Public dealership groups lead 2021 buying spree

Publicly traded dealership groups collectively bought more than 200 franchised stores in the U.S. in 2021, leading a surge in deal-making across the auto retail sector.

The publics — the six major groups, plus fledgling retailer LMP Automotive Holdings — acquired 222 dealerships in the U.S. last year in 42 separate transactions, according to Automotive News, which tracked and analyzed buy-sell deals across the industry in 2021. The publics accounted for 11 percent of all transactions and 31 percent of all franchised stores bought last year. Automotive News doesn't have complete data to be able to generate comparable figures for 2020.

The publics' buying spree, which included several megadeals such as the December purchase of Larry H. Miller Dealerships by Asbury Automotive Group, is largely credited as being a main driver of the bustling buy-sell market and for a 2021 widely considered the biggest year for acquisitions in industry history.

"We have certainly seen the publics capitalize on their improved valuations," said Erin Kerrigan, managing director of Kerrigan Advisors, a sell-side dealership advisory firm in Incline Village, Nev. "I do think they are leading the market in the consolidation push that is driving more large private groups to also consider major acquisitions."

Kerrigan Advisors estimated in its 2021 annual Blue Sky Report that the six major public groups spent a record $9.56 billion on acquisitions in 2021, about four times the $2.48 billion they collectively spent in 2020 when Lithia Motors and Asbury were the only public companies that purchased stores.

By contrast, all six of the major public groups acquired dealerships in 2021. And LMP bought its first eight franchised stores last year, spending $155 million plus issuing stock shares in some transactions.

Haig Partners, a buy-sell firm in Fort Lauderdale, Fla., that also tracks deals, reported a 2021 spending amount on acquisitions for the six major publics of $9.1 billion, close to but slightly lower than the Kerrigan number.

Several supersized deals pushed up the publics' collective spend on acquisitions in 2021. Four of the biggest transactions in U.S. auto retailing history took place in 2021 and involved public buyers.

• In April, Lithia bought Michigan's 34-store Suburban Collection.
• In November, Group 1 Automotive bought 28 dealerships from Prime Automotive Group.
• In December, Sonic Automotive bought RFJ Auto Partners Holdings, which included 22 new-vehicle dealerships.
• The largest deal of the bunch, Asbury's acquisition of Larry H. Miller Dealerships, which included 54 franchised stores, also closed in December.

And Lithia, Group 1, Sonic and Asbury completed several acquisitions last year beyond those four megadeals.

Lithia led the industry in stores bought in 2021, acquiring 67 U.S. franchised dealerships. That was just ahead of Asbury, which acquired 65.

Additionally, Lithia entered Canada last year with its acquisition of Pfaff Automotive Partners — 13 stores, including 11 new-vehicle dealerships.

Lithia, largely responsible for kick-starting the current wave of the industry's dealership acquisition frenzy, passed Penske Automotive Group last year to become the No. 2 dealership group based in the U.S. as ranked by 2021 new-vehicle sales. Lithia is now on the heels of No. 1 AutoNation and outsold AutoNation in the first quarter of 2022.

AutoNation bought 20 dealerships in 2021 in two large transactions, while Penske bought two dealerships in single-store deals.

Other than Penske, each of the major publics sold at least one dealership in 2021. They collectively divested 17 stores in 16 transactions last year. Lithia alone accounted for eight of the 17 sold dealerships.

Melissa Burden contributed to this report.