Asbury's Monaghan: 'The industry is back'
Craig Monaghan smiles a lot these days. The CEO of Duluth, Ga.'s Asbury Automotive Group Inc., the sixth-largest dealership group in the country, sees rising auto sales, a recovering economy and growing profits for dealers.
"The industry is back," Monaghan said here Saturday. He spoke with Staff Reporter Amy Wilson.
How many industry vehicle sales do you expect in 2012?
We're planning about 13.5 million to 14 million, and anything better than expected is just upside.
We're a very different company today. The recession was a baptismal fire for us, but in hindsight it was probably a very good thing.
It wasn't all that long ago that we had exploding covenants, concern about financing, plummeting new-vehicle sales. We were headquartered in New York, a very different management structure, a very different cost structure. We were drastically reducing capital spending. We were downsizing.
And now I look at it today, and this year we will spend over $50 million in capital spending. Last year was $18 million. So we will more than double capital spending. Our Japanese partners are coming back online with inventory.
Are you fully restored on that inventory?
No, not at all. But it's coming. I would say this quarter we'll be in good shape with the Toyota stores. It will take a little longer for the Honda stores.
What do you foresee in the merger and acquisition market this year?
It's still our perception that sellers' expectations are far greater than what buyers are willing to pay. I personally think some of that is driven by real estate. The real estate market is still depressed.
What do you think about NADA's study of manufacturer facility programs?
Manufacturer demands go in cycles. As the economy is recovering, it feels like we're going to go into the high-demand phase of the cycle again. But I also think it's very unfair to paint all manufacturers with a broad brush. That's just not the case.
We see widely different approaches and widely different willingness of the manufacturer to really be partners.
I've got to call out Toyota. They are wonderful to work with for us. They'll look at a piece of dirt and sit down with us and say how can we best utilize it? How can we build a good-looking store but keep the costs under control? Not all the manufacturers are like that.