Colorado stores high on list for acquisitions

Last year, an estimated 1 in every 6 new-vehicle dealerships changed ownership in Colorado amid a flurry of acquisitions led by accelerated spending by public auto retailers.

Automotive News estimated that at least 44 franchised stores, or about 17 percent of the state's 260 new-vehicle dealerships, changed hands in 2021 in Colorado as buy-sells surged in the state.

The Colorado Automobile Dealers Association pegged the percentage of dealerships bought and sold last year slightly higher than the Automotive News estimate in part because it counts standalone stores differently. But by either accounting, Colorado experienced a huge surge in buy-sells in 2021, said Tim Jackson, CEO of the state's dealer association.

"We had never had a year that even 5 percent of our stores changed hands in the same year," Jackson told Automotive News.

Buy-sell experts and dealers said Colorado, with its growing economy and population, has become increasingly popular for dealership expansion. Many buyers are bullish on the state because of that growth.

Take Phil Long Dealerships of Colorado Springs, for example. The dealership group has about doubled its store count and the number of brands it represents since the Great Recession.

"We didn't go out and choose Colorado, but we love what's going on economically in Colorado," said Kevin Shaughnessy, vice president of operations and a partner in Phil Long Dealerships.

The group, which ranked No. 100 on Automotive News' most recent list of the top 150 dealership groups based in the U.S., bought Glenwood Springs Subaru in June and a Ford-Chrysler-Dodge-Jeep-Ram store in December in Trinidad, Colo.

Public retailers including Asbury Automotive Group Inc. and Sonic Automotive Inc. have taken notice. They led the 2021 buying spree in Colorado, among the fastest-growing states in the country by population, according to the U.S. Census Bureau.

Asbury of Duluth, Ga., which entered Colorado in 2019, bought nearly half of the Colorado stores that traded hands last year, according to an Automotive News estimate.

Asbury bet big on Colorado when in December it bought eight Stevinson Automotive stores in the Denver area, spending $377 million on the dealerships and real estate.

That same month, it acquired 11 more Colorado stores as part of its purchase of Larry H. Miller Dealerships. It also added a Subaru dealership in Greeley and a Hyundai-Genesis store in Centennial, Colo., last year.

Sonic of Charlotte, N.C., bought three dealerships last year in the state, nearly doubling its franchised store count there. In July, it bought Subaru and Volkswagen dealerships in Grand Junction, Colo., and in Aug-ust bought an Audi-Volks- wagen dealership in Glenwood Springs, Colo.

Colorado historically hadn't had a high penetration of publicly owned dealerships, Jackson said.

AutoNation Inc., the largest U.S. new-vehicle retailer, however, has long had a presence in the state and ended 2021 with 15 stores in Colorado, after selling one to Foundation Automotive Corp. AutoNation opened two used-vehicle-only AutoNation USA stores in the state last year.

Several privately held dealership groups also have entered or expanded in the state.

Foundation Automotive of Canada and Fowler Holding Co. of Oklahoma each bought two stores in the state last year.

Ken Garff Automotive Group of Salt Lake City also bought two Colorado dealerships when it entered the state last year. Ken Garff ranks No. 9 on Automotive News' most recent top 150 list.

Schomp Automotive Group of Highlands Ranch, Colo., has expanded in recent years, Jackson said. Schomp, No. 104 on Automotive News' most recent top 150 list, now has eight franchised stores in the state.

Last year, Schomp bought Mike Naughton Ford in Aurora, Colo., and Empire Nissan Littleton. Schomp also has dealerships in Utah and California.

McDonald Automotive Group in Colorado also is growing: Last year it bought Toyota and Chrysler-Dodge-Jeep-Ram stores in Fort Morgan, Colo., and a Toyota store in Greeley, Colo.

Why the popularity of the Centennial State? Jackson credits demographics in part.

"First off, one thing that's attractive for Colorado is ... we're a growth state," he said.

Colorado's population grew nearly 15 percent to almost 5.8 million people between 2010 and 2020, according to the Census Bureau. Some counties boomed, such as Weld County, up 30 percent, and Broomfield County, up 33 percent. Both are north of Denver.

Scenic Colorado also is popular with visitors, Jackson said. It's a "very tourist-driven state," he said. "That probably helps attract dealers."

Dealership lawyer Stephen Dietrich, a Denver-based partner with Holland & Knight, said Colorado's economy has stabilized in the past 10 to 15 years.

"You've got financial services that are there now; you've got some technology [companies]. It's just a very solid place," said Dietrich, who frequently works on buy-sell transactions. "The economy's going to be solid there, and people like to live there. There's a massive influx of people coming. The market for people who are buying vehicles is growing."

George Karolis, president of the Presidio Group, an investment banking and advisory firm with offices in Denver and Atlanta, agreed that many dealership buyers want to acquire stores in Colorado.

"It does seem to hit a lot of lists these days when we talk to buyers in terms of where they're looking to grow," Karolis said.

Fourth-generation dealer David Perkins, president of Perkins Motor Co., a Chrysler-Dodge-Jeep-Ram store in Colorado Springs, expanded to the southeast part of the state in August 2020 when he and a partner bought two domestic-brand stores in La Junta.

Perkins is open to bulking up even more in Colorado, if the right deal comes along.

"Our goal would be to be able to grow our footprint and grow our impact," he said.

Asbury on March 1 sold a Colorado Springs Toyota dealership, part of its Larry H. Miller Dealerships acquisition. It also more recently sold two other stores from that December purchase — Larry H. Miller Liberty Toyota Colorado Springs and Larry H. Miller Toyota Boulder — to Corwin Automotive Group of Fargo, N.D. Asbury now has about 20 stores in the state.

While such deals show that Colorado remains on buyers' lists, deal pace in the state so far in 2022 seems to have cooled from a hot 2021.

"We're not at the pace we were last year or anything close to it," Jackson said.