Publicly owned consolidators continue to acquire dealerships and franchises in so-called sunbelt markets, although at a much slower rate than in the last two years.
Second-ranked megadealer Sonic Automotive sets the pace for the segment, purchasing five Texas dealerships with 1999 revenues totaling about $458 million. This raises Sonic's dealer count to 123, with 14 in Texas.
With a revenue "run rate" now at a projected $6 billion, the Charlotte, N.C.-based Sonic's gross income will rise about 75% this year from 1999, according to Theodore M. Wright, chief financial officer.
Purchase agreements were entered into by Sonic with the following Texas stores: Baillargeon Ford and Nils Sefeldt Volvo in Dallas; Garry McKinney Toyota in Fort Worth; and Philpott Ford and Philpott Toyota in Beaumont.
Nine dealerships were purchased by Sonic earlier this year, including two Cadillac stores in Las Vegas.
In Garland, TX, CarMax Group, based in Richmond, VA, adds a Suzuki franchise to one of its 40 superstores. The group, now with 22 new-car franchises, also acquired a Mitsubishi franchise for its outlet in Nashville, TN.
Lithia Motors, the only consolidator allowed to operate Saturn franchises, purchases Saturn of Eugene, OR, from its founder Santos Zamora, plus two points in Sioux Falls, SD. Lithia also has a Saturn dealership in its headquarters city of Medford, OR.
The Eugene addition marks Lithia's 49th dealership and 103rd franchise. The Sioux Falls addition consists of Terry Schulte's Chevrolet-Subaru-Jeep-Mitsubishi and Kia outlets.
UnitedAuto Group Chairman and CEO Roger S. Penske increases his stake in the company from 40% to 43.5%. Mr. Penske's investment subsidiary bought 352,550 shares of UAG for $2.1 million and now controls about 14.3 million shares of the stock.
The Detroit-based UAG this year raised its franchise total to 120 and its dealership total to 111, with purchases of a Pontiac-GMC store and two Honda points in Houston and a Buick-Pontiac-GMC store in Cerritos, CA.
Relatively quiet on the acquisition front have been AutoNation Inc., based in Fort Lauderdale, FL, and Group 1 Automotive, based in Houston.
AutoNation, with 290 dealerships, grossed a record $20 billion last year and reportedly is on track to remain at that lofty level.
Group 1 Chairman, President and CEO B.B. Hollingsworth, Jr. says dealership acquisition plans would be put on hold for the rest of 2000 after closing six transactions in Boston, New Orleans and Pensacola, FL, last February. The group's 2000 run rate grew to about $3.4 billion with the purchases.
Reflecting an upward sales trend for the automotive sector generally through the 2000-model year, CarMax total sales for the March-August period rose 27% from the previous year, to $1.3 billion. Net earnings skyrocketed 406% to $30.2 million.
CarMax President W. Austin Ligon says "higher-than-anticipated sales for used cars and continued improvements in inventory, plus our enhanced web site," boosted gross profit margins for the first half of CarMax's fiscal year from 12.3% to 13.5% and operating pretax and interest margins from 1.4% to 4.2%.
CarMax is a subsidiary of Circuit City Stores Inc.