While Asbury Automotive Group Inc. made no acquisitions in the third quarter, the public dealership group is setting its sights on expansion.
Asbury executives told reporters and analysts last week that the group is interested in entering new markets as well as acquiring "tuck-in" stores, generally described as one or two stores that help round out a retailer's presence in an existing market.
"During the year of 2018, I don't think we have had a week where we haven't been looking at an acquisition," Asbury CEO David Hult said on a call announcing higher third-quarter earnings. "So it's fair to say we are looking at things now."
The company declined to share details but said it is working on potential acquisitions. More domestic-brand dealerships are possible.
"There is no question we would like to grow our domestic rooftop count," Hult said. "Our domestic partners are much appreciated. We think we make good money with our domestic partners."
During the third quarter, just more than 80 percent of Asbury's new-vehicle sales came from its luxury- and import-brand stores, with the balance coming from domestic brands, led by Ford, Chevrolet and Dodge. Asbury's dealerships generally are concentrated in the Sun Belt, with locations in Florida and Georgia accounting for more than half of the company's revenue.
"Diversifying the portfolio is our main focus because all brands are cyclical," Hult said. "So you really want to think about where you are positioned in the country and what brands you have."
Asbury will base acquisition decisions on the potential return, said CFO Sean Goodman.
"If the project meets the return characteristics given the risk profile, then we would invest in that project," Goodman said.
An acquisition target's potential fit with the Asbury organization is also key, Hult said.
"Sometimes, buying revenue isn't necessarily a great thing for a company if it doesn't mesh well together," he said. "So we are very focused on how they operate. Is it a good fit for us, and is there a win-win for us and the dealer partner?"
Asbury operates 83 dealerships. It ranks No. 7 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 99,975 new vehicles in 2017.