Asbury sells S.C. Lexus store to comply with brand's region cap

Asbury Automotive Group Inc. sold its South Carolina Lexus dealership in September to comply with the luxury brand's cap on how many stores the dealership group is allowed to own in a region.

The divestiture was prompted by Asbury's $735 million acquisition in August of the majority of Park Place Dealerships, which included two Lexus stores in Dallas. That gave the nation's seventh-largest retailer six Lexus stores across its network, including the Greenville, S.C., store, one Lexus dealership in St. Louis and two Lexus outlets in metro Atlanta.

Lexus's framework agreement with Asbury allows the group to own six stores across the country. And if all six stores are high-performing, Asbury CEO David Hult said, Lexus allows a dealership group to operate up to eight stores.

But the framework agreement has another wrinkle, Hult said: The dealership group cannot operate more than four locations in the same area of the country.

"I knew right away we had an issue, because we now had five stores in one region," Hult told Automotive News last week. "From Atlanta to Dallas, it's almost 1,000 miles. Even though it's 1,000 miles apart, it's still one region. We had a choice of selling one of three stores, and the choice was Greenville."

Asbury sold Lexus of Greenville to Hudson Automotive Group of Charleston, S.C., generating $24.7 million for the retailer in the third quarter. The Greenville store had contributed approximately $90 million in annual revenue to Asbury, officials said.

Jaycie Dane, general manager of Lexus sales operations, said Lexus divides its U.S. dealership footprint into four regions. Asbury ended up with one too many stores in Lexus' southern region.

While acknowledging that Lexus imposes limits on how many dealerships a single group can own, Dane would not comment on the extent of the limitations beyond them being largely performance-based.

"Asbury and David Hult and their entire organization are strong partners with Lexus, and we're really pleased to see them strengthening our partnership," Dane said.

This isn't the first time one of the nation's big retailers has had to sell Lexus stores because of the automaker's cap.

In 2018, Penske Automotive Group sold two New Jersey Lexus stores — Lexus of Edison and Lexus of Bridgewater — upon acquiring two Lexus stores in the Austin, Texas, market. CEO Roger Penske said at the time that divesting the stores was required under its framework agreement with Lexus.