Asbury Automotive Group Inc. has learned that smaller is better when it comes to stand-alone used-car stores.
CEO Craig Monaghan said the dealership group will add two "small to midsize format" Q auto stores in the Tampa, Fla., market by the end of summer at a cost of $10 million. The company closed its large Q auto store in Jacksonville, Fla., in February because it was unprofitable.
The new stores will bring the total of Asbury's Q auto stores to four, all in the Tampa area.
Monaghan said the large-format Q auto store could not generate enough volume to break even. But the two smaller stores made enough money to cover their overhead expenses, he said.
Asbury launched Q auto in 2014 with three stores. It said last year that it would not open others until it figured out how to make its existing stores profitable.
"The smaller-volume stores seem to be working. In fact, the store that we had open the longest, our store in Brandon, has been profitable for four quarters," Monaghan said during a conference call in late April discussing the company's first-quarter results. "Our store in Fort Myers has been profitable for two quarters."
"With all our knowledge about used cars, the capital we can bring to play, the marketing expertise we have in-house, IT, what we can do with the website -- it seems to be an initiative that makes a lot of sense. It's worth our time and effort to try to figure out that model."