Editor's note: One of the dealerships acquired by Morgan Auto Group was not listed in an earlier version of this report. It has been updated.
It's a good time to buy dealerships, says Brian Bates, CEO of Holman Consumer Services, the branch of Holman Enterprises that includes Holman Automotive Group Inc. Holman Automotive acquired the 14-rooftop Kuni Automotive in July. The acquisition bumped Holman 35 spots higher on Automotive News' annual Top 150 Dealership Groups list, which ranks dealership groups based in the U.S. by new-unit retail sales. Holman accelerated to No. 16 from No. 51 on the prior list. "The automotive market is in a great space in the economy," said Bates. "It's got a long, viable future, and the foundation is very solid."
Acquisitions such as Holman's of Kuni were behind a number of changes in this year's rankings. And no wonder: Last year had the second most buy-sell activity in history, after 2015, with 223 transactions representing 350 franchises, said Erin Kerrigan, managing director for Kerrigan Advisors.
"What was notable about 2016 was the number of multi-dealership transactions," which hit a record 57, she said. "Most of these larger acquisitions were completed by private dealership groups."
Among the groups acquired, besides Kuni, which had been No. 63 on last year's list, were Carbone Automotive Group, No. 94 last year, which was purchased by Lithia Motors Inc., and Ron Tonkin Family of Dealerships, previously No. 93, 16 stores of which were bought by Gee Automotive, of Spokane, Wash.
Acquiring stores makes sense for groups such as Holman and Lithia that want to grow. But Bates said Kuni's culture sealed that deal. "The alignment with the Kuni culture was perfect. We are an organization that is focused on employee engagement, as was Kuni," he said.
Holman, of Mount Laurel, N.J., had 19 stores in New Jersey, Pennsylvania and Florida before the acquisition. With the addition of Kuni's 14 rooftops, Holman gained business in the West -- in Washington, Oregon, California, Colorado and Kansas.
"It was a great time to put it together and expand our retail presence," Bates said.
Holman Automotive Group's new-vehicle retail sales were the second most improved over last year. Sanderson Automotive jumped the most rungs on the list. The Glendale, Ariz., group increased 51 spots to No. 94 as its two dealerships' retail new-unit sales soared 72 percent to 10,322 units.
Morgan Auto Group ranked third in rungs climbed, as its acquisitions brought it to No. 49, up 29 places from last year, on a retail new-unit sales increase of 45 percent. On a same-store basis, the Tampa, Fla., group outpaced the U.S. industry's 0.3 percent sales increase, rising 2.2 percent, said Chairman Larry Morgan. The dealership group also strengthened its used-vehicle sales, fixed ops business and F&I results in 2016, he said.
Morgan Auto Group acquired Sun Toyota in Holiday, Fla., Mercedes-Benz of Gainesville (Fla.), and Rountree-Moore Toyota, Rountree-Moore Chevrolet-Cadillac, Rountree-Moore Ford-Lincoln, Rountree-Moore Nissan and Rountree-Moore Kia in Lake City, Fla.
"They were right in our own backyard," Morgan said. "They were good brands. We saw upside that we thought could improve the operations. We had good bench strength to grow our business."
Prime Motor Group, of Westwood, Mass., fell 25 rungs to No. 66, the biggest drop among dealership groups on this year's list. Its retail new-unit sales fell 33 percent to 13,853.