The dealership acquisition “freeze” that engulfed most of the top dealer groups during the 2009 sales recession has thawed out, but the same cannot be said for the dividend policy that made the six publicly-owned collections attractive to shareholders.
None of the six New York Stock Exchange-listed dealer groups mentioned the dividends in their reports of2010 first-quarter revenues and profits, which for the most part applauded their dealers' profitable showings and upbeat sales for new and used vehicles, finance and insurance segments and service departments.
Without exception, CEOs and CFOs of the “public” sextet singled out preowned-vehicle sales and profit margins as evidence of rebounding financial results. Sonic Automotive's president and CEO Scott Smith, disclosed plans to spur its 123 dealers to raise used-unit sales by 100 vehicles a month, declaring “the CarMax model is one we'd like to adopt.”
While Sonic said it was continuing to abstain from acquisitions, Group 1 Automotive's president and CEO, Earl Hesterberg, said the Houston-based group had returned to a growth mode in the first quarter in line with a trend among nearly all megadealers to shift their brand mixes to luxury and import models.
“There are a lot of acquisition opportunities out there, now that consumers are out shopping again and credit is readily available, unlike 2000,” said Hesterberg.
Group 1 has been proactive in looking at acquiring more import and luxury brands. It had 95 dealerships as of January 1, 2010, and is expected to top the 100 mark by year-end. “We're excited about growing our business again,” said Hesterberg. “Hopefully, we'll never again see the contractions that GM and Chrysler brought about in 2009.”
Lithia Motors also has reinstated a growth policy, according to its chairman and CEO, Sid DeBoer. The Western group saw its dealership total decline from above 100 to 85, but has decided to reopen eight closed locations in line with the rebound in business, DeBoer says. “We're hopeful for a recovery in Chrysler Group sales.