In a sign of the growing appetite for acquisitions among big retailers, Sonic Automotive Inc. says it plans to buy 18 dealerships with combined revenues of $800 million.
The addition of the mostly luxury import dealerships also means the nation's third largest public car retailer is closing in on No. 2 UnitedAuto Group.
Industry watchers say Sonic's move shows the market for dealerships is heating up. "There is renewed interest," says Sheldon Sandler, a Princeton, N.J., investment banker.
In April, UnitedAuto Group purchased a $300-million-a-year luxury auto mall in Warwick, R.I.
Sonic's acquisition includes the jointly owned Momentum and Advantage chains in Houston and seven other stores in Dallas, Atlanta, San Francisco and Detroit.
The transactions are expected to close in the third and fourth quarters of 2003.
Now heavy in General Motors brands, Sonic will beef up its product mix with the import and luxury makes. The 11 Momentum and Advantage dealerships represent BMW, Mini, Audi, Jaguar, Volvo, Porsche, Volkswagen and Nissan. Ricardo Weitz, owner of Momentum and Advantage, will join Sonic's management team.
Sonic, of Charlotte, N.C., did not disclose how much it paid for the 18 stores. Sandler estimates Sonic paid $120 million to $140 million, excluding real estate.
Sonic said the new dealerships would raise its annual revenue to $7.2 billion, giving it 208 franchises at 161 dealerships in 15 states. Last year, Sonic acquired Don Massey Group of Plymouth, Mich., which had revenues of $1 billion.
Sonic reported sales revenue of $3.6 billion in the first half of 2003. UnitedAuto Group said its sales totaled $4.2 billion in the first half.