Public dealership groups expand their brands
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When AutoNation announced last week that it would purchase three Volkswagen stores and a Chrysler dealership, it proved the company's interest in diversifying its brand base.
AutoNation's leaders have long expressed interest in acquiring a wider variety of brands, including domestics.
But the nation's largest retailer hasn't bought any stores since acquiring a Florida Toyota dealership in early 2011.
Last week it said it would buy six Texas dealerships, including three Volkswagen stores and Audi and Porsche stores in metro Dallas and a Chrysler-Jeep-Dodge-Ram store near Houston.
It will be AutoNation's first purchase of a Chrysler-Jeep-Dodge dealership in at least 12 years.
AutoNation CEO Mike Jackson says he's a believer in both VW and Chrysler.
"It's a statement that the renaissance of Chrysler is real, is sustainable," Jackson said last week on CNBC. "Sergio Marchionne has done a walk-on-water turnaround performance there."
AutoNation says the dealership -- Spring Chrysler-Jeep-Dodge-Ram -- is the highest-volume Chrysler store in Texas and the fourth-highest in the country with annual revenue of $200 million. The Volkswagen, Porsche and Audi stores, which are being acquired from Boardwalk Auto Group, have annual revenue of $375 million. Jackson called the combined purchase the biggest deal in the U.S. industry in a decade.
AutoNation's move was followed by a deal announced by Asbury Automotive Group.
Asbury, the nation's seventh-largest retailer, bought VW and Bentley stores with $60 million in annual revenues in suburban Atlanta from Gossett Motor Cars. Asbury CEO Craig Monaghan has said Asbury is interested in a wide variety of brands. During the next three years, the retailer plans to acquire stores representing $400 million to $600 million in annual revenue.
Last week's deals show that big consolidators have expanded their interest beyond the top five brands -- Honda, Toyota, Lexus, BMW and Mercedes-Benz -- that have traditionally most appealed to them, said Alan Haig, managing director of Presidio Group, a San Francisco company that advises dealerships on acquisitions.
Blue-sky multiples definitely will rise for Chrysler brands, he said.
Haig said: "I had given up that franchise for dead man walking two years ago."
You can reach Amy Wilson at awilson@crain.com.
