Lithia Motors Inc. and Group 1 Automotive Inc. are back on the prowl for dealerships.
In recent quarters, the auto retailers have actively repurchased their own stock, saying that sometimes represented a better use of their cash than paying a premium to buy dealerships. But that's changing.
Lithia, of Medford, Ore., and Group 1, of Houston, talked about their acquisition strategies after releasing third-quarter earnings last week. Each had record third-quarter revenue, but their profit results were mixed, with Group 1's down due in part to a weak U.K. market.
Both also reported financial headwinds at dealerships in energy-producing states.
Partly for that reason, Group 1's acquisition interest is strongest in the U.K. and Brazil where it has stores. In the U.S., it is looking "outside the oil patch," said CEO Earl Hesterberg. "It would be nice to have some more scale outside of the oil patch, on the East Coast, the Southeast and other growing markets in the U.S."