Lithia CEO Bryan DeBoer says 100-150 more dealerships needed to hit revenue goal

Lithia Motors Inc., one the most active players in the buy-sell market, will need to acquire 100 to 150 more dealerships in the United States, and possibly elsewhere, between now and the end of 2025 to reach its goal of $50 billion in annual revenue that year, according to CEO Bryan DeBoer.
 
The auto retail giant generated about $23 billion in revenue in 2021 and DeBoer, speaking Thursday at AutoTeam America's Dealer/CEO/CFO Forum in Dallas, said Lithia is currently generating around $28 billion.

DeBoer said he expects additional revenue will come from Driveway, Lithia’s digital retailing platform; GreenCars, its marketplace for new and used electric and hybrid vehicles; and largely from acquisitions.

“We probably need to buy about $10 to $15 billion in revenue," DeBoer said.

When Lithia said it bought a Stellantis store in December, the auto retailer noted that in 2022 it had acquired dealerships that were expected to add $3.5 billion in annual revenue. Lithia also sold several dealerships in 2022.

DeBoer said Lithia likely would need to have about 500 dealerships overall to hit its $50 billion revenue target. Lithia has 282 dealerships in the U.S. and 14 in Canada, according to its website.

To add $10 billion to $15 billion in annual revenue from acquisitions, “it's 100, 150 locations domestically in the United States, or in some of the other parts of the world where we have some growth opportunities as well, depending on what pricing looks like," DeBoer said. "As we start to reach some of the ceilings of what our manufacturers will partner with us on, domestically, we have to start putting our oars into different waters because we probably have three to seven years of growth with most manufacturers before we start to cap out."

DeBoer said the retailer for a long time had four automaker partners that required framework agreements. Today, that number is 10, DeBoer said.

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 or in a certain region.

“We welcome the framework agreements and as such, [for] most manufacturers, we're usually one of their top two dealers,” DeBoer said. “We're usually in good graces and that's why we've probably been able to grow. Because when you start to buy groups, you could have 10 manufacturers, and if you don't have approvability with all 10 of the manufacturers, you got a problem.”