Dallas dealer Bob Stallings started spending time on car lots when he was 8 years old, helping his father buy cars. But he didn't become a dealer by the old-fashioned way of taking over a family store.
Instead, Stallings made his money -- a lot of it -- in financial services even as he kept his eyes on the car business and formed his own racing team. When the insurance holding company he leads sought to invest excess capital, Stallings came back to the car lot.
"We have been looking for ways to diversify our investment strategy," said Stallings, 65 . "I've had a passion for cars for a very, very long time."
Two years ago, Stallings started looking for dealerships to buy. His company, Gainsco Inc., acquired a Hyundai store in Dallas in November and aims to invest $100 million in dealerships over the next five years. He's looked at more than 30 deals and is negotiating to buy three more Texas stores.
Stallings is one example of how outside money is gravitating to auto retailing, which proved its resilience by emerging from the industry sales crash more profitable than ever. An increasing number of outsiders are buying stores, gathering up cash and looking to invest in dealerships. They include wealthy families, private equity firms and even public companies such as Gainsco.
Most deals still happen dealer to dealer, but outside buyers can be an increasingly good fit for sellers, dealership advisers say. They sometimes will pay a premium and often prefer to retain store management. Manufacturers also are becoming more open to outside investors, provided they have a long-term outlook.
The new investors largely seem to have just that view.