“That’s just an expression of our confidence that we really have this combination figured out,” CEO Mike Jackson told analysts last week during a call to discuss the retailer’s soaring first-quarter net income.
The group of five AutoNation USA stores had an operating profit of more than $3 million in the first quarter, Jackson and CFO Joe Lower said.
AutoNation said it remains on schedule to open five USA stores this year and to add 12 stores in 2022. Each costs about $10 million to build, Lower said, so the company could invest $1.25 billion or more into AutoNation USA stores over the next five years.
While it grows in pre-owned, AutoNation also is keeping an eye on franchised dealership opportunities that will “complement” its footprint, Lower said. The Fort Lauderdale, Fla., retailer will buy its first franchised stores since 2018 when it closes on 11 dealerships and a collision center from Peacock Automotive Group of Hardeeville, S.C. Peacock Automotive will retain a Ford store in Maitland, Fla.
AutoNation expects to add $380 million in annual revenue with store acquisitions in the Hilton Head and Columbia areas of South Carolina and in Savannah, Ga.
AutoNation isn’t the only public auto retailer looking for and buying stores.
Lithia Motors Inc. purchased Michigan’s Suburban Collection this month, adding 34 dealerships and 56 franchises, in one of the industry’s largest transactions in a decade. That purchase put Lithia, which has been on a dealership-buying spree, ahead of AutoNation in store count: 246 to AutoNation’s 235 stores at year-end 2020, including five USA outlets.
If neither group buys or opens additional dealerships in the interim, they would be tied in store count following AutoNation’s Peacock acquisition.
But Lithia, which reported record-breaking first-quarter revenue and earnings per share last week, is not planning to stop making acquisitions. While some of the publics are growing in standalone used-vehicle stores, Lithia’s growth strategy is focused on purchasing franchised dealerships and scaling its digital retailing platform nationwide.
Lithia ranked No. 3 on Automotive News‘ latest list of the largest dealership groups based on 2020 new-vehicle sales. But the Suburban acquisition makes Lithia the second-largest group going forward.
