Asbury sells 7 stores to fit Lexus, Toyota cap rules

Asbury Automotive Group Inc. — which exceeded automaker-set limits on the number of Lexus and Toyota dealerships it could operate after two large December acquisitions — has completed the sale of dealerships it needed to jettison to comply with both brands' policies.

Asbury, which in December bought Larry H. Miller Dealerships and Stevinson Automotive, sold two Lexus dealerships and five Toyota stores across four states over the course of six weeks.

"This was brutal because obviously you don't want to sell any of these stores," Asbury CEO David Hult told Automotive News.

But Hult said he knew he would have a problem to fix with Lexus and Toyota after closing on the mega Larry H. Miller Dealerships group with 54 new-vehicle dealerships across seven Western states and Stevinson, with its eight stores in the Denver area.

Those deals gave Asbury 10 Lexus stores — two more than high-performing dealership groups are allowed in the U.S., according to the existing framework agreement between Asbury and Lexus. Framework agreements govern relationships between automakers and their largest franchised dealers and can limit the number of stores an owner can have of a certain brand overall or in a certain region.

And Asbury's Toyota store count in that brand's Denver region also rose above what "any one dealer can own in a specific region," Hult said. Toyota's Denver region covers six states: Colorado, Arizona, Utah, New Mexico, Nevada and Wyoming.
So Asbury in February sold a Lexus dealership in Creve Coeur, Mo., to Gurley Leep Automotive Group. The sale of a Larry H. Miller Toyota dealership in Colorado Springs, Colo., to Baxter Auto Group shortly followed, and Larry H. Miller Toyota dealerships in Colorado Springs and in Boulder, Colo., were sold to Corwin Automotive Group in March.

On April 1, Asbury sold a Larry H. Miller Toyota dealership in Albuquerque, N.M., to Group 1 Automotive Inc. and Larry H. Miller Toyota and Lexus dealerships in Spokane, Wash., to Findlay Automotive Group.

Hult said the Spokane Lexus store acquired in the Larry H. Miller deal had been Asbury's smallest dealership representing Lexus based on vehicles sold and revenues. Asbury had owned the Lexus store in Missouri since the late 1990s, he said, but opted to sell it to put itself back within the cap allowed by Lexus.

On the Toyota side, Asbury ran into contiguous market issues within Toyota's Denver region, Hult said.

He referred Automotive News to Toyota for specifics on its cap on dealerships in that market. A Toyota spokesman, in an email to Automotive News, said the brand limits how many dealerships a group or person can own in a region, but the allowed number of stores depends on multiple factors such as the owner's share of regional sales.

Hult noted that the limits meant Asbury couldn't keep both Toyota dealerships acquired in Colorado Springs, for instance. So Asbury sold both newly acquired Toyota stores there as the group had no other existing dealerships in that city, Hult said.

Asbury kept a newly acquired Toyota dealership in Albuquerque as it already had other stores in that market, Hult said. He also wanted to keep the Toyota store Asbury acquired in the Phoenix area.

Hult said Asbury worked with Toyota on the sales process and had some flexibility. The group didn't have to sell the Spokane Toyota dealership in Washington state, part of Toyota's Portland region, Hult said.

"We chose to sell that one because it was a small store," he said.

"And if we had to sell the Lexus store [in Spokane], it just seemed to make sense. It was a better package, putting the two stores together than selling Lexus and keeping the Toyota store there."

Asbury opted to keep five newly acquired Toyota dealerships in the Denver region: two stores that came with the Stevinson deal in the Denver area, the larger of two outlets acquired in Albuquerque from Larry H. Miller, a Larry H. Miller store in Peoria, Ariz., and a Larry H. Miller dealership in Murray, Utah.

"Murray Toyota was what I call the epicenter for the Millers," Hult said. "Murray Toyota was the original store that Mr. Miller bought back I believe in 1979. So from my standpoint, it was not an option to sell the store."

Hult said most of Asbury's focus now will be on continuing to integrate its newly purchased dealerships into its portfolio.

But additional store purchases aren't off the table — Asbury has looked at a dozen opportunities over the last 60 days, Hult said in mid-April.

"We still look at acquisitions, but we're really not focused on that right now and probably won't get aggressive about acquisitions for another six to 12 months," he added.

Asbury of Duluth, Ga., ranks No. 5 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 109,910 new vehicles in 2021.

John Huetter contributed to this report.