 | –15% |
| 9 | Lithia Motors* | 30,506 | –35% |
| 10 | Larry H. Miller Group | 27,443 | –29% |
| *Publicly held | |||
| Source: Automotive News Data Center and company sources | |||
You can reach Jesse Snyder at jsnyder@crain.com.
