In another sign that the economy is starting to improve, the CEOs of two public dealership groups say they intend to start buying stores again.
Sid DeBoer, CEO of Lithia Motors Inc., wants to use cash from Lithia's Oct. 8 stock offering to be the first public auto retailer to resume an aggressive hunt for dealerships.
In September, Mike Jackson, CEO of AutoNation Inc., told Reuters he is convinced the economy is recovering and said the No. 1 dealership group would go "on offense" acquiring stores.
Dealership acquisitions have been in a deep freeze as the recession worsened over the past two years, brokers say.
But Lithia, of Medford, Ore., is prepared for a shopping spree with more than $40 million raised in its stock offering and a $50 million revolving credit line, DeBoer said.
Lithia's transaction was the second successful stock offering by an auto retailer in less than a month. On Sept. 23, Sonic Automotive Inc., of Charlotte, N.C., generated about $266 million from the sale of stock and convertible notes to refinance its debt.
Since announcing a restructuring plan in June 2008, Lithia also generated $66 million in cash through dealership divestitures. The retailer paid off all its debt except for commercial mortgages and the floorplan credit lines used to buy vehicles.
The company is much leaner than it was last year, when it slashed expenses and streamlined operations. DeBoer said Lithia will remain profitable even if annual light-vehicle sales drop to 8.5 million.
"We are done playing defense," DeBoer, 66, told Automotive News.