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Megadealers high on the list use the “hometown” approach despite their size

To see the Ward's Megadealer 100 list, click here. Requires Adobe Acrobat Reader For free download, click here. For more Ward’s Megadealer 100 information, click here. The Ward’s Dealer Business Megadealer 100’s upper echelon, despite their size and scope, take a hometown approach to automotive retailing. "We're all coming closer to the model that is the right model for large megadealers/consolidators

To see the Ward's Megadealer 100 list, click here. Requires Adobe Acrobat Reader For free download, click here.

For more Ward’s Megadealer 100 information, click here.

The Ward’s Dealer Business Megadealer 100’s upper echelon, despite their size and scope, take a hometown approach to automotive retailing.

"We're all coming closer to the model that is the right model for large megadealers/consolidators in this marketplace, which is to run it close, run it with operators at the local level, to focus on the retailing aspects and to fine-tune our retail strategies," says Brian Kendricks, CEO of Asbury Automotive Group, No. 4 on the 100 list.

He adds, "There are very few synergies to be reaped from a national (consolidation) strategy. Most of the synergies in our business exist with local level advertising. We'll continue to do that. We believe that is the right strategy. I think we've seen everybody come full circle around to that."

The industry’s largest dealer group, AutoNation of Fort Lauderdale, FL, maintained the lead and the status quo with its dealership count at 290. It also saw a slight dip in revenue, from $20.9 billion in 1999 to $20.4 billion in 2000.

While AutoNation kept its store count level, No. 2 Sonic Automotive of Charlotte, NC sold off five of its performers and purchased seven more to bring its count to 116.

In July, it bought two Cashman Cadillac stores in Las Vegas. In September, Sonic picked up Philipott Ford and Philipott Toyota in Beaumont, TX; Garry McKinney Toyota in Ft. Worth, and Nils Sefeldt Volvo and Baillargeon Ford in suburban Dallas.

In doing so, O. Bruton Smith’s company almost doubled its units and revenue. Unit sales went from 166,473 in 1999 to 283,503 in 2000. Revenue increased from $3.3 billion to $6 billion, which puts Sonic second among the Megadealer 100.

Third place United Auto Group was aggressive in 2000, upping its store count from 67 in 1999 to 86. UAG’s revenue also increased from $4.02 billion to $4.88 billion.

Among the 19 stores UAG acquired between reporting periods include Volvo on Camelback in Phoeniz and Bob Clark Toyota in Springdale, AZ; Mel Farr Imports in Bloomfield Hills, MI; and the Audi, Mercedes-Benz and Porsche stores of Continental Motors in Fairfield, CT. It also bought Kevin Rinke’s Toyota, Pontiac-GMC and Cadillac stores in Centerline, MI; Goodson Honda, Goodson Pontiac-GMC and Goodson Spring Beach Honda in Houston; a Toyota and a Lexus store in Puerto Rico. It also moved into Indianapolis and Cleveland.

Also in 2000, UAG joined forces with CarsDirect.com to go after the Internet market.

The top three consolidators on the Ward’s 100 are publicly owned companies which are seeing better days on the stock market.

AutoNation, which had Wall Street woes in the past, saw a year-to-date gain of 68%. Its shares are valued at about $10.

Sonic had a year-to-date gain of 53%, UAG, 108%. Their stocks are at about $10.55 and $13.90 a share respectively.

Fourth-place Asbury Automotive Group added only four stores in 2000, going from 80 to 84, but increased revenue from $4.1 billion to $4.8 billion.

Asbury already has acquired dealerships in 2001. Earlier this year, the Stamford, CT-based megadealer added two dealerships and five franchises in the Jackson, MS market and will add a ninth regional platform to its national organization.

The dealerships are Gray-Daniels Ford and Metro Mazda-Hyndai-Suzuki-Isuzu. Dealers Bobby Gray, Noel Daniels and Steven Inzinna will join Asbury’s senior management group.

The move allows Asbury to link these operations with the Mark Escude dealerships in the Jackson area in a new platform. The five Escude stores (Daewoo, Nissan, Toyota and Mitsubishi) had been part of Asbury Automotive Arkansas.

“We believe Asbury’s dedication to improving the efficiencies in the automotive retail sector will enable us to take advantage of the great potential in this dynamic (Jackson) market,” says Mr.Kendricks. “Jackson has been a target market for us for a while.”

Mr. Kendrick’s local branding strategy dictates that he has more than one store in each city. He says critical mass for Asbury in each of its markets is $1 billion.

“We’re looking at other cities east of the Mississippi,” says Mr. Kendrick. “There are deals in the works, but most of the imminent announcements are tuck-ins for our current platforms. We don’t like having orphan stores.”

The Asbury CEO sees the rest of the largest megadealers leaning toward his business model.

UAG, like Asbury has continued its acquisition ways early in 2001. So far, the retail giant founded by Marshall S. Cogan and now chaired by Roger Penske has entered the Washington, D.C., market with the purchase of the Mercedes-Benz, Porsche, Audi and Land Rover franchises owned by HBL Inc. in Vienna, VA. It’s also moved into the Cleveland market with Motorcars Toyota. It also added a Chevy store in Benton, AR.

Mr. Cogan resigned from the board of directors in late April.

“He led the company through its early days to its emergence as a leading publicly traded auto retailer and a substantial force in the industry,” says Mr. Penske.

To see more information on the Top Five meagadealers, click here. Requires Adobe Acrobat Reader For free download, click here.

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