Publics' purchases in 2022 take a tumble

After a year in which each of the six publicly traded auto retailers bought dealerships — including some that hadn't done so in years — all but one acquired again in 2022.

But the overall purchase total was a fraction of the number of U.S. stores the publics acquired in 2021, a year dominated by four of the largest dealership acquisitions in industry history, each of which was completed by a publicly traded auto retailer.

Automotive News tracked 19 acquisition transactions completed by the public auto retailers in 2022, which involved just 39 dealerships trading hands. Those figures represent a drop of more than 50 percent for the number of transactions and an 82 percent plunge in the number of acquired dealerships.

"It doesn't surprise me that the public groups were a little quieter, just given the way their stock is valued," said dealership lawyer Stephen Dietrich, a partner with the Holland & Knight law firm in Denver. "Their investment of money may have been more valuable in buying back some of their stock than going and buying dealerships."

Lithia Motors Inc. was responsible for the lion's share, over half, of the acquired dealerships, with 25 stores purchased in 2022.

That figure was the highest across the industry, according to Automotive News. Lithia also bought the most dealerships among the publics in 2021 at 67, anchored by its purchase of Michigan's Suburban Collection.

Meanwhile, Group 1 Automotive Inc. bought six stores, AutoNation Inc. acquired four dealerships and Penske Automotive Group Inc. and Sonic Automotive Inc. purchased two U.S. stores each in 2022.

While Penske’s domestic acquisitions were few, it doesn’t mean the company isn’t growing: It acquired auto dealerships in the U.K. and Team Truck Centers in Canada last year. Penske acquired $1.3 billion in annualized revenue last year, including $1.15 billion of auto retail, spokesman Anthony Pordon said in an email.

Asbury Automotive Group, which bought the second-highest number of dealerships in 2021 at 65, did not purchase a dealership in 2022.

Other than Sonic, each of the publics also sold at least one dealership in 2022. And the five publics that did sell collectively sold nearly as many stores in 2022 as they bought.

The publics divested 38 stores in 28 transactions last year. Two of those transactions involved a public group selling one store to another public auto retailer in 2022.

Asbury sold the most dealerships with 16, while Lithia divested 13.

The public groups "took their foot off the gas in 2022," according to the fourth-quarter Haig Report, published by Haig Partners, a buy-sell firm in Fort Lauderdale, Fla.

Haig Partners used regulatory filings to estimate that the public groups spent around $1.85 billion combined on acquisitions last year, a free fall of 80 percent from the firm's estimate of nearly $9.1 billion spent in 2021.

Kerrigan Advisors, a sell-side dealership advisory firm in Incline Village, Nev., that also tracks deals, estimated that the publics spent $1.9 billion on acquisitions in 2022.

Kerrigan Advisors in its 2022 annual Blue Sky Report estimated the publics' fourth-quarter acquisition spending plunged 94 percent from the estimated $6.3 billion spent in the fourth quarter of 2021.

"The decline in the publics' acquisition spending in 2022 was largely a byproduct of their falling market valuations throughout most of the year, as Wall Street discounted these companies' ability to sustain record profitability," Kerrigan Advisors said in its report.