Lithia Motors Inc.'s incoming CEO wants to sell more used cars at more stores.
"Our real opportunity comes in used vehicles," Bryan DeBoer told Automotive News.
On May 1, DeBoer, 44, will succeed his father and company founder, Sid DeBoer, 68, as CEO of Lithia. The older DeBoer will assume the role of executive chairman of the Medford, Ore., dealership group.
The younger DeBoer, who has been COO since 2007, wants to increase Lithia's store count and per-store sales. He also plans to significantly boost Lithia's used-car sales, an area in which about half of Lithia's 86 stores are underperforming, he said.
DeBoer says Lithia retails on average 39 used vehicles per location a month. He says there is potential in the market to sell 60 units per site.
"We have to get enough managers on site and train the employees to get to that cadence," he says.
Lithia ranks No. 9 on the Automotive News list of the top 125 dealership groups in the United States with retail sales of 33,790 new vehicles in 2010.
DeBoer joined Lithia in 1988. After a few months of working on the company's financials, he started selling cars at Lithia Honda in Medford, Ore. He did that for two years. Then he became the used-car and sales manager at the Honda store for a year before taking over as general manager for five years.
In 1996, Sid DeBoer took Lithia public. The younger DeBoer's main job then was to help grow the company. Lithia owned five stores.
"My role was to go find stores and integrate those stores operationally," he said. "I got to know the people, brought them into our organization and made the transitions."
Lithia will continue buying franchises in small- to mid-sized markets where it can be the exclusive operator, or luxury franchises in larger markets where there are only a couple of competing dealers, he said.
DeBoer's top priority this year is to improve used-car sales.
At the Honda store in Medford, "we used to sell 1,500 used cars a year or about 125 a month," he said. "That store is selling less than 40 a month. It's a combination of mind-set, getting enough inventory, but probably, most of all, it's the mistake of living and dying by the trade-in."
He says many dealers tend to believe a late-model year conquest used vehicle they get on a trade-in is going to sell. But often the customers who want that kind of vehicle buy it certified from the brand's franchised competitor.
"It freezes your dollars," DeBoer said.
He wants his managers to go to auction and trade those late-model vehicles for older ones that a customer wouldn't find certified on another franchised dealer's lot. "That's one of my main focuses," he said, "to train managers to better manage the inflow and outflow."